Income Distribution: Equal Opportunity vs. Equal Results

Income distribution has become less equal in many countries in recent decades, and prominent economists and politicians have advocated policies that would reverse the change in inequality. Some advocates of greater equality have acknowledged a trade-off between greater equality and higher total income. However, Paul Krugman (2014) and Alan Blinder (2014) have recently denied that […]

Criticisms of Piketty Valid, but Underlying Thesis Still Intact

There has been much discussion of Thomas Piketty’s new book, Capital in the 21st Century. Some of the criticisms I agree with, and some I do not. The latest concern was raised by Chris Giles, who found “a series of problems and errors” in Piketty’s publicly posted data and spreadsheets. Here is Paul Krugman’s reaction: Giles finds a […]

The Problems With Piketty

Everybody has had a go at the phenomenon of Thomas Piketty’s Capital in the 21st Century. Here’s a version of my Sunday Times piece of a few days ago. Most people in Britain will never have heard of Thomas Piketty, a 42-year old professor from the Paris School of Economics, but that may be about […]

America as a Tale of Two Neighborhoods

Welcome to what Arianna Huffington has aptly called Third World America — we’d expect riots and revolution in any foreign city with NYC’s level of economic and racial segregation. Both the affluent and the impoverished in NYC can ride the same mass transit system (AKA the subway) and might work in the same office buildings. But at […]

Raising Taxes on Corporations that Pay Their CEOs Royally and Treat Their Workers Like Serfs

Until the 1980s, corporate CEOs were paid, on average, 30 times what their typical worker was paid. Since then, CEO pay has skyrocketed to 280 times the pay of a typical worker; in big companies, to 354 times. Meanwhile, over the same thirty-year time span the median American worker has seen no pay increase at all, adjusted for inflation. […]

Socrates & the Pope: Overheard at the IMF’s Spring Meetings

By IMFdirect editors: Socrates’ famous method to develop his students’ intellect was to question them relentlessly in an unending search for contradictions and the truth—or at the very least, a great quote. The method was alive and well among the moderators, panelists and audiences of the IMF’s Spring Meetings seminars that took place alongside official discussions, […]

Economic Consequences of Income Inequality

A lot of things have happened in China since my last entry – in the FX markets, in the banking system, in the announcements of default, and in the continuing lowering of growth expectations – but for all the turmoil, as I see it nothing has happened that was unexpected and that has not been […]

Meeting Rising Pressures to Address Income Inequality—A User’s Guide

By Sanjeev Gupta and Michael Keen These are difficult times for ministers of finance. Fiscal constraints are tight and raising economic growth a priority. At the same time, income inequality is on the rise, and so is public pressure for governments to do something about it through their tax and spending policies. What’s a minister to do? How […]

The Great U-Turn

Do you recall a time in America when the income of a single school teacher or baker or salesman or mechanic was enough to buy a home, have two cars, and raise a family? I remember. My father (who just celebrated his 100th birthday) earned enough for the rest of us to live comfortably. We […]

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