Posts tagged ‘Inequality’

May 6, 2013

The Lost Meaning of Models

Written By: Rebecca Gu

Harmless Economics

Economics has rightfully earned a reputation for being abstract to the point of obscurity.  Theoretical physics and mathematics also practice this same level of abstraction, but unlike economics, those fields also do not arrogantly claim that their usefulness lies in their applicability to real life.  It is this combination of both asserting relevance and simultaneously reducing complexity of real applications that leads to some dangerous assumptions about how the world should work.  For example, my research thus far;

The Many Facets of Carbon Emissions

Global climate change is an economic puzzle in that it involves a lot of different elements, that relate back to concepts of fairness and unfairness.

1) Historical Grudges

Given the amount of man-made emissions that have collectively been produced to date, it is arguably the currently rich countries that have benefited the most from this. Carbon emissions are a by-product of industrialisation, and industrialisation is associated with the economic development of most of the West. Thus, climate change treaties are saddled with the burden of how to distribute future obligations based on historical responsibility.

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January 29, 2013

Has the Global Economic System “Raised All Boats”?

Written By: Dennis Shen, Raktim Roy and Joséphine Gantois

The design of a global economic system that supports inclusive growth is central to today’s policy debate. The current global economic model has been in-place since the 1980s: the decade in which free market thinking revolutionized the world economy. The neoliberal system adopted since that time has engineered a world with less trade barriers, globalized markets, and minimal government intervention – based on the belief that a pro-market, anti-governance approach would support human welfare. Globalization has been an important outcome, and has re-shaped our lives.

Now, there exists an active debate on whether the neoliberal system has been a success. Proponents of globalization and free trade would say that the world is the better for it – proponents like Martin Wolf write that inequality and poverty are declining in large part due to globalization forces. But on the other end, outspoken voices like Robert Wade at the London School of Economics would say that rather than supporting lower inequality and improvements in welfare, the current system has in many ways held the rich countries up and the poor countries down.

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October 8, 2012

Growth and Inequality: Analyzing an Important Relationship

Written By: Dennis Shen

In academic circles, it has become commonly accepted that rapid economic growth can increase inequality. This has been supported by international developments in recent decades that show declining inequality between countries but increasing inequality within countries. China and the United States are just two examples. To explain the reason, some point to globalization as the natural conduit not only for high growth and inter-country convergence but also the agent for downward domestic pressures on working class payrolls, capping wage increases in response to international labor competition and resulting in intra-country divergence.  Others have argued that unregulated laissez-faire economics is both an apparatus for rapid economic advances and the natural environment for the development of a Darwinian economy (see Robert Frank’s “The Darwin Economy”) of winners and losers across an increasingly segmented income distribution, requiring a strong state to intervene and re-balance.

In a recent article on Project Syndicate (link here), Columbia professor Alexander Stille acknowledged this accepted relationship between rapid economic growth and increasing inequality, but also interestingly pointed to a novel alternative hypothesis: in addition to rapid growth driving rising inequality, could times of relatively weak growth also be associated with the very same inequality phenomena? As Stille writes, “might slow growth and rising inequality – the two most salient characteristics of developed economies nowadays – also be connected?” At first, it would seem counter-intuitive that very weak growth be commonly associated.

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