(3/4) 1st WID conference: Discussion with Esther Duflo and Branko Milanovic

We will be very fortunate to hear the comments of two experts in the study of poverty inequality, so Esther Duflo of MIT and then Branko Milanovic of the City University of New York and then Gabriele Zucman, so they will address each dog and then we'll sit here and take questions from the audience about the report in general, what we heard in the first session and what the

discussion

s say, so we'll start with Esther Duflo, so I'll make a very brief introduction, I'm sure . you all know about her, she is a world famous development economist at MIT, one of the most decorated young economists, so she has worked a lot in developing countries and her specialty is really looking at things from the field at a level very micro.

I mean, she's been doing a lot of randomized experiments around the world to see what kind of policies or interventions can help address poverty in developing countries, so it will be very interesting to hear her perspective, the contrast with our approach. really about aggregating data from all countries to get statistics on poverty, she'll tell us how she knows we can shift that poverty curve globally, maybe you know she's starting from scratch with all the experiments she's been studying throughout the years. years so Esther please come and speak here on the podium thank you very much I will speak very briefly to try to highlight three points so first of all congratulations to the entire team and this is a beautiful beautiful day beautiful report that was not that was point zero , those are my three points, thank you very much and I explain it, so let's go to a couple of requests and thirdly, what I take, you know, if I had a substantial conclusion from this whole body of work, take it to maybe a broader level. context of my own work, as I was told to do as a commenter, first thank you and it's a phenomenal amount of work to produce all this result.

It is also phenomenally useful both for doing the work and then presenting it in this way, it is readable, accessible and transparent. It aims to change the public debate on these issues and I think it has already achieved that. It will do even more. It's a phenomenal amount of work I'm sure. most people in this room know this, but perhaps it's worth emphasizing that people in the media need to do what they know to try to bring not only the key, but also the number of decisions that need to be made and the data. He said you have to find it and you know, if you just read the executive summary, there's some sentence about the methodology that allows you to solve this problem, the methodology is really so small, I mean, it's important, but it's such a small part of everything. compared to drilling down into the entire data set and searching for each of the data, that's the first part, in a sense, you know, it's similar to the effort we never made similar in spirit to the effort we never recognized in our own work when suddenly we start using GDP, they are trying to expand the notion of GDP to the international account to include and include distribution, but that is very much the same approach that we must make the decisions that must be made to arrive at a In short, this isn't always pretty, so that's the other way I would say, thank you personally, I couldn't do it, I feel uncomfortable every time I have to make an assumption that I can't personally discuss, and of course you can not. making this exact size without you knowing, dealing with data that isn't perfect, and making assumptions that are somewhat heroic here and there and that someone is willing to do this and is willing to apply as much common sense as possible in doing so. a big help to the rest of us, the people who wouldn't even come close to this, so that's another reason why I thank you and that brings me to my second point of requests.

I have two requests, one is that of course. That starts with a recognition that it's wonderful that data is a variable that people can play with and that they can change some of the assumptions. I think there should be. It would be great if there was a sense of uncertainty or There's something like that around some of these numbers because what we have in the final report is a set of numbers, they are the number, of course, it's clear and it's clear that it's based on a series of options in a series. of extrapolation, for example, that needs to be done, there is absolutely no lack of transparency about that and, again, people can play with that, but I think it would be nice if there was some sense that people could even include someone who also be.

It's lazy to go into the database to get a sense of where we know very well what's being said, so if in the US we're talking about the fraction of income that goes to the top 1% right now, it's very known, but if we talk about Africa, where there may not even be a survey, then we know a little less and So in some ways, I don't even know what it would be, but some way of conveying how much certainty there is would be wonderful. The second request and this is where it comes. The closest thing to my own work is having. add as an Israeli something to add to the wonderful body of some artistic history, you have to add something about poverty because right now we have a lot of over fifty percent, the poorest people do well with the mice in my books in my line commercial. someone who is at the 50th percentile of global distribution is practically in India, someone who is at the 50th percentile of global distribution and the factories in India would of course be near the top of the distribution in India, So it turns out that providing data on poverty is, in a sense, easier than doing it on inequality because many of the problems we have in survey data in developing countries where when I talk about poverty I'm already talking about people of extreme poverty who live on less than a dollar a day, 2 dollars a day. day $5 per day, etc., that is something that is much easier to survey.

It turns out that the rich are people, so I think something is actually known and exists, of course, to some extent in some data set. It would be a good combination, as is clear from my understanding of what has happened to poverty since 1990 is very similar to what they say, what the report tells us, what happened to the poorest 50%, so no I think there is nothing substantially misleading in the data that exists now, but in practice it is. could be quite different when in practice we have seen in the report that the bottom 50% are doing quite well in relative terms and similarly we also know that the number of people living on less than $2 a day has been about half since then. 1990, so concretely the conclusion is the same, but it shouldn't be that way because it could be, for example, that in India all the growth occurs for the people you know, even if you were in the 50th percentile of the distribution from India.

From then on, perhaps nothing would have happened to the birds, so I think it would be appropriate for some of you to focus on poverty. It would be a nice test and another thing to add, of course, it's another set of data to analyze, but that would be a wonderful complement now I want to finish by saying what other substantive conclusion I drew from the report, you know, taking a step back and saying what are the substantive conclusions that I drew from the report and that is another thank you because in a certain sense it is a kind of justification of what A large part of my project has been since I have been an economist.

I work as a manual that has cells on the evaluation of the design of Social Policy and the evaluation of Social Policy in particular towards the very, very poor, mainly in poor countries, and it is something that I have to defend. In much of my work there has been an almost knee-jerk reaction: "It's very nice what you're doing, but these are the small things, the only thing that really matters to do something against poverty is economic growth. Look at India, look to China". get rid of power, you know this is where ownership disappeared because they leave, so you always say, well, in a sense, if we were sure that that's the only thing that mattered and if we knew how to influence the objectives, then yes I would.

It makes sense to work on a youth cause for poverty, but both things are not potentially debatable. As for the second point, if we knew what to do with gold, I think microeconomics professionals would also conclude that this is not the case. nice and this gives me a mission in the first one, which are these things, you know, it seems that we are self-sufficient, but there is absolutely nothing automatic between the economic objectives of an economy and what happens in the country and, of course, this should be maintained. right, but I think this shows it, this data shows it very clearly in two countries, so here we have tequila China and India, their chemicals are good, clearly you know that you need some economic goals to improve the food situation , but it is insufficient. because nothing says that because the part of the course that goes to the poor will be enough to make them less poor now it turns out that you really don't need that much because since the poor are very poor we need just a little economic objectives to get many people out of the poverty because it doesn't take many dollars for someone to go from two dollars a day to ten cents a day, so that's part of it, you know?

Even if we see that in China and India, as the targets have emerged, inequality has increased even with that, there is still a little bit left, but it wasn't necessarily the case, it could have been that the ghosts would have been captured completely. by the rich and we know this is what happened in the US, for example, so it could have been the same in China and India. There is nothing automatic about ghosts leading to improvements for the poor, it is argued that it is related to distribution, how it is distributed and Of course, then we think well, but then you can discuss growth and fiscal policy and they have already fact, but what they report, even in the short version, clearly recognizes that when we think about distribution and, in particular, distribution to take out the poor and It's not just about taking money from the rich, we will have to figure out what's the right way to distribute it so that the poor, you know, get on the bandwagon of some of them, so I've always maintained that there are If we're very interested in poverty, which is what I work on, The only thing we can do for Donna Singh, we can be sure is to try to improve the situation for the people here from time to time, with a little luck, that will put them in a position to jump and jump on the coast train when it arrives that train and the report talks about education, for example, as something that is a sun and maybe like in the US, which is one of the reasons why people don't have we haven't jumped on the bandwagon of developing countries want to think about education we want to think about health we want to think that although the various things that seem to be emphasized will make it necessary, it will be necessary for the poor to be able to grasp some of the good now, the question of distribution is, of course , essential because if the poor old techies, if the rich take all the money there is, that seems quite plausible, could happen, then there would be nothing to distribute, except once, if they don't do it.

Not taking all the money that is created, then the question of how it is effectively distributed to the poor and, in particular, whether there are ways of distributing that put them in a position to take advantage of the course even when it arrives, seems essential. Of course, it is good to have questions to solve in rich countries and it is definitely not enough. We could go into detail on the issue of China and India and how they have had specific central hub policies as an end to social policies. or less effective in both countries, which probably played a role in keeping the poor enjoying the benefit of growth even when market inequality was exploding in both countries, but the last point is that and this is again another good Javanese economy , the other thing that I guess was in the back of my mind, but it became very clear from reading these articles, so right now, for example, there's this whole debate about whether tax reform in the US will increase growth economic and that's why most economists think it won't and then some crazy people think it will, but it's like it's beside the point, even if it does, the first order effect is that it will increase inequality, the fact That it has a second-order effect, of course, we don't care one way or the other.

Even, in fact, it's possible that you could argue that from a social point of view and from a political point of view, when you live like I do, it's something that's very, very salient right now, the direction that it's taken. happened in the last decades has been bad, you don't even know that you would be better off for no reason because, on the one hand, none of these girls reached the vast majority of people and, on the other hand, it creates so much meaning for the vast majority of people who do not benefit from the objectives thatexisted, there were a lot of losers because the way the economy is going, how come they are not doing well and it creates this?

You know, very large inequalities, what are they? It has been one of the reasons to create social resentment, so people see that all of these see the benefit, none of that is that I think they are losers or they think that someone else must be stealing from them, which could be the Chinese. The Hispanics, the blacks, you know, they choose what they want and that reinforces me in a certain way on the point that working on the issue of growth per se is not a very fruitful exercise, thank you very much, thank you. Thank you very much Esther for these commands, so next we will hear from Branko Milanovic.

Branko Milanovic is currently at the City University of New York and is a veteran of inequality studies and, in fact, is a pioneer in the study of global income distribution. As you know, he was one of the first to bring together survey data from several countries to construct what is effectively a global income distribution. In a recent study, in fact, with Chris Lackner he built the first elephant curve of what growth looks like at each percentile and as you go. As you can see from the report we presented this morning, their pioneering work has really inspired us to build on their contribution and try to improve the data, especially with our experience in capturing the top of the income distribution, so we hope listen to the reaction. from bronco 2:12 our report good, thank you very much, many thanks to Manuel for the very pleasant presentation of the veteran dish.

It's over, of course, it's a pleasure to be here. In fact, I want to say that I am very happy in my tweets. In fact, I mentioned it. This is a bit like the World Cup of Inequality Studies, so I guess in two years we will have other regional competitions, even to come to Paris and, in fact, I think this is important because of the enormous work that we are actually doing. I have also heard from the presentations that you know this morning and Esther also mentioned it, so it is a normal work, but I would like to emphasize that I think it has two objectives, in my opinion, coming to object with one is an incredible work on inequality and knowledge of global inequality. much better, but the other part is actually breaking into the mainstream economy where unfortunately inequality is not yet dominant, even after ten years of the crisis, it is still not fully integrated and secondly, it is also diversifying towards the popular interest, which is very great but, of course, it is also It needs better or more accurate data, so in that sense I think it is, of course, a great contribution.

It gathers physical data, physical data in particular that is good at the top. I won't repeat all the things we know, but also use. Obviously there is a place to study national accounts data and of course there is another kind of advancement which is using distributive national accounts to basically bring together the national accounts that were essentially driven by GDP, but also to look at how those national accounts are distributed. account takes place another part that is important, I think of course Gabrielle will talk about that is the inclusion of evasion because it is a very important part, you know, we study, you know, inequality using surveys, we study using their administrative data Obviously, physical data, but there is one. part that is never covered anywhere, by definition is not covered in surveys, by definition is covered or covers the tax account in physical data because people do not report, I mean, by definition, they have to move that money when it was not subject to tax. and it's probably gaining importance and I think that's an important point because they believe that globalization has made a movement of capital of that nature much easier and the top 1% take advantage of the fact that the report also highlights the importance of China so far, which It is not a novelty, of course, we know that, whether in poverty or in global inequality, China has really played a key role, but it also emphasizes that, towards the end, that role has really come to an end, in other words.

Yes, China was a great equalizer, but as China becomes richer and richer, that great equalizer role can no longer be played. China will become played by India and perhaps in the future without Africa, which of course is the question mark because we don't know. If Africa will converge the way Asia has over the last 50 years and then highlight the importance of India and the huge inequality in India, I would really like to highlight that point because it is something that the report does and that actually is not very well recognized or known because the Indian data that the survey data used to contain was very venerable national data from 1952 and shows a much lower level of inequality than the income data and a much lower level of inequality than the data fiscal, so it's something really very important and then finally highlights the importance of reducing what you can call the marginal gains of the national top 1%, where, I mean, it's in the projections, as Luka actually talked about before that the assumption is that the rich continue to take the same proportion of the total income and that's really, basically, it's kind of a new approach of looking at the projections assuming that the marginal gain of the rich remains the same, so I think now we're Of course, in a very special period of time.

I would like to emphasize that because we already know this. As is implicit and sometimes explicit in the report, we have decreasing or constant global inequality and, in most cases, increasing national inequalities, so that's the first one, then we have the global middle class traders and we have a middle class in decline in practically all rich countries, not only the US and the United Kingdom, we have it in Finland, we have it in Sweden, we have it in Germany, something paradoxical, from the point of view of twenty years ago, we have a much greater acceptance of globalization in the south than currently in the north.

Let's see that from the Pew Research Fund questions we have the rise of Asia, which is quite well known as a myth, and in reality the continued decline of Africa, which is somewhat less known because Africa tends not to take up too much space, but with the increase in population in Africa, this particular effect will increase. they become more and more important and now we share which is an interesting phenomenon. I called this articulation in the West that in the past we used to believe that it occurs only in poor countries within the elite that is integrated into the global world and within. or some people who are actually not very happy about it and who don't really find their place there and of course there is a Lost Decade in the West.

In fact, the term was used in the report, but because the distribution is being uneven and heterogeneous, The Lost Decade was obviously not a lost decade for everyone, for some people it was actually a pretty good decade and for many others it was not. it was now. I did a simple summary of what I actually already presented today, so I'm not going to go over that, but you guys. I can read the numbers, but it's really amazing how the world has changed in two generations, so if you look at these countries, France, I took France intentionally because it doesn't show much change, but everywhere else you see the ratio of the top one percent really increases by leaps and bounds, it's like you know double digit numbers, so if we look at the world today and the world that was in the late '70s or early '80s, these are actually two different worlds, the interesting part.

However, this world of the late 70s and early 80s was also the world where inequality between countries was probably at its peak, so the world structurally today is very different from what they did. I also looked at the data that Christophe Lochner and I did. with house call service and with top income adjustments so we adjust the top income because you all know that the arousal service doesn't really cover the top 1% or maybe they have the top 3% very well and this is the blue . line and this is actually the Gini coefficient obtained from the causal service with top fit, then I took the red line that actually comes from the report, which is the top 1%, as you can see, they don't actually do it on the vertical axis .

On the left you have the Gini and on the right you have the top 1%, so you will see that in reality the movements are not very different, you know that they both reach a peak, they actually require survey data, they reach the peak already in the peak of Inequality already at the beginning of 2003 and 2004 here the peak occurred in 2008, right at the time of the crisis, and the intensity of the increase of the top 1% is greater because obviously the Gini is a very slow measure. The gene is not going to show it to you. There's a lot of sharpness when it comes to the decline, as you can see it's actually pretty similar from 2007 to 2008 to today, so this is the same story.

In summary, the decline from the peak in our case with the hospital service is 8 percentage points with the top 1% decline is 1.7 percentage points and then with exchange rates it's actually interesting as well. I like that the report presents exchange rates not just PP beans, obviously these stocks are rising in terms of shares. increases two percentage points in terms of genius, we're talking about a 10 to 12 percent increase in genius points, so it's actually quite dramatic when you think that actually the genius in the world who uses an even probably underestimates it to the highest income and um more underestimate it because of the ability to include evaded money or you know some kind of tax came in money is something around 80, so it's an incredibly high genius that actually prides itself that no country has, you know , not even South Africa.

And one thing that we have a certain change, although this is a rough calculation, is that the average income in the world that we get from the cloud service is fifteen to seventeen dollars a day. In fact, I took a number that the report presents. per adult, so I'm not sure I got the right number between the number of adults and the number of people in the world. I looked at Wikipedia, it has a little bit of that, so I found something that is 25. dollars a day, so I think there is a sign: if these numbers, if my calculations are true, then there is a slightly higher median income, significantly more higher in the database than we represent them today.

Finally, when I talk about Africa, there is one thing I really want to point out. What can be observed is an interesting phenomenon and the world is becoming richer as the mean increases, the median also increases, especially when there are large countries like China and India moving towards income distribution, but the irony of This is that if we do not go at that speed and you are behind these countries that are large and are improving, then in reality the distance from the median becomes greater and that is why you could have another development that is somewhat contradictory in terms of percentage. of people. those who are in poverty, where poverty is defined in relative terms, it's like half the global media is going up and these are the people who are left out, not necessarily because they're getting poorer, because they're not. richer, but not at the rate at which the world's median and average are rising and of course especially not at the rate at which the top 1% are rising and my last slide is the kind of lessons I learned from the report The first is that the China effect, as I said before, is about to end, so we can no longer depend on China to reduce global poverty and stop the increase in global poverty, so that effect is declining.

You know, I used to tell my friends. students that actually now the world has two great sumo wrestlers fighting against global inequality, one is China, the other is India and in fact, that sumo wrestler because we became rich abandoned sumo wrestling and now we really can't Now that it is India, which is really about to assume or should assume the role of China, the second, whose dimension is also African, the divergence becomes the force of growing inequality, which is a problem unless that Africa becomes the Asia of the 21st century and that is a problem for global poverty. a global problem, a global inequality problem and obviously it is a migration problem, so as I said before, Africa, due to its growing population, will come to play a much larger role in the next World Cups that we have here, maybe in ten years. more or less and my last point is that of course the lesson or the threat to global inequality is that if rich countries continue to take the same proportion of additional income, if the region regrets it, it continued to take the same proportion of income additional than they Over the last two decades, we find ourselves in this business as usual scenario, which is actually an extremely divergent force and a force for growing global inequality and I say, as I said before, I think it's actually aapproach very similar to this type of study.

So in Tobias Lee's project, no one knows what will happen in the future, but it's a good approach to look at the marginalized and say, "Okay, things are business as usual," basically, we're just saying that the rich will take the lead. same share as in the next twenty years. taken in the last twenty years, so in my opinion these would be the biggest threats to global inequality and I think that, actually, these are the questions that should make us all think about how to avoid them in the future, so thank you very much again and congratulations to the authors you you