Income Inequality and Wealth Concentration in the Recent Crisis

This article shows that the increase of income inequality and global wealth concentration was an important driver for the financial and Eurozone crisis. The high levels of income inequality resulted in balance of payment imbalances and growing debt levels. Rising wealth concentration contributed to the crisis because the increasing asset demand from the rich played a key role in the growth of the structured credit market and enabled poor and middle‐income households to accumulate increasing amounts of debt. This analysis thereby puts both income and wealth inequality at the epicentre of the recent crisis, and as crucial for social scientists analysing the causes of the crisis. The authors’ findings suggest that the policy response to the crisis should not be limited to financial regulation but must involve policies to address inequality by increasing the bargaining power of labour as well as redistributive tax policies.     

Thomas Piketty's Global Tax on Wealth

Thomas Piketty's concern with growing economic inequality leads him to propose a global tax on wealth. While he recognizes that the efforts of individual nations to tax wealth will prove ineffective since wealth is mobile, he does not seriously confront the collective action problems that will impede national efforts to cooperate in more effectively taxing global wealth. To what degree are more radical forms of political integration required to overcome these collective action dilemmas? Piketty provides partial and inadequate answers for these questions with regard to European integration. To be persuasive the economic analysis of Capital in the Twenty-First Century would have to be supplemented with a political economy comparable in depth and sophistication to that provided by The Federalist Papers regarding the political and economic integration of American states at the time of the American Founding. Piketty's failure to address questions of political economy makes his project vulnerable to the charge that nothing less than a world state would suffice to impose a global tax on wealth, and thus that his project is hopelessly visionary and susceptible to misappropriation for tyrannical purposes.     

What If Piketty Is Right? Real Economic Costs of Rising Income Inequality

Thomas Piketty's analysis of income and wealth distribution, Capital in the Twenty-First Century, argues that wealth has become increasingly concentrated in the hands of the most affluent, while lower and middle class real incomes have stagnated; he warns that this trend could have “potentially terrifying” results, possibly even violent revolution. This article presents evidence that growing inequality weakens the entire economy by eroding the purchasing power of the vast majority of the population and the education of the labor force, while increasing its vulnerability to future collapses of the financial markets. It agrees with Piketty's concern that the capitalist market system, driven by Adam Smith's classic reliance on the pursuit of individual self-interest, lacks mechanisms to correct these distortions, which must be addressed by new policy initiatives.     

On the ‘Arab Inequality Puzzle’: The Case of Egypt

This article surveys and discusses prominent protagonists of the debate on socio-economic inequality in the Arab region, with a special focus on the World Bank and Egypt. According to official data, the region holds remarkably low Gini coefficients in a context of declining inequality. This contradicts the popular perception of high social inequality as a major cause of regional protests since the Arab Spring; hence the reference to a ‘puzzle’ in mainstream literature. The debate about the reality of social inequality in the region has developed since 2011 — particularly in regard to Egypt, where income and consumption data are periodically collected by means of household surveys. Inequality measures based on this method alone, while income taxation data are inaccessible, are highly questionable and conflict with various observations and calculations based on other indicators such as national accounts, executive income or house prices. Yet, the World Bank upholds official inequality findings in portraying the Arab upheaval as the revolt of a ‘middle class’ that aspires to greater business freedom, in consonance with the neoliberal worldview.     

Economic inequality in Australia: A reassessment

This article reviews and analyses the evidence on the distribution of income and wealth in Australia since the 1960s. A number of scholars – most prominently among them Thomas Piketty – suggest that inequality has been increasing across the advanced capitalist world. Kuznets’ benign picture of an ‘inverted u-curve’ depicting declining inequality in modern industrial society is replaced with an altogether different and potentially quite alarming one. Does this hold for Australia? Surveying 25 income trend and 17 wealth distribution studies, we draw on the best available evidence and find that overall there has been far less of a rising inequality trend than is often assumed or argued.

本文分析了1960年代以来澳大利亚的收入及财富分配。有一些学者——其中最著名的是托马斯·皮凯提——认为所有发达资本主义国家的不平等都在加大。库兹涅倒U曲线所描绘的近代工业社会不平等不断减弱的美丽图画被一个全然不同、令人震惊的景象所取代。那么澳大利亚也是这样么？笔者考察25种收入趋势、17种财富分配的研究后发现,总的来说,不平等远并不像人们所常说的那样增加。     

Causes and Consequences of Inequality in Egypt

This study presents an analysis of various facets of inequality in Egypt using a political economy approach to understand how inequalities are reproduced in the Egyptian economy. It examines the drivers of income and wealth inequality, and the impact of uneven taxation. The paper highlights how the mismeasurement of top incomes can skew the measurement of inequality, and shows how Egypt has one of the biggest wealth gaps in the world. It investigates educational, gender, and healthcare inequalities and how they are reproduced across generations. The paper also highlights the disparity between urban and rural areas, which further contributes to inequality. It assesses why economic growth in Egypt has had limited success in reducing poverty and inequality, and analyzes how state and military interference in markets hampers the growth of the private sector. The paper concludes by examining how inequality, combined with a number of challenges that Egypt is facing, including increased authoritarianism, climate change, demographic pressures, and water security will likely exacerbate many of the country’s socioeconomic and political problems. Overall, the study argues that inequality remains a key concern that, if left unaddressed, may lead to social unrest and instability in the long term.     

Has the Income Share of the Middle and Upper‐middle Been Stable around the ‘50/50 Rule’, or Has it Converged towards that Level? The ‘Palma Ratio’ Revisited

In an article published in this journal in 2011, an alternative measure of inequality was suggested, which has subsequently become known as ‘the Palma Ratio’. In this new article, the author of the original proposal revisits the argument for such a measure. Using new data, he examines whether the current remarkable homogeneity in the income share of the middle and upper‐middle around the world — the foundation of the so‐called ‘Palma Ratio’ — is an historically stable stylized fact, or whether it is a new phenomenon, the outcome of a process of convergence towards the current ‘50/50 Rule’ (in which half of the population in each country located within deciles 5 to 9 tends to appropriate about 50 per cent of the national income, or just above). Although partly written in response to a comment on the 2011 paper (published in this issue), the article also makes a substantive further contribution to the literature on inequality and the statistics to measure it.     

Residential property disparities in city districts in Prague,Czech Republic

City districts are often classified as ‘rich’ or ‘poor,’ a phenomenon that occurs within cities all over the world. While income inequality, wealth inequality, and other kinds of social inequality are frequently tracked, there is a surprising lack of research concentrating on how social inequality manifests as differences between parts of cities, especially outside of the U.S. That is mostly due to insufficient available data. In this paper, we propose a methodology for measuring the relative inequality between city districts by using the average prices of residential properties in various parts of the city, and assessing their relative difference. This approach has several advantages, as property listings are often readily available even in cities where income data is not. This methodology has potential for measuring developments in inequality in a much wider range of cities. As a proof of concept, we apply this methodology to property prices in Prague during the period 2003–2012 to identify a trend of either growing or decreasing inequality among individual parts of the city. We have found that during this period the disparity has grown only 5.97%, which means the overall growth of disparity between the city districts was negligible.     

The Four Good Dissenters in Pollock

The overall theme of this lecture series is great dissenters. This contribution to the series is on the dissenters in the 1895 case of Pollock v. Farmers' Trust & Loan Co. In Pollock, the Supreme Court decided, by a vote of 5–4, that the 1894 federal income tax was unconstitutional. The four dissenters—Justice Henry Brown of Michigan, Justice John Marshall Harlan of Kentucky, Justice Howell Jackson of Tennessee, and future Chief Justice Edward D. White—would have upheld the tax.     

INFLATION, PROGRESSIVITY, AND STATE INCOME TAX REVENUES

The combination of progressive income tax structures and inflation has led to significant increases in state income tax revenues. While the federal government has de facto indexed the federal personal income tax, states have generated large relative and absolute increases in their income tax revenues. This paper shows that the ratio of income tax revenues to personal income has grown significantly more in states with progressive income tax structures than those with proportional tax structures. Almost half of such increases may be attributed to inflation. The increase in the relative share of income tax as a source of state revenues has recently run into resistance in some states which have installed income tax indexation measures. This may suggest that the marginal cost of raising revenue through inflation, relative to other means (taxes), is reaching its limits.     

Not My Taxes! Explaining Tax Resistance and its Implications for Australia's Welfare State

In discussing Australia's need to increase taxes to pay for future social security, Michael Keating worries that voters see taxes as a ‘burden’ and that ‘the link between taxation and citizenship has been broken’. This paper deals with the problem of tax resistance (preferring lower taxes even when tax cuts risk public services) for Australia's welfare state. First, I describe how two Australian fiscal institutions—a residual welfare system and visible income taxes—promote tax resistance among voters. Second, I draw on these insights to develop several explanations for tax resistance: voter self-interest, voter hostility to minorities, voter disengagement (low trust and lack of interest in politics), and individualistic attitudes. The main conclusion is that tax resistance in Australia is institutionalised, making it easier to mobilise interests around low taxes, and harder to advocate for alternatives. Results of multivariate analysis using AES 2004 data indicate that an ‘anti-tax coalition’ can build on three diverse publics; one of higher and middle-income earners attuned to self-interest, another hostile to welfare beneficiaries, and another ‘tuned out’ of politics and willing to support any call for tax cuts. Inevitably, the debate about the welfare state is shadowed by a debate about voter willingness to pay taxes that finance it.     

The Piketty phenomenon: why has Capital become a publishing sensation?

Why has Piketty's Capital become a publishing sensation? Not for revolutionary findings; its message that western societies have experienced increases in inequality of income and wealth over the long term is hardly new. Of the several reasons discussed in this article, attention is paid in particular to the book's timing and its claim to reveal the laws of income and wealth distribution in western societies. Had the book been published before 2008 it would have been much less successful. Piketty's revelation of the big trends and their underlying logic helps to objectify, legitimize and offer a kind of catharsis for surging middle‐class anxieties during the Great Recession. These anxieties have been further intensified by evidence that over 90 per cent of the increase in disposable income in the United States has accrued to the top 1 per cent of the population in the past several years, and a not much lower percentage to the top 1 per cent in Britain. In the conclusion it is argued that if Piketty's forecasts are even remotely accurate, capitalism will lose its core claim to legitimacy.     

Behind the Seven Veils of Inequality. What if it's all about the Struggle within just One Half of the Population over just One Half of the National Income?

This article addresses three main issues: why there is such a huge diversity of disposable income inequality across the world, why there is such a deterioration of market inequality among countries of the Organization for Economic Cooperation and Development (OECD), and why inequality seems to move in ‘waves’. There are many underlying questions: does diversity reflect a variety of fundamentals, or a multiplicity of power structures and choice? Is rising market inequality the product of somehow ‘exogenous’ factors (e.g., r>g), or of complex interactions between political settlements and market failures? How do we get through the veils obscuring these interactions and distorting our vision of the often self‐constructed nature of inequality? Has neoliberal globalization broadened the scope for ‘distributional failures’ by, for example, triggering a process of ‘reverse catching‐up’ in the OECD, so that highly unequal middle‐income countries like those in Latin America now embody the shape of things to come? Are we all converging towards features such as mobile élites creaming off the rewards of economic growth, and ‘magic realist’ politics that lack self‐respect if not originality? Should I say, ‘Welcome to the Third World’? In this paper I also develop a new approach for examining and measuring inequality (distance from distributive targets), and a new concept of ‘distributional waves’. The article concludes that, to understand current distributive dynamics, what matters is to comprehend the forces determining the share of the rich — and, in terms of growth, what they choose to do with it (and how they are allowed do it).     

Of Coconuts and Kings: The Political Economy of an Export Crop

The Philippines is the world's leading coconut exporter. The benefits of this trade for Filipino producers have been circumscribed by declining terms of trade in the world market and by highly unequal distribution of coconut-sector income at home. A case study of the Philippine coconut trade illustrates the crucial importance of linkages between wealth and power in determining the size and distribution of income in export agriculture. ‘The time has come,’ the Walrus said, ‘To talk of many things: of shoes — and ships — and sealing wax — Of cabbages — and — kings — And why the sea is boiling hot — And whether pigs have wings.’ Carroll (1922: 186)     

A NOTE ON INCOME TAXES AND DEGREE ONE PRODUCTION HOMOGENEITY*

ABSTRACT In a recent JRS article [Martinich and Hurter (1985)] we examined the production and spatial impact on a firm operating in an uncertain environment due to the imposition of a flat rate income tax. The impacts were shown to depend on the properties of the firm's production and preference functions. In this paper we develop further results for the case where the firm has a degree one homogeneous production function. It is shown that an income tax is technologically and spatially neutral for any risk-averse firm, without regard to any other properties of the preference function. Thus, we not only extend our earlier results for the degree one homogenous production function case but we also correct an error related to this case in the earlier paper.     

Using the Capability Approach to Conceptualise Inequality in Archaeology: the Case of the Late Neolithic Bosnian Site Okolište c. 5200–4600 <Emphasis Type="SmallCaps">bce</Emphasis>

The past few decades have witnessed a growing realisation that market-based measures of human well-being—measures that centre on income and consumption distributions—miss some other perhaps even more essential elements of human well-being. This insight has found a prominent expression in the work of the Nobel Prize-winning economist Amartya Sen’s so-called capability approach. At the same time, the market-based measure of inequality as a function of the distribution of material remains in graves and other locations remain dominant in archaeology. In this paper, we explore the significance of the capability approach, and the associated concept of human well-being based on the idea of capabilities, to the archaeology of social inequality and social malintegration. We discuss these notions using the case study of the Late Neolithic Bosnian tell site Okoli?te and argue that there, in c. 5200–4600 bce, the monopolisation of certain critical goods led to a critical capability inequality, malintegration and to a prolonged period of social unrest and decline.     

Laboratories of (In)equality? Redistributive Policy and Income Inequality in the American States

Prior literature has emphasized demographic, economic, and political explanations for increasing income inequality in the United States, with little attention paid to the role of state‐level policy. This is despite great variation across states in both the level of inequality and the rate at which it is rising. This paper asks whether differences in state policy choices can help explain this variation; specifically, we examined a range of state redistributive policies enacted between 1980 and 2005 and identified four common approaches likely to impact inequality: taxes on the wealthy, taxes on the poor, spending on the poor, and labor market policies. We used pooled cross‐sectional time‐series data and a fixed‐effects model to assess the relationship between states’ use of each policy approach and two measures of market income inequality: the Gini coefficient and the income share of the top 1 percent. We find policies played a significant role in shaping income inequality in the states. For three of these four policy approaches, we found less inequality following expansions of state redistributive policy. Yet, for another, we identified the opposite pattern. These findings highlight the importance of state policy choices in shaping market inequality, and have implications for designing state policies to reduce income inequality since the success of these efforts depends on the policy approach used to redistribute income and wealth.     

Water Mamas among the Makushi in Guyana

Abstract

This article examines folklore concerning water spirits among the Makushi Amerindians in Guyana. Makushi accounts of spirits called ‘water mamas’—twingram or Tuenkaron in Makushi—associate these beings with white people in both past and present. The case is presented here that this folklore reflects Makushi histories and experiences of European contact, colonialism in Dutch and British Guiana, and ongoing relations with Europeans and other outsiders. The themes of abduction, enticement, capricious wealth, and exotic ‘palaces’ found in stories of water mamas relate to these histories and experiences and inscribe them into the present landscape in Guyana. In addition to describing beliefs in water mamas and examining Makushi histories of interaction with Europeans, the article begins to explore the comparative context of this folklore in relation to other beliefs in water spirits across Amazonia and beyond.     

The Colour Purple? Reconsidering the Greek Word halourgos (ἁλουργός) and its Relation to Ancient Textiles

The aim of the present article is to reconsider the interpretation of the Greek word halourgos (?λουργ??) and its relation to textiles and purple dye by reinvestigating its recordings in Greek epigraphy and the papyri, as well as comparative examples from Greek literary sources, in the period from the fourth century bc to the seventh century ad — thus combining the source material from ancient Greece and the Greek-speaking part of the Roman world. This will illustrate the wealth of information one can get from the exploration of one single word: not only on the significance and appearance of textiles and garments in the ancient world from Greece to Egypt, but also on the diversity of colours and the subtleties in their use and terminology.     

The Measurement of Socio‐economic Gender Inequality Revisited

The measurement of socio‐economic gender inequality has not received much attention from the development literature despite its great relevance and important policy implications. In this article we present two new indices to measure gender inequalities that overcome some of the limitations inherent in the UNDP gender‐related indices and other indices presented in the literature. The proposed new indices are conducive to exploring the extent to which gender gaps favour women and/or men, and to showing the contribution of the different subcomponents to the overall levels of gender inequality. Using UNDP data, our calculations suggest that the levels of gender inequality are mostly explained by differences in the earned‐income subcomponent and that the average difference between women's and men's achievement levels has been reduced by 12 per cent during the period 1995–2005.