Monday, January 9, 2012

The Costs of Inequality

If you can spare just 16 minutes of your time, watching this video will be worth your trouble:

Spare me from all those who think we need to be like Singapore.

What’s interesting to me from a policy perspective is that Wilkinson mentions that societies have approached achieving greater equality by either having incomes not too different, or through welfare-state-style tax and transfer.

That’s a fundamental question we have to answer – we kind of economic organisation do we want to have? An Anglo-Saxon style free market based one, or something along the lines of a Euro-style welfare state? And that’s something we need to work out, if we are at all to make any headway against inequality. That and what price we’re willing to pay to get there – because there will be costs.

(H/T Din Merican)


  1. Thanks Sir.
    That encapsulates my main concern on ETP GNI centric program.Owners of capital n assets given greenlane treatment.Infra invstments designed to improve asset values.But wages restructuring sorely neglected.Thus share of wages i.e main income stream of 80% of the population stagnates at 35% of GNI.Truly nonsustainable n with increased social cost.Factor the demographic effect whereby 70% of the poor are young n from one racial group and its a powder keg.
    Economic planning must be more balanced n not merely focussed on growth without distributive elements.
    NAJIB must realise this or else his legacy will be a very2 sad one.

  2. @Anon 9:04
    I think you're talking about the ETP solely from the NKEA standpoint of project focused. However, there is also the element of Strategic Reform Initiatives (SRI) in the ETP which talks about transforming the workforce and workplace under Human Capital Development. However, I think this is not highlighted a lot in the ETP since the policy measures was announced in June

  3. If thats the case..Pemandu needs to announce a review of projected wages 2020...i.e Chap2.
    As u well know...Pemandu derives GNI as a summation of wages n ebitda. Thus if wages goes up..either ebitda(hence ROI on 1.4 tril invstment) or GNI goes up.No two to review.

  4. Watched this (Tom Hartmann & Prof Alperovitz) video recently,

    Interesting inequality perspective at the start of the video. Basically breaking down the type of human societies:
    1) Traditional feudal system - tiny elite own most of the capital(land)
    2) Conventional competitive capitalism - Small and ordinary businesses owns most of the capital.
    3) State socialism/communism - theoretical capital by all. But appropriation of capital is still in the hands on minority bureaucrats
    4) Corporate capitalism - small group of corporate figures owning most of the capital.

    Other than item no 2), 3) and 4) are basically other forms of neo feudalism. So we are presented with the argument of how feudalism endures by keeping on reinventing itself.

    Rather than looking at class war as struggle between 2 groups. We can also look at it struggle between the process of democratizing capital and feudal capital ownership.

    In the struggle to democratize capital(or power), today we get to enjoy benefits such as environmental, occupational safety laws, pensions and compulsory public education(hishamh might argue otherwise).

    Instead of looking at income inequality as the future outcome of our modern economy. We can actually look at it as feudal system retaking control of capital.

  5. What Prof Alperovitz is talking about sounds a lot like what Prof Yunus has been advocating lately.