Global Inequality: Measurement, Analysis and Political Implications (Series of lectures in a course)
Credits: 4 ECTS
The course is divided into three parts.
1. Methodological introduction. (it sounds boring but without it nothing else is comprehensible) The first part is introductory. It discusses the methodology used in the work on inequality and the data sources. What are our key metrics of welfare and thus of inequality? How do we define income or consumption? Should differences in income between individuals be measured in absolute or relative terms? Should we look at income before transfers and taxes or after? Do we look at households or individuals or both? How are top incomes treated in household surveys and fiscal data? Do we include the poorest people? Where do we find the data from which to calculate income or consumption inequality? Is wealth different from income and consumption, and how?
2. Inequality between all people in the world. In the second part, we study global inequality. This is an empirical area of a relatively recent vintage for two reasons: the data to study global inequality were not available until about 20 years ago, and it takes a certain “cosmopolitan” or “globalist” outlook to begin thinking about inequality among all human beings rather than within one country. In this part, we shall address three issues: (1) how is global inequality calculated and what are the methodological challenges faced in such a huge exercise, (2) what are the empirical results, and (3) what can political philosophy tell us about the relevance and importance of global inequality. We shall cover in part national inequalities (e.g. what happened in the US or China) to the extent that they influence global inequality.
This (core) part of the class moves from methodological issues (how do we find prices at which to compare incomes in India and the US?), to empirical (how high is global inequality and is it going up or down?) to philosophical (is it right for people born in rich countries to have higher lifetime incomes and not allow migration?).
3. What next? At the very end of the class, we shall try to address the difficult issue of “what next.” It seems clear today that (i) the rigid neoclassical approach has failed, and that (ii) there is broad dissatisfaction with the existing high inequality. But what can be done? What policies, at national and global level, can be used to effect change? Will tax on financial transactions help? Or global tax on capital? Can individual countries do it alone by, for example, raising top income tax rates? Why the public accepted marginal tax rates of 90% only three decades ago and cannot imagine them today? Will inequality between countries make migration pressure greater and migration politically less sustainable? Can a growing global “middle” class coexist with the dwindling (hollowed out) middle classes in rich countries? What does higher inequality imply for political democracy? Finally, and perhaps most importantly, will greater income inequality “spill into” greater wealth inequality and inequality of opportunity?
Here, we enter into an area for which there are relatively few new contributions, and where we are unlikely to provide strong answers. Several recent books, blogs and articles try to move our thinking forward. We shall discuss some of them in class.
Each student will make one half-hour presentation in class (that includes about 20 minutes for presentation and 10 minutes for Q&A). The topic will have to be on inequality, but the choices may include relationship between inequality and some other phenomena, analysis or description of changes of inequality in a given country or region, critical review of several inequality papers or books etc.
The final exam will be in class and will consist of two or three essay questions. The grading weights will be as follow: class participation 30%, presentation 30%, final exam 40%.