The pioneering economist presents ‘broad outlines of a new radical reformism’
Ashish Mehta | August 17, 2015 | New Delhi
The question of economic inequality was always a pressing one, but last year it threw up an unlikely best-seller, Capital by Thomas Piketty. Before and after Piketty, there has been a growing body of literature on the theme (a long list can be found at: inequality.org/books-inequality), including Joseph Stiglitz’s Price of Inequality and Angus Deaton’s The Great Escape for non-expert readers.
The Occupy Wall Street movement highlighted the fact that the top 1 percent rich have more wealth than the rest of us. President Obama as well as IMF chief Christine Lagarde have declared that addressing the increasing rich-poor gap is our top priority.
Now, the man who pioneered inequality studies decades ago has come out with a book that offers possible solutions. Atkinson, as Piketty writes in the New York Review of Books, “occupies a unique place among economists. During the past half-century, in defiance of prevailing trends, he managed to place the question of inequality at the centre of his work while demonstrating that economics is first and foremost a social and moral science”.
Atkinson devotes two of the book’s three parts to ‘proposal for action’ and ‘what can be done?’, providing us what Piketty calls “the broad outlines of a new radical reformism”. The first section, ‘Diagnosis’, surveys the global scene, along with historical lessons.
Not claiming the qualification to review the book, we would contend by pointing out some of the 15 proposals and five ideas the British economist presents in a capsule form:
Proposal 1: The direction of technological change should be an explicit concern of policy-makers, encouraging innovation in a form that increases the employability of workers, emphasising the human dimension of service provision.
Proposal 2: Public policy should aim at a proper balance of power among stakeholders, and to this end should (a) introduce an explicitly distributional dimension into competition policy, (b) ensure a legal framework that allows trade unions to represent workers on level terms, and (c) establish, where it does not already exist, a Social and Economic Council involving the social partners and other nongovernmental bodies.
Proposal 3: The government should adopt an explicit target for preventing and reducing unemployment and underpin this ambition by offering guaranteed public employment at the minimum wage to those who seek it. [Atkinson makes a special mention of MGNREGA in this regard.]
Proposal 4: There should be a national pay policy, consisting of two elements: a statutory minimum wage set at a living wage, and a code of practice for pay above the minimum, agreed as part of a “national conversation” involving the Social and Economic Council.
Proposal 5: The government should offer via national savings bonds a guaranteed positive real rate of interest on savings, with a maximum holding per person.
Proposal 6: There should be a capital endowment (minimum inheritance) paid to all at adulthood.
Proposal 14: There should be a renewal of social insurance, raising the level of benefits and extending their coverage.
Proposal 15: Rich countries should raise their target for Official Development Assistance to 1 percent of Gross National Income.
Then there are “ideas to pursue” along with the proposals. Among them,
Idea to pursue: A global tax regime for personal taxpayers, based on total wealth.
Idea to pursue: A minimum tax for corporations.
Atkinson concludes on a touching, positive note: “It is true that since 1980 we have seen an ‘Inequality Turn’ and that the twenty-first century brings challenges in terms of the ageing of the population, climate change, and global imbalances. But the solutions to these problems lie in our own hands. If we are willing to use today’s greater wealth to address these challenges, and accept that resources should be shared less unequally, there are indeed grounds for optimism.”
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