Vishal Gulati

Four steps to fixing inequality

April 1, 2014

Income inequality is something that seems to bother some people (most of these people tend to not be in the top 1% of earners, who have done rather well over the last few years).

Turns out that income inequality is a common symptom of many underlying conditions. These can be massively unequal pay which is not adjusted by tax collection to the extent that would make net income distributions fairer (as in the USA or the UK). In contrast they are more evenly distributed at the point where they are set. For example, in Japan, incomes of top earners and bottom earners is closer so the tax system doesn’t have to do the hard work of making the world ‘fairer’.  The former can be addressed but you need strong social contract and political will (example Finland, where your taxes are more closely linked to how much you earn).  Rather amusingly, almost uniquely, in Finland, quantum of speeding fines are linked to how much you earn. Famously, a Nokia executive riding his motorbike at 45 kmph in a 30 kmph zone was fined € 103,000.

Then there are other issues of the underlying issues of rules and policies which can create massive inequality without appearing to be odd. For example, how copyright law can make JK Rowling very wealthy by collecting pennies from each Harry Potter book sale and cinema ticket creating a massive wealth concentrator.

My favourite point of this article, of course, is the last one which I also tweeted  🙂


Source: Tim Harford — Article — Four steps to fixing inequality

Vishal Gulati on Twitter

A final, fifth piece of counsel: don’t for a moment think this is a problem that can be solved in four easy steps.” http://t.co/dtBHS4lD3N