More Equality or More Growth?
The Economist writes,
Up to a point, spreading the wealth around carries no growth penalty: growth in income per person is not meaningfully lower in countries with more redistribution. But economies that redistribute a lot may enjoy shorter growth spells, the authors reckon. When the gap between the market and net Ginis is 13 points or more (as in much of western Europe) further redistribution shrinks the typical expansion. The authors caution against drawing hasty conclusions. Details surely matter; nationalising firms and doling out profits would presumably be worse for growth than taxing property to fund education.
Basically, a high level of inequality or an extreme level of redistribution can both lead to slower growth within countries.
Inequality as measured by Gini coefficients has been rising. One contribution to this is that the wealthy receive a disproportionate amount of income from capital, as opposed to labor. The above diagrams show how labor income inequality has indeed risen over the past five decades in both the US and the UK, however, capital income has essentially always been very concentrated. Branko Milanovic offers a few solutions to this,
Deconcentrating capital ownership can be done in at least three ways:
From Scott Sumner,
As you can see the employment ratio was about the same in 2007 as in 1990, and hence the aggregate data shows no evidence that either trade or automation reduced employment during the period studied by Autor, Card and Hanson, as well as Acemoglu and Restrepo.
The above was in response to a paper showing that local unemployment often results from deployment of robots. The same is seen as a result of automation and trade, which is why he includes the last sentence above. Local markets are affected by these structural changes, but not necessarily aggregate employment.
A new paper from Vox states,
An increase in average income per capita does not necessarily guarantee that the broad population is better off. If all the income gains were captured by companies’ top executives and shareholders, the broad population might not benefit and could actually be worse off. Our analysis finds, however, that the gains from immigration are broadly shared across the population. Migration increases the average income per capita of both the bottom 90% and the top 10% of earners, even though high-skilled migration benefits more top earners — possibly because of a stronger synergy between migrants and natives with high skills. Moreover, the Gini coefficient — a broad measure of income inequality within the bottom 90% of earners — is not affected by the migrant share.
Trade and Manufacturing Employment
Paul Krugman has done a little digging into the effects of trade on manufacturing employment in the U.S. Overall, he concludes that,
How much of a role did trade play in the long-term decline in the manufacturing share of total employment, which fell from around a quarter of the work force in 1970 to 9 percent in 2015? The answer is, something, but not much.
From Business Insider, "To Krugman’s point, manufacturing employment peaked in 1979, before a significant number of the free trade agreements Trump blames for the decline."
Less and Less Men Are Working
From Larry Summers,
Job destruction caused by technology is not a futuristic concern. It is something we have been living with for two generations.
That is according to a new article in The Economist,
For many pro-life politicians, the answer to high abortion rates is to make abortion illegal or harder to get. Donald Trump, a recent convert to the pro-life cause, has vowed to appoint a conservative to America’s Supreme Court. Many religious leaders fulminate against abortion, although Pope Francis softened the Catholic church’s line slightly on November 20th. Abortion remains a grave sin, but penitent women can now be forgiven by parish priests and do not have to go to a bishop.
Studies of Western countries suggest that few women who have had an abortion regret their choice. Although women with pre-existing mental-health problems can see them worsen following an abortion, such problems also tend to worsen if they carry an unwanted baby to term. But in poor countries, where sterile rooms and well-trained doctors are in short supply, even legal surgical abortions can be risky. In the West less than 1% of abortions carried out by manual vacuum aspiration are followed by complications. In Bangladesh the share is 12%.
And perhaps most importantly,
Contraception also offers an excellent return on public investment. An abortion costs the NHS 13 times the amount it spends on the average contraceptive user per year. The Copenhagen Consensus, a think-tank, estimates that making contraception and sexual-health advice universally available would bring returns worth $120 for every $1 spent, mostly by reducing deaths in pregnancy and childbirth in poor countries.
The State of Global Migration
From a new McKinsey Global Institute report,
Refugees might be the face of migration in the media, but 90 percent of the world’s 247 million migrants have moved across borders voluntarily, usually for economic reasons. Voluntary migration flows are typically gradual, placing less stress on logistics and on the social fabric of destination countries than refugee flows. Most voluntary migrants are working-age adults, a characteristic that helps raise the share of the population that is economically active in destination countries.
These voluntary movements have potentially large benefits,
Moving more labor to higher-productivity settings boosts global GDP. Migrants of all skill levels contribute to this effect, whether through innovation and entrepreneurship or through freeing up natives for higher-value work. In fact, migrants make up just 3.4 percent of the world’s population, but MGI’s research finds that they contribute nearly 10 percent of global GDP. They contributed roughly $6.7 trillion to global GDP in 2015—some $3 trillion more than they would have produced in their origin countries. Developed nations realize more than 90 percent of this effect.
Much depends on integration,
Realizing the benefits of immigration hinges on how well new arrivals are integrated into their destination country’s labor market and into society. Today immigrants tend to earn 20 to 30 percent less than native-born workers. But if countries narrow that wage gap to just 5 to 10 percent by integrating immigrants more effectively across various aspects of education, housing, health, and community engagement, they could generate an additional boost of $800 billion to $1 trillion to worldwide economic output annually. This is a relatively conservative goal, but it can nevertheless produce broader positive effects, including lower poverty rates and higher overall productivity in destination economies.
Air quality has improved dramatically in rich countries over the past century. Around 1880, when the air was worst in London, it is estimated that 9,000 people died each year from air pollution,1 about one of every seven deaths.2 Today, London air is cleaner than since medieval times.
That comes out to, "one of every thirteen people that die on the planet" (Kindle Locations 1433-1434). In China, 23 percent of deaths are due to air pollution.
That is according to an article in The Atlantic on the association between health and homelessness in the United States,
The connection between housing and health is coldly logical. The sick and vulnerable become homeless, and the homeless become sicker and more vulnerable.
The article continues with,
The specific therapy for homelessness and its associated health issues is housing.