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(4/4) 1st WID conference: Discussion with F. Alvaredo, L. Chancel, E. Saez, T. Piketty, G. Zucman

(4/4) 1st WID conference: Discussion with F. Alvaredo, L. Chancel, E. Saez, T. Piketty, G. Zucman
we're going to hear from gabriel

zucman

at the University of California Berkeley telling us about globalization and tax justice so Gabriel tsukemen is part of the coordinators of the of the report and his work has really been about putting on the map the issue of globalization and how the rich really can take advantage of globalization to escape taxation and capture therefore you know an unfair share of the gains from globalization so we look forward to hearing his remarks well thank you
4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman
very much for being here so we've talked a lot about data and trends in global inequality this morning I'd like to talk about policy how can we make globalization and tax justice compatible I think it's one of the most pressing policy questions of our time it's becoming clear by the day that globalization makes her distribution harder it makes it harder to tax multinational corporations in 2015 for instance Google alphabet which is one of the biggest corporations on the planet
made fifteen point five billion dollars in profits in Bermuda where the corporate tax rate is a relatively modest zero percent so that's one problem and you have growing profit shifting to zero tax countries like Bermuda you have a race to the bottom in corporate taxes with big declines in statutory corporate tax rate so the u.s. going very likely to move from 35% to something like 21% a friend is going to move from 33% to something like 25% in the years ahead globalization has also made it
simpler for wealthy individuals to move assets across countries in which in ways that makes it easier for them to avoid taxes and in some instances to evade taxes and all of this contributes to the rise of pre-tax and transfer income inequality with wealthy pay less taxes they have more incentives to hire higher incomes or to bar gain higher incomes it also contributes very mechanically to the rise in post tax and transfer inequality just because the wealthy pay less taxes and in many ways the
policy reaction so far has been quite disappointing it's been mostly something like let's all become tax havens you know if it's becoming harder to tax multinational corporations then let's just stop trying to tax multinational corporations properly if it's getting harder to tax wealthy individuals then let's get rid of wealth taxes for instance or let's cut estate taxes on let's get top marginal income tax rates and so the question at this stage I think is the
following do we really think that globalization has a future if it means ever lower taxes for the wealthy and higher taxes for the rest of us because of course connecting more taxes and the rich is not a goal in itself it's good because it makes it possible for the rest of us to pay less in taxes and so I think you know if you want to think about this issue I think the answer is we can do a better everything that it's possible to reconcile globalization with progressive taxation and and
limiting the rise of inequality but to do to do this we need two things we need a good understanding of the of the issues which are relatively novel in some you know case is not properly understood and we need innovative policies so what are the issues so issue number one is rising profit shifting to to offshore tax haven so here's a graph that shows the fraction of all there are foreign profits that US multinationals book in tax havens and so in the 1980s used to be something like 15 20
percent of all the front-- profit of us firms that were made in tax havens and you know since then it's been rising year after year and the latest data point for 2016 shows that 63% over the frame profits of US multinationals now are made in Singapore in Bermuda Luxembourg Ireland and so on where they're taxed at a rate of you know typically in between zero and five percent and so if this continues you know in the 2020 it will be something like you know 75 80 percent and eventually 100
percent to have all the profits of the foreign profits made outside of the US by US multinationals that we basically avoid taxation the second issue is that very much taking that into account governments have been cutting the tax rate that they apply to corporate profits so here's a graph that shows the evolution of the world average corporate tax rate so in the 1980s used to be knowing between 40 and 50 percent around 45 percent it has declined since then and nowadays it's a bit higher
than 20 percent and with the US tax reform and the French tax reform and other tax reforms in other countries it is likely to be maybe below 20 percent in the next decade and so we've radically changed the way that we attempt to tax corporate profits at the very same time as indeed globalization was progressing so on the on the right X's you have the fraction of global corporate profits which I call multinational profits which correspond to profits made by firms outside of the country
where their headquarter and that is reaching about close to 20 percent today now if you look next at the evolution of individual income taxation he's a well-known graph which is in the report and the evolution of the top marginal income tax rate in a bunch of countries including the US UK Germany France and Japan and there's been as is well known a big decline in top marginal income tax rates from as much as 90 percent in anglo-saxon economies in the was World War two decades - pretty
much everywhere something around a 40% in the latest version of the tax planet that's no discuss by Congress in the US this would be reduced to 37% and to even less forms of income that typically accrue to top 1% individual so 2009 30% for them okay so now if you combine everything so you have this decline in corporate taxation both because of rising tax avoidance and because of a decline in statutory tax rates you have a decline in top marginal income tax rates if you combine everything and
you ask what's the fraction of their pre-tax income that rich people pay in taxes so here's the figure for the US which is based on our distributional national accounts for the US so that's that takes into account all taxes at all levels of government federal state and local in the US that make some assumptions about who bears the burden of corporate taxes for instance and you know these are relatively standard assumptions were the owners of capital pay the perk of the corporate
income tax and you have this striking figure where basically the average effective tax rate of top 0.1% income earners is returning to its level of the 1920s so - something like 30% so now you have to realize that in the 1920s the size of the government was very different the US government was about 10% of national income it took ten percent of national income in taxes and who distributed ten percent of national income in transfers and government spending nowadays it's three times larger
it's 30 percent in taxes and 30% in transfers and yet we are returning to a world where the at the very top of the income distribution the tax rate is going to be very much the same so here I'm making simple projections for 2020 based on you know the tax bill as currently discussed in Congress and indeed you would return to something like 30% in average taxes at the top of the distribution and so the decline started actually a bit earlier than 1980s starting in the 60s with the first
Kennedy tax reform in 70s that was an Inc you know and then it in you know the decline accelerated very quickly 1980s there was some rebound in 1990s and since then this tax rate at the top of the distribution has continued to decline so that's important because many people who see this graph and marginal tax rates sometimes the reaction is nobody you know really paid these high taxes at the top of the income distribution and nobody you know few corporations actually paid a lot of corporate
taxes there was a lot of tax avoidance that doesn't seem to be the case there was Dino's you know several decades after World War two where you had indeed more than 50% average tax rates for were very wealthy individuals and the flipside of that you know as tax rates declined at the top of the distribution what we observe is that taxes have actually increased at the bottom of the distribution so we've talked a lot about the dynamic of the bottom 50% income share and II was at the
world level it's very striking to see that in a country like the US as its share of total pre-tax income fell from about 20% of total income in the 1970s to about 20% today then the actual tax rate increased from about 15% of increments in 60s to about 25% of income today so working-class individuals who see their income stagnate their share of income fall pay more and more in taxes because in particular of the rise of payroll taxes that has played a bigger role it's far from being the
only reason but it's one of the key drivers of the rise of income inequality in a country like the United States so here's a graph that shows that gives a comprehensive view of how the distribution of income has evolved in in the United States since 1980 and I focused a lot on the u.s. in this presentation because you know it the country that in many ways has done the most radical policy experiment in terms of changing changing its its taxes in terms of changes to binding power for labor
versus capital changes to access to higher education and so on and so on so what has happened is for at the level of the of the country as a whole aggregate growth has been has been quite mediocre actually since 1980 you look at growth for the average adult and an average income has grown only 1.4 percent a year since 1980s there's absolutely no evidence that indeed no lower taxes at the top or lower taxes for corporations increased macroeconomic growth one point four percent is a pretty bad
perspective in international in a pretty bad performance in international perspective that's result number one but second was even more striking than that is that for the vast vast majority of the population there are nowhere near the macroeconomic average of 1.4 percent which really shows how you know in many ways useless it is to only talk about growth for all the percentiles below the 88th percentile so for 88% of the population macroeconomic growth has been less than less than 1.5 per
year and even in some cases you know in many cases close to zero or even negative at the bottom of the distribution for income before taxes and transfers well you see also that many people have a view that ok since 1980s the economy and globalization has been good for let's say the top quintile of the income distribution the top 20% that's not really what this graph shows even for the groups around the 90th percentile I know people who have actively went off even for them the income
growth rate has been quite modest it's really you know in the top one percent and within the top one percent that all the action is taking place and that shows how crucial it is to indeed look at tax data which are the only data that that make it possible to say something about the dynamics of income for the top point one percent of 0.01 percent for the very very top group we consider the top point or 1% if being rain like China you know it's six six point five percent per year on
average since 1918 so a synthetic view of this if you just compute the share of income that goes to the top one percent versus the shelf income that goes to the bottom fifty percent of earners in the u.s. then both groups have basically switched their income share so the top one percent used to have about twelve percent of the total income in the US now they have about twenty percent of total income so the average income is twenty times the average income in the US the bottom 50 percent and the
4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman
other hand used to have about twenty percent of income in the 1960s and nowadays has a bit more than ten around twelve percent of total income so this matters because if all countries as as we saw this morning is if all countries follow this inequality trajectory this very high inequity trajectory of the US then global income inequality is bound to increase enormously by 2050 pretty much irrespective of what happens to average income growth in each country so that's what you see here on this
graph that look at talked about this morning in this scenario number two notice high inequality scenario all countries follow the u.s. inequality trajectory and then the top one percent income share would increase from about 20% of global income today to almost 30% so in between 25 and 30 percent of global income despite you know higher growth in developing countries than in the developed world and the bottom 50% income share would actually collapse to a barely more than five percent so how do
we prevent this from happening so I'd like to talk about one very concrete and very specific though important tax reform that would do a lot and tomorrow in our session on the Global Wealth registry with Debbie no gearhead we will talk about other policies and pathway of the Global Wealth registry and how to better tax wealth individuals by creating more information but just to finish the Dell I'd like to talk about how can we make corporate taxation work in a globalised well is it no
should we just give up is it just impossible or is there actually a path forward and the nice thing is that now many you know issue policy issues that are you know generally complicated and well there's no clear no solution here there is actually a very clear simple and impractical solution which is just to change the way that we compute corporate profits so we could say for instance if a company like Apple makes fifty billion dollars of profits at the global level and ten percent of its
global sales are in France then friends could say okay we are going to consider that 10 percent of Apple's corporate profits have been made in France that's going to be the tax base and we're going to apply whatever rate we want to apply to to this tax base and that is known as an apportionment of global profits using a formula your very simple formula which is based on where you make your sales and what is particularly nice with this is this is already what most US states do you
know most US states have their own corporate tax like California and New York New Jersey that's how they compute the amount of profits that are taxable in California or in New York and New Jersey it works very well what's particularly nice is that it would completely put an end to the artificial shifting of profits by multinational firms because right now you can send your profits to Bermuda but you can't send your customers to Bermuda the customers they are you know here in France
they are in California they are in developing countries and so that would you know put an end to profit shifting and tax avoidance and a third thing which is underappreciated is that this can be done unilaterally so very fern when when you talk about changing the way we tax mineral corporations are cracking down on tax evasion people say well you need you know global agreement this will never happen because countries like Ireland or Luxembourg will always you know block and and refuse to make
any progress but here that's not the case France for instance tomorrow could say that's going to be the way that we compute the amount of profits that are taxable in France and we don't need you know the agreement from Luxembourg or iron we just ask any company that you know makes sales in France has access to the French market to tell us about their global profits and what fraction of the global sales they make in France and so of course you know global agreements and multilateral
cooperation is always better but in that case I think maybe now has come the time has come to actually move unilaterally we can try to convince Ireland and Luxembourg in the last two or three decades but my feeling is that there is an urgency to actually improve things if we want to prevent a global inequality to rise considerably in the next decades thank you very much thank you thank you very much Gabrielle so before we take questions and so the speakers are going to seek here and they are
going to answer questions let me just make two remarks after these presentations by Esther Bronco and Gabrielle so the first one is about a poverty that Esther specifically mentioned so the World Bank measures poverty as basically two dollars a day so it's it's a threshold fixed in real terms and you just count the number of people that fall be below that threshold worldwide so it's obvious that with economic growth if it benefits the poor at least a little bit that number is going
to fall over time and that's what has happened you know with the economic development in China my view and perhaps the view you know of the coordinators is that such a measure is really not very meaningful so what they tried to have is that very low threshold is a subsistence level the level under which basically you wouldn't be able to survive economically but so if subsistence is what interests you I think you know look at something like life expectancy is going to have a much sharper
measure of whether humans are able to survive in in these societies so I think the absolute level of poverty measured in dollar terms doesn't make a lot of sense and indeed you know within a country where there is significant economic development countries switch to measures linked to the median income that's how Europe does it so you get back to measures of inequality that is how do the poor a fraction of the population does relative to a median or an average for the things we are
trying to do the second thing I want to mention is about government so that has appeared a little bit particularly in Gabrielle stock but perhaps it hasn't been emphasized enough so one of the striking development of the 20th century in advanced economies has been the growth of the size of the government that is now in advanced economies government take between thirty to fifty percent of national income in taxes so it's 30 percent in the United States about 50 percent in France and they
use this income to fund a number of transfer programs education investment retirement health etc so the fact that our societies have decided to share such a large fraction of the economic output we produce tells you right there that human societies humans care a lot about inequalities if the view was really literally individualistic you know I work and I earn and I deserve what I earn people wouldn't tolerate such large government so I think that's you know the best illustration for why
we care about inequality and why you also want to measure inequality bus on a pre-tax basis that is most of the report is based on pre-tax numbers but we've also computed post-sex numbers to see what happens to inequality once you factor in all the taxes and then other transfers that the government the government does let's start over here thank you so we introduce ourselves yes introduce yourself if you want Edward Wolff New York University so first of all let me applaud the effort this
fantastic project underway so I know it's a technical question or maybe it's more of a broader issue but the inequality measures are based on per adult and I'm always uncomfortable with using adults or even adults as the unit of measurement certainly you know equivalent income would be a more a broader measure to use when you're comparing when you're looking at inequality and movements over time because you know countries differ in the the ratio of adults to total population
so you know Africa for example I'm as a much lower ratio of adults to population and Western Europe particularly Northern Europe has a much higher ratio so I'm not sure what you can do about that given the data I mean I think thinking about the US tax code it actually asks a question about the number of dependents that's the number of exemptions I don't know how general that is but I think that that might be a more useful measure to use thank you thank you anybody on the floor
wants to answer this one yes Gabriela yes well it's a great question is through that we focus on per adult income just because you know project income is the the number that's used to compute macroeconomic growth and so what we try to do is to decompose growth so a natural way to do that is is to use the adult unit of observation but in all our country specific work we also consider other units of observation so for instance in the u.s. we are going to release micro fires where
researchers can compute their own iniquity statistics across households or across tax units and not only across individual adults and somehow flippin I'm a journalist from a Dutch newspaper I was wondering the presentation by mr. Sigman you mentioned that a policy solution might be dead to tax based on sales and not on on well on corporate corporate revenue streams but you know a large it seems from a study by Nick blue that a large concentration of the top 1% is actually our Silicon Valley
firms and those firms are often based on two-sided markets right where they don't really sell products that products are actually almost free and their income is based on advertisement would your policy option hold for this kind of these kind of firms as well yes so that's a that's a very good question so it was important I should have explained this better is that the the tax base in what I discussed remains profits okay so it's not taxing sales like the eighty-three taxing
profits it's just we need to find a way to allocate profits across countries you know where that makes sense so right now Google pretends that the bulk of its profits are made in Bermuda that makes no sense okay so need to find a way to allocate the profits of Google to the west of France and Germany and Google sells ads to customers in these various countries and so we could just look at the geography of their ad revenue and the other revenue to allocate their profits there's a proposal
that that I make and I think it's you know it works very well actually for the for the idea industry thank you very much for the opportunity and to be alone from Germany and doing PhD in economics with the background in physics and this leads me to trying to connect this question on inequality to actually climate change because when we're talking about growth and lifting bottom 50% up this is connected to resource use and I know that people have worked on that as well so we have a budget
of co2 emissions for example and equivalence to lift up and deal with the problem of inequality so maybe you could comment on that because the projections leave that out and otherwise we would end up with four degrees or something like that thank you very much for for this question indeed environmental the environmental degradation is one the you know other big policy challenges of the decades to come and two years ago during the cop21 in Paris were actually released and we mentioned this in the
4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman
report we release with with Thomas

Piketty

another version of the global elephants that that we presented this morning but in terms of co2 emissions and and we see basically a similar curve so so this shows the the the extent of the challenge of course rising income levels at the bottom of the world distribution at the moment with current production and consumption mode Rises increases co2 emissions now there are many different ways to to to lift up incomes at the bottom and some can be with
little co2 emissions and so the point I'm making here is that yes if we it's it's the same a similar kind of message as we had this morning in business as usual yes there's an explosion of co2 emissions so from 2 degree today to 3 degree minimum by the end of this century and most likely four degrees but there are different ways to do it just one example for instance in Indonesia in the government was subsidized is subsidizing very much kerosene and fossil fuels and it decided to
suppress these subsidies to fossil fuels and so this has a positive impact on environmental protection because people will use less fossil fuels and progressively move to other other types of energy and at the same time what the Indonesian government did in order to not create too much social tension is that they created the beginning of a social security system with the transfer of this money so you can have a synergy between environmental protection and inequality reduction in poor countries
but also in rich countries thank you so this environmental yes so Facundo Alvarado which is actually the feed coordinator of the report so you've seen four of us and here is the faith Facundo go ahead just interrupting the questions we we'll follow I just wanted to make one comment on on the development world which is part of the report and the future thank you to the discussants for this and in particular thank you to Esther Duflo for the first comment on the distress it produces on her
to make some assumptions don't don't underestimate the stress it produces and some of us to make some assumptions in the case of the developing world and and I want to refer to this in this case one of the very positive outcomes of DOMA

piketty

's book in 2014 was that as Tom I mentioned is that many more developing countries started to released and published fiscal data which were hidden not published not regularly shown before to mention the largest one in terms of population where
Brazil Mexico South Africa India and this profit this data provided exact are not perfect at all for sure these are not perfect but this provides a new window to look at the distributional issues in countries where we only had surveys for distribution and and which is one of the many key in many senses the the construction of social statistics is has been an invention of national states based on their needs and their administrative needs and you have to imagine the enormous machinery behind us
we have national accounts income size the balance sheets the surveys the price indexes the exporting statistics the central banks the tax collections and in developing world we have particular problems with all these sources and the difficulty of reconciling these sources is enormous and enormous pressures on the assumptions which we need to make so as one of of the the positive outcomes of Tomas book was the provisional statistics I expect and I took two government's now and official bodies
I expect that one of the outcomes of this report of this kind of work is to pull sure to to ask to invite governments on to work collectively and improve substantially and revise substantially the production of social statics because we have there's a problem because we have national accounts on one side very very far from surveys verify in terms of incomes in terms of wealth from tax data and when it's a fact that even for their own administrative needs we need to improve the
reconciliation of the data sources and I hope that one of the outcomes of this report is it will be some improvement in this sense this is only what I wanted to add thank you thank you I say one thing on the environment because to some extent so it's developing countries in particular India is for some time has played this thing that ok it's our time to go and we don't care about environmental policy but they've changed actually on cop21 and the reason why is that it's also
clear that the distributional effect of climate change are allowed and in particular most of the cost of climate change are going to be experienced are already experienced and will be experienced in the future by developing countries due to their location and 15 application plus you know the fact that many of the people are very vulnerable in the first and another thing that is relevant is that there is a tight connection for developing countries between what produces co2 and what produces
pollution and although the effect of co2 are far in the future the effect of co2 are right now so until relatively recently there was little I think political pressure behind pollution in China and India for example which are responsible you know which will create a lot of global warming and have huge pollution level but I think this is changing the the Prime Minister the Chief Minister of Delhi talked about gas chamber to refer to the situation in Delhi in in the winter month so that's kind
of that's a pretty strong word and when Sri Lankan cricket player starting to collapse toeing up on the field that sort of created a bit of West yeah so I think this in a sense this the pollution is going to generate maybe I at least I hope but I tend to be optimistic but I think he was going to generate social pressure to do something along slightly I'll tell the ghost pass maybe at some cost but probably not that much for example there was some cost it were just not not towing not not
burning the cops in around Delhi it would cost two hundred million dollars it is not that much compared to the size of to the size of of Delhi for example so the it is possible that it will be a cost you know some cost in time of course but again like a second order cost in term of goals in exchange of a fact out of cost in terms of quality of life might be eventually it but there might be a realization that it's necessary and I think pollution is more likely to do it then climate change
simply because it's it's right now Thank You Rocco Santini from Island so I have actually two questions if possible so one is here in the report is for everybody basically in report you say that income inequality trajectory observing in the United States is largely due to massive education inequalities and other stuff and I wondered if maybe you think there is a case for it the other direction of causality as well and also if you think that this inequality in education also may result in
some high here hierarchical structure disciplines and speaking of economics James Heckman recently spoke of the year of the dictatorship of the top five journals maybe you have something to say about that and the other question is specifically to the professor

zucman

and I mean you part of your work is about you know reasoning on how you can lead to a change in the rate tax rate of high income and I couldn't really see from this angle but in the United States really changed in the course of
the fifties it's that correct and I mean if we can learn something from them from them I guess that in 1954 there was the first decline in the rate of unionization and the strike rates felt drastically relative to the 40's and so I would like you to comment on whether this may be one of the factors that affected the change in tax policies yes let me try to address the second question so you've had a number of changes that have happened at the same time or roughly same time in the
u.s. so dramatic decline in progressive taxation and decline in Union density and the role of unions and more broadly speaking the bargaining power of labor and sharp decline in the federal minimum wage and so on and so on so all of these things I'm not sure there's one you know causing the others what's clear is that you've had all these policy changes have gone in the same direction start seeing many cases in 1980s sometimes earlier the big changes in tax progressivity in the
u.s. really start actually with the 1981 tax reform by reagan and then the 1986 tax reform where the top personal income tax rate which is its minimum of 28 percent and that's the reason why the you know the u.s. inequality trajectory is so it's so spectacular just because all of these policy changes have happened no less you know three tenuously so maybe let me say one thing about the first question on education so historically it is always the case that education is going to expand
both you know at the secondary level and the university level through government so govern in all experiences it's really the government that funds you know the vast bulk of educational expenditure so that's why it's really a public decision and that's something we've seen you know in the United States that is with fiscal problems at the state level that fund a large part of education the states have retreated from providing public education and that likely you know will
worsen intergenerational mobility because it's the lower half of the income distribution that benefits from public higher education almost free and we are at a level in the United States where inequality in access to the good institution of higher education is extremely high three striking in statistics that we've put together with Rush Jerry and others at the very best school to think about Harvard Stanford etc the share of students that come from top one percent families between 15 and
20 percent sixty percent of students come from the top 10 percent and you have less than 10 percent of students that come from the bottom 50 percent so it's really the higher education system in the United States is really a powerful machine to entrench inequality question of my name is max Lawson I'm from Oxfam I had a question about schizophrenia in the report around Europe because Europe is positioned is the good guy to some extent but I think we have also seen rapidly racing rising
inequality in place like Sweden and also reforms like the tax reform here in France at the moment and I just wanted the panel to comment on the trajectory of Europe in terms of policy and inequality because clearly it's to some extent trading on past glories thank you very much and I think you yeah you figured out that that Europe in relative terms performs better than the other regions that with that we've presented but but things could be much better in Europe as well I mean when we
look at the situation even of France in fact from 1983 when really the the policies are changing there is a rise in the 10% in the top 1% share as a detailed work on France has shown with incomes rising much faster than than the than the average in terms of tax competition as was discussed with Gabriel before I mean it is Europe that invented this rat this competition to the bottom in the corporate tax rates moving from 40 percent to 30 percent to 20 percent zero in some countries and tomorrow
subsidies for for companies to to settle in on specific ground so so Europe also can do a much better in the coming decade to tackle a rising rising equality and the other thing which is particularly striking in Europe is this strong decline in in in public wealth in in European countries 0-0 levels in the UK close to zero in France or or in other countries and again in in in these matters perhaps Europe can also look toward what is happening in other regions and potentially in the emerging
world where so far China is preserving an important amount of public wealth in order potentially to to have more room for maneuver to invest in these important challenges of tomorrow perhaps my colleagues also want to maybe Bronco yeah hi Roger will consider University of Melbourne I should just start off by saying it hasn't gone unnoticed that Australia didn't make it into any of those graphs so there's been a lot of talk about the role of capital in and and and as a driver of
inequality and also I talked about solutions being things like education and and and taxation but I haven't heard much mention of the labor market and what's going on there and what role that technological change is playing and whether there should be policy focus around around managing that but perhaps that's just a matter of emphasis or do the panel not think that that is one of the big challenges moving forward so a very brief answer and and perhaps a manual or Gabriel may want to
add a few points so on the labor on the labor market institution we also indeed stressed the importance for labor market regulations we show for instance the declining minimum wage in the US so in the US the minimum wage was the highest in the world in the 1960s and it declined actually by 25 to 30 percent in a period of 40 to 50 years which is a very exceptional situation now we also discuss the importance of workers representation in in corporate boards and and there are many interesting
examples in the European context for instance in Germany where where workers are represented 50 percent in governance bodies of the corporate world in in Sweden 30 percent so these are also interesting policies to be implemented in certain countries and there's an interesting

discussion

in the UK for the moment on this topic where progress is again can be made so all these are also indeed important policies to to limit the concentration of capital just one word actually on this last point
really the the concentration of capital income is quite astonishing and one till you know one starts working with that one doesn't really realize but we are talking of genius in all the countries rich countries in excess of eighty five up to ninety ninety five so it's it's incredible concentration to which I think not sufficient attention has been paid maybe what I'm going to say is wrong but I think it's the case that it might be the case that in the future technological
progress will do a turn to affect inequality but until now no one was thinking about the new technology Exeter it might be the case that it will have a dramatic impact but until now I don't know if it has really had we it has not yet gone deep enough at a new technology I have not yet gone deep enough in deep in the labor market to change it radically so whatever changes you have seen over the years they are not certainly not primarily due to technology that have not been invented yet and
maybe not primarily due to technology can progress so we don't know what's gonna happen in the future but clearly a lot of pretty dramatic things can be happening even in the absence of that so I think you're thinking about I mean there is reason to be worried about what might happen in a few in the future with a different technology but it's a culprit that is so far not yet shown their head hello um thank you for the presentation Stephanie conquered from Free University of
Berlin my I have two questions so first we were talking about the relevance of inequality what role do you see for the perception of the people of their own position in the wealth and income distribution there are some findings pointing to to the fact that people don't really know at which point in the distribution they they can really be found so how do they really know how big the inequality is and and if not who's going to be the driving force and and that the maybe the political put
the political pressure on the system to to change and work on inequality especially given the or the statement globally if globalization has a future my my polemic polemic statement would be to the poorer 50% really have a future or do they really have the chance to become richer in the future ya know so this is a good question I mean as we know we know from studying history changing inequality is is hard it takes really strong advance you know to make a big difference but I think what we can
say today is that we've been a century ago in a situation with very high inequality and somehow societies has been able to tackle that problem and sharply reduce inequality with the rise of government rise of taxes rises of the welfare state and what we're seeing is that were confronted with a similar challenge so even though our governments are bigger the inequality problem has come back and I think you know because we care people care about inequality it will have to be confronted but
it's true it's not going to be easy and it's not going to be it's not clear when it's going to happen it could take you know decades but that's that's the challenge and that our hope is that precisely the report helps you know the public understand the challenge on perception versus reality I mean a big objective of the wind world project is precisely to allow anybody to actually make their own mind about the inequality situation in their country at the level of the
world by comparing their own income with the income of other groups in their society so this is the the the efforts we we've trying to do with the wind world website to try to allow the largest amount of people the largest number possible to really do these comparisons and very often these comparisons are not possible because of lack of data at the top because of big discrepancy between average income growth rates and what you see in the surveys in the case of India or other emerging
countries for instance so this is really what we're trying to do to ground this and more facts that are really accessible to the majority Martyn wheel from King's College London you talked about the growth of the incomes of the top 1% or the top naught point 1 percent or whatever suppose we took the people who've been in the top nought point one percent five years ago how do you think their incomes would have grown surely that's at least as pertinent a question as what's
happened to the people who are in the top nought point one percent now yes well that's a good question there's been a number of studies that have been conducted on mobility across income groups and how it effects the dynamics of inequity that we find and typically what you see that there's a lot of persistence in the in the top group so you know if you're in the top 0.1% given here the priority that you're going to be no 2.1 project next year it is very high it may be around
70% 75% and you don't see a lot of changes you don't see in the u.s. any change in that persistence over time so that if you are able to do inequality statistics on lifetime income we've not done that it raises many complicated issues but if you are able to do that I'm not sure it would show very different results than the purely cross-sectional iniquitous artistic that we've shown this morning very very briefly on that actually of course the the curves that we have seen
today the elephant chart and the previous elephant chart they are actually anonymous but if we cannot do it no no no no no no no Mia Slee with without individual data over time but what Christopher Lightner and I did was actually to keep the country decile for percentiles at their position 1988 and then to draw the curve and actually the results are not very different you know the main shape which is really growth in the middle absence of growth among richer people but basically West European
and Americans and a very high growth in the top 1% remains but your question is of course a very important one I mean we ideally would like exactly to measure the gains like that but we just don't have to date so one thing that Americans have been telling themselves to feel better about the situation of inequalities that at least mobility is bigger thinking about and but now with you know bad is in the manuals were looking at tax data it simply isn't whoo when you look at generational
mobility today in the u.s. the mobility is not is not the chance for a kid in the bottom 20% to find themselves as a top 20 to 20 percent when they grow up is no larger and in the u.s. as it is in France but that links to the previous perception Stefan estancia Alberto elizena and Eduardo tezo have looked at the perception of mobility and people still think that the mobility is much higher in the US and I think it has been politically positive and it has become positively negative it has helped
people think that okay fine I'm doing poorly but maybe my kids will do better but now I think they have this perception that actually it's possible to succeed but here the year on generation after generation they are not succeeding and that creates that a thing in part that gap creates that that huge resentment that people feel because they feel if I'm not succeeding either I'm a loser or someone at least so I think this effort of bringing and publicizing data but what is the
situation both in term of mobility I guess that's not you object even in term of the inequality is pretty central ok thank you very much so let's finish on this beautiful question on mobility because we have only one hour for the lunch so I just want to make sure we we don't cut that short thank you very much you