Question and Answers During Globalization, Development & Inequality

1. Which of India's growth rate is the norm? 6% or the 9% range?
  The panelists answered this indirectly. They said India's growth at 9% can be the norm! But the 9% was not uniform or healthy. We need to find ways and means of ensuring 9% plus growth without impact on climate, ecology and without increasing inequality!

2. Question about Russia.

In Russia there has been an increase in inequality. The average life span has declined. This is more in tune with the fact that Russia has become a rent seeking economy.

3. Is Democracy a prerequisite for reducing inequality?
        The answer if i infer correctly from Joseph Stiglitz is that it is not. The relationship between democracy and inequality is very complex. He mentioned that it was mentioned in textbooks that Russia grew because it was not a democracy and when it started stagnating it was blamed that it was because it is not a democracy!

4. In times of change there is a rise in inequality, example-railways, information technology etc. Is change the driver of inequality?
          The panelists mentioned that this the typical argument of mainstream economists. The question of inequality cannot be left to be answered by market forces. Government has to intervene to reduce inequality by various measures.

5. Taxation
     Discussion about the need to have Cayman Islands! Why should the speculators and other irrational risk takers should be taxed less then the people who are productive like researchers, industry workers etc.

Few other points and my ruminations.

Information asymmetry was mentioned as a reason for inequality. This is always going to be there. Also the fact that 1% of Americans hold 35% of wealth will hold true when we look at wealth of nations. The G7 nations may hold disproportionate amount of wealth and also consume disproportionately. This is due the technology lead which the developed countries have. This cannot be eliminated in near future.  This asymmetry in information is protected by various policies, laws and regulations. When this question was posed to Joseph Stiglitz he replied that China and India will have to work together and bring a change in this. This calls for laws which will be more in favor of developing countries.

Disclaimer: I have missed few question. Also the interpretation of answers might me prejudiced because of my beliefs or disbelief!

'Globalization, Development and Inequality' by Joseph Stiglitz, Ravi Kanbur and Robert Wade

Notes and other points from

APU Public Lecture: 'Globalization, Development and Inequality' by Joseph Stiglitz, Ravi Kanbur and Robert Wade

Why is inequality rising? What are the costs and consequences of inequality? Can governments worldwide intervene and regulate to decrease/eliminate inequality? The government policies, laws and structure are built in such a fashion that the rich get richer and poor become poorer. How the recent economic crisis has deepened this divide. Joseph Stiglitz with few stories brought the above points into consideration. The discussion with his colleagues from Cornell and London School of Economics did stimulate a few grey cells and roused emotions.
In US the bankruptcy laws are lenient on banks and corporate while  they will  not budge in case of educational loans. The political system is also responsible for fostering this inequality. As the rich and super rich donate the election campaigns, the subsequent government form laws and structures more lucrative to their well being.
Ravi Kanbur highlighted with series of case studies the role of government in Taiwan, China, Ghana in addressing the issue of inequality. Land reforms formed a starting point in Taiwan for equitable growth. The same holds true in case of South Korea. In Ghana the divide between north and south is stark because of geographical vagary. The south grows products which can be exported and this raised the inequality after the exports boomed. So the parameters measured may show that Ghana has grown and inequality is decreasing but the divide between North and South has grown larger. This is actively being addressed by the government of Ghana.
In China the first 15 years of growth saw reduction of inequality because of agricultural growth. As the country relied more on export oriented growth the inequality started widening. The difference between coastal and heartland china is something which Chinese government is trying to rectify by increasing investments in mainland china.
Between inflation and unemployment governments normally tend to address inflation. This according to the panelists helps the larger organizations and raises inequality.
 They also mentioned that GDP may not be the right metric to measure economic progress.

The lecture and discussion was interesting with few anecdotes thrown in by Robert Wade but all panelists agreed in their views and belonged to the same school of thought. It would have been interesting and illuminating to have the opposite view with serious debate. Hope Azim Premji University will address this point. The question and answer session had its own Indian flavor. More of it in next post.