Inequality

The Economist writes:

VOTERS’ anger over inequality is one explanation for the rise of politicians as varied as Donald Trump, Bernie Sanders and Marine Le Pen. Tough choices, the 'Economist', 26 March

Very true, and our governments don't seem very highly motivated to do anything about it. Many might not consider reducing inequality to be a goal worth targeting in itself. But, if we did move in the direction of targeting meaningful outcomes, that would be for society as a whole to decide. 

 

But Social Policy Bonds could reduce inequality in a less obvious, less direct way. A bond regime would be a means whereby private gain would be strongly, visibly and inextricably correlated with public benefit. Some bondholders, whether institutions or individuals, would start out rich and, if their bonds rose in value, would become richer. But working successfully to achieve desired social goals would most probably be seen as a laudable way of acquiring wealth. There are intangible benefits from having people or institutions grow rich in this way. There are many disaffected people who view with suspicion or alarm the very high incomes or profits of corporations engaged in activities of little obvious net social or environmental benefit. They are also unconvinced that ‘trickle-down’ occurs to any meaningful degree. Wealth, in these people’s eyes, must inevitably result from exploitation, either of other people or the commons. Social Policy Bonds could shift this worldview and, by helping people take a more positive view of the act of earning an income and accumulating wealth, could make for a more cohesive society. A socially acceptable way of becoming wealthy would also make it more politically feasible to tax less socially desirable ways more heavily – not necessarily an end in itself, but a means of raising more tax revenue for redistribution or increasing the number and quality of public goods and services.

Meantime the OECD is reporting that:

Income inequality in OECD countries is at its highest level for the past half century. The average income of the richest 10% of the population is about nine times that of the poorest 10% across the OECD, up from seven times 25 years ago.