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

Feb 22, 2020
We are going to listen to Gabriel Zucman from the University of California Berkeley talking to us about globalization and tax justice, so Gabriel Tsukemen is one of the coordinators of the report and his work has really been to put the issue of globalization on the map. and how the rich can actually take advantage of globalization to escape taxation and capture, so you know an unfair share of the gains from globalization, so we look forward to hearing your comments. Thank you 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?
4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman
I think it is one of the most pressing political issues of our time. Every day it is clearer that globalization makes its distribution difficult. makes it more difficult to tax multinational corporations in 2015, for example, Google Alphabet, which is one of the largest corporations on the planet, made fifteen billion five billion dollars in profits in Bermuda, where the corporate tax rate is relatively modest, zero percent, so that's a problem and there are increasing profits being passed on to zero tax countries like Bermuda, there is a race to the bottom on corporate taxes with big drops in the statutory corporate tax rate, so which the US is very likely to go from 35% to something like 21%.
4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman

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4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman...

A friend will go from 33% to something like 25% in the next few years. Globalization has also made it easier for wealthy people to move assets between countries in ways that make it easier for them to evade taxes and, in some cases, evade taxes, all of which contribute to rising pre-tax and transfer income inequality. ; The rich pay less taxes, have more incentives to hire higher incomes or to refuse higher incomes. It also contributes very mechanically to rising inequality after taxes and transfers simply because the rich pay less taxes and in many ways the political reaction so far has been quite disappointing;
4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman
It's been mostly like let's all become tax havens, you know, it's getting harder. to tax multinational corporations, then let's stop trying to adequately tax multinational corporations, if it's getting harder to tax rich people, then let's eliminate wealth taxes, for example, or reduce wealth taxes to get top marginal income tax rates, and so the question at this stage I think is this: do we really think globalization has a future if it means lower and lower taxes for the rich 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 taxes, so I think if you want to think about this issue, I think the answer is that we can do better as much as possible to reconcile globalization with progressive taxation and limit the rise of inequality, but to achieve this we need two things: we need a good understanding of problems that are relatively novel, in some cases not understood adequately and we need innovative policies, so what are the problems?
4 4 1st wid conference discussion with f alvaredo l chancel e saez t piketty g zucman
Number one is the increase in profits being shifted to offshore tax havens, so here's a chart showing the fraction of all foreign profits that American multinationals book in tax havens and therefore in the 1980 used to be something like 15 to 20 percent of all border earnings. - the profits of American companies were made in tax havens and as you know, they have been increasing year after year since then and the latest data from 2016 shows that 63% of the overall profits of American multinationals are now made in Singapore, in Bermuda, Luxembourg, Ireland and So, where they are taxed at a rate that is generally between zero and five percent, and if this continues, in 2020 it will be something like 75, 80 percent and, finally, 100 percent to have all the profits.
We basically avoid taxes on foreign profits earned outside the US by US multinationals. The second issue is that, with that in mind, governments have been cutting the tax rate they apply to corporate profits, so here is a graph showing the evolution of the global average corporate tax rate, so in the 1980s it used to be between 40 and 50 percent, around 45 percent has decreased since then and today it is a little 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 below 20 percent in the next decade, so we have radically changed the way we try to tax corporate profits at the same time that, in fact, globalization was advancing.
They have the fraction of global corporate profits that I call multinational profits, which correspond to the profits obtained by companies outside the country where they are based and which today reach close to 20 percent, if we look below at the evolution of taxes on individual income, he is a well-known chart found in the report and the evolution of the top marginal income tax rate in several countries, including the US, UK, Germany, France and Japan, and, As is well known, there has been a large decline in top marginal income tax rates from as high as 90 percent in Anglo-Saxon economies during the two decades of the World War; almost everywhere, around 40 percent in the latest version of the fiscal planet that is not discussed by Congress in the US, this would be reduced to 37 percent and even fewer forms of income that normally accrue to the top 1% of individuals, so in 2009 30% for them is fine, so now if you combine everything to have this decrease in corporate taxes due to increasing tax evasion and a decrease in statutory tax rates, we have a decrease in top marginal income tax rates if you combine it all and ask what fraction of their pre-tax income the rich pay in taxes, so here's the figure for the US based on in our national distributive accounts for the US that is what takes into account all taxes at all levels of federal, state and local government in the US which make some assumptions about who bears the burden of taxes corporations, for example, and you know these are relatively standard assumptions where capital owners pay the corporate income tax benefit and we have this amazing figure where basically the average effective tax rate of 0, The top 1% of earners are returning to their level of the 1920s, something like 30%, so now you have to realize that in the 1920s the size of the government was very different than the government of The US accounted for about 10% of the national income, took ten percent of the national income in taxes and who distributed ten percent of the national income in transfers and government spending today is three times larger, it is 30 percent in taxes and 30%. in transfers and yet we are returning to a world where, at the top of the income distribution, the tax rate will be practically the same, so here I am making simple projections for 2020 based on the current tax bill. discussed in Congress and, in fact, would return to something like 30% in average taxes at the top of the distribution, so the decline actually began a little before the 1980s, starting in the 1980s. of 1960 with the first Kennedy tax reform in the 1970s which was an Inc.
You know and then you know that the decline accelerated very quickly in the 1980s, there was some rebound in the 1990s and since then this rate The tax rate at the top of the distribution has continued to decline, so that's important because a lot of people who see this graph and the marginal tax rates sometimes the reaction is that no one you know actually paid these high taxes at the top of the distribution. income distribution and no one you know few corporations actually paid a lot of corporate taxes there was a lot of tax evasion which doesn't seem to be the case there was Dino You know, several decades after World War II, where in fact there were average tax rates of over 50 % for very wealthy people and the other side of the coin, you know, when tax rates decreased at the top of the distribution, what we see is that taxes have actually increased. at the bottom of the distribution, so we've talked a lot about the dynamics of the bottom 50% income share and I was globally, it's very surprising to see that in a country like the US their share of the Total pre-tax income fell from about 20% of total income in the 1970s to about 20% today, then the real tax rate rose from about 15% of increases in the 1960s to about 25% of current income, so working class individuals who see their income stagnate, their share. of falling incomes they pay more and more taxes due, in particular, to the increase in payroll taxes, which has played a larger role; is far from the only reason, but it is one of the key drivers of rising income inequality in a country like the United States.
United States, here is a graph that shows a comprehensive view of how the income distribution in the United States has evolved since 1980 and I focused a lot on the US in this presentation because you know that it is the country that in many ways has done the most radical political experiment in terms of changes, changes in their taxes, in terms of changes in the binding power for labor versus capital, changes in access to higher education, etc., etc. So what has happened is that at the level of the country as a whole, aggregate growth has been quite mediocre.
In reality, since 1980, if you look at the growth for the average adult, the average income has grown only 1.4 percent a year since 1980. There is absolutely no evidence that, in fact, neither lower taxes for higher nor lower taxes for corporations increased macroeconomic growth by one point four percent is a pretty bad outlook in the international perspective in a pretty bad performance in the international perspective that's the number one result, but the second was even more surprising that is, for the vast majority of the population there is nothing close to the macroeconomic average of 1.4 percent, which really shows that in many ways it is useless to talk only about growth for all percentiles below the 88th percentile, that is, for 88 percent. of macroeconomic population growth has been less than 1.5 per year and is even known to be close to zero or even negative in many cases at the bottom of the income distribution before taxes and transfers.
Well, you also see that a lot of people have a view that, since the 1980s, the economy and globalization have been good for, say, the top quintile of the income distribution, the top 20%, that's not really which this graph shows, even for the groups around the 90th percentile. I know people who have actively left. Even for them, the income growth rate has been quite modest; In fact, in the top one percent and within the top one percent you know that all the actions are taking place and that shows how crucial it is to look at the tax data, which is the only one. data that allows us to say something about the dynamics of income for the upper point one percent of 0.01 percent for the very upper group we consider the upper point or 1% if it rains like in China, you know, it is six six point five per percent per year on average since 1918, so a synthetic view of this if you just calculate the proportion 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. .so both groups have basically changed their income share, so the top one percent used to have about twelve percent of the total income in the U.S. now they have about twenty percent of the total income, so that the average income is twenty times the average income in the US the bottom 50 percent and on the other hand it used to have about twenty percent of the income in the 1960s and today it has a little over ten , about twelve percent of total income, so this is important because if all countries as we saw this morning is if all countries follow this trajectory of inequality this trajectoryof very high inequality in the US, then global income inequality is bound to increase enormously by 2050, virtually regardless of what happens to average income growth in each country, so that's what you see here in This graph that analyzes what was said about this.
Tomorrow, in this scenario number two, let's look at a high inequality scenario: all countries follow the US inequality trajectory and then the income share of the top one percent would rise from about 20% of global income today to almost 30%, that is, between 25 and 30 percent of global income despite the fact that growth in developing countries is known to be higher than in the developed world and the lower world. The 50% revenue share would actually collapse to just over five percent. So how can we prevent this from happening? I would like to talk about a very concrete and very specific, although important, tax reform that would help a lot tomorrow in our session. on the global wealth registry with debbie, no gearhead, we'll talk about other global wealth registry policies and pathways and how to better tax wealth people by creating more information, but just to finish, i'd like to talk about how we can do the Corporate taxes work in a globalized pit, right?
Should we just give up? Is it just impossible or is there really a way forward? and the good thing is that now many of you know political issues that are generally complicated and, well, there is no clear solution. Actually, there is a very clear, simple and impractical solution which is to simply change the way we calculate corporate profits so that we can say, for example, if a company like Apple makes fifty billion dollars in profits globally and ten percent of its global sales are in France, so friends might say okay, let's consider that 10 percent of Apple's corporate profits have been earned in France, that will be the tax base and we will apply any rate we want to apply. this tax base and that's known as a global profit sharing using a formula, its very simple formula that is based on where you make your sales and what's particularly nice about this is that this is already what most states of USA know in most US states have your own businesstaxes like California and New York New Jersey this is how they calculate the amount of profits that are subject to tax in California or in New York and New Jersey it works very well what's particularly good is that it would completely put an end to artificial profit shifting by multinational companies because right now you can send your profits to Bermuda, but you can't send your customers to Bermuda, the customers who are, you know, here in France, they're in California, they're in developing countries, so, you know? profit shifting and tax evasion and a third thing that is underestimated is that this can be done unilaterally, so when you talk about changing the way we tax mining corporations that are cracking down on tax evasion, people He says, well, we need to know a global agreement on this.
This will never happen because countries like Ireland or Luxembourg will always block and refuse to make any progress, but that is not the case here. France, for example, tomorrow you could say that that will be the way we calculate the amount of profits that are subject to tax in France and we don't need you to know the Luxembourg agreement or the iron, we just ask any company that you know that makes sales in France and who have access to the French market to tell us about their global profits and what fraction of global sales they make in France and, of course, you know that global agreements and multilateral cooperation are always better, but in that case I think perhaps the time has come to act unilaterally;
We can try to convince Ireland and Luxembourg in the last two or three decades, but my feeling is that it is urgent to improve things if we want to prevent global inequality from increasing sharply in the coming decades. Thank you very much, thank you very much Gabrielle, so before we answer questions, the speakers are going to look here and they are going to answer questions, let me make two comments after these presentations by Esther Bronco and Gabrielle, so the first one is about the poverty that Esther specifically mentioned, so the World Bank measures poverty basically at two dollars a day, so it's a threshold is set in real terms and only the number of people who fall below that threshold around the world are counted. , so it is obvious that with economic growth, if it benefits the poor at least a little, that number will decrease over time and that is what has happened.
You know, with respect to economic development in China, my opinion, and perhaps the opinion that you know of the coordinators, is that such a measure is actually not very significant, so what they tried is to make that very low threshold a subsistence level, a level below which you basically couldn't survive economically, but if you're interested in subsistence, I think you know, look at something like life expectancy, which will be a much more accurate measure of whether humans They are able to survive in these societies, so I think that the absolute value The level of poverty measured in terms of dollars does not make much sense and, in fact, you know, within a country where there is significant economic development, countries change to measures linked to average income, that's how Europe does it, so you go back to inequality measures. that's how a poor fraction of the population is doing relative to a median or average of the things we're trying to do.
The second thing I want to mention is about government, so that has come up a little bit particularly in Gabrielle's actions, but maybe it hasn't been emphasized enough, making one of the most surprising developments of the 20th century in economics advanced has been the growth in the size of government that is now in advanced economies. The government takes between thirty and fifty percent of the national income in taxes, so it's 30 percent in the United States, about 50 percent in France and they use this revenue to finance 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 speaks volumes. right there in human societies humans care a lot about inequalities, if the vision was literally individualistic, you know, I work, I earn and I deserve what I earn, people would not tolerate such a big government, so I think that's the best example of why.
We care about inequality and why we also want to measure pre-tax inequality - that is, most of the report is based on pre-tax figures, but we have also calculated post-sex figures to see what happens to inequality once that takes into account all the taxes and then other transfers that the government makes, let's start again here, thank you, so let's introduce ourselves. Yes, introduce yourself if you want. Edward Wolff New York University. First of all, let me applaud the effort. This fantastic project is underway. I know it's a technical question or maybe it's a broader question, but inequality measures are based on per adult and I'm always uncomfortable with using adults or even adults as a unit of measurement.
You certainly know that an equivalent income would be more of a broader measure to use when comparing when looking at inequality and movements over time because you know that countries differ in the proportion of adults to the total population, so you know Africa, for example, I have a much lower proportion of adults. relative to population and Western Europe, particularly Northern Europe, has a much higher ratio, so I'm not sure what can be done about it, given the data. I think when thinking about the US tax code, it actually raises a question about the number of dependents, which is the number of exemptions.
I don't know how general that is, but I think it might be a more useful measure. thank you, thank you, anyone in the room wants to answer this question, yes, Gabriela, yes, well, it's a great question to focus on the income per adult just because you know that the project income is the number that used to calculate macroeconomic growth and so what we're trying to do is decompose growth, so a natural way to do that is to use the adult observation unit, but in all of our country-specific work we also consider other observation units, for example in the U.S.
We are going to release microfires where researchers can calculate their own inequality statistics between households or between tax units and not just between individual adults and somehow I am a journalist for a Dutch newspaper. I was wondering about the presentation of Mr. Sigman, you mentioned that a policy solution might be dead for taxes based on sales and not on corporate corporate income streams, but you know, according to a study by Nick Blue, it seems that a large concentration of the top 1% is in our reality Silicon Valley companies and those companies often rely on two-sided markets just where they don't actually sell products that are actually almost free and their income is based on advertising.
Would your policy option be valid for these types of companies? Well, yes, that's a very good question, so it was important. I should have explained it better. The tax base I talked about is still profits. Okay, so sales aren't taxed like the eighty-three profits are taxed, we just need to do it. find a way to allocate profits between countries, you know where that makes sense, so right now Google pretends that most of their profits are made in Bermuda, which doesn't make sense, okay, so I need to find a way to allocate Google's profits to western France, Germany, and Google sells ads to customers in these different countries, so we could simply look at the geography of their ad revenue and other revenue to allocate their profits.
There is a proposal that I make and I think it works very well. Well, actually, to the ideas industry, thank you very much for the opportunity and for being alone in Germany and doing a PhD in economics with a background in physics, and this leads me to try to connect this question about inequality with change climate, because when we are talking about growth and lifting up the bottom 50%, this is related to the use of resources and I know that people have also worked on that, so we have a CO2 emissions budget, for example, and equivalence to elevate and address the problem of inequality.
So maybe you could comment on that because the projections leave it out and otherwise we would end up with four degrees or something like that. Thank you very much for this question. In fact, environmental degradation is one of the other great political challenges of the In the coming decades and two years ago, during COP21 in Paris, another version of the global elephants were launched and we mentioned it in the report that we published with Thomas Piketty. that we presented this morning, but in terms of CO2 emissions and we see Basically it is a similar curve, so this shows the extent of the challenge, of course, the increase in income levels at the bottom of the global distribution in this moment with the current mode of production and consumption.
The increases increase CO2 emissions. Now there are many different ways to delete. they increase revenue at the bottom and some can do it with little CO2 emissions, so what I'm saying here is yes, if it's the same kind of message similar to what we had this morning in business as usual, yes , there is an explosion of CO2 emissions, from 2 degrees today to at least 3 degrees by the end of this century and most likely four degrees, but there are different ways to do it, just one example, for example, in Indonesia, the government received subsidies and it is subsidizing a lot of kerosene and fossil fuels. and decided to eliminate these subsidies for fossil fuels and this has a positive impact on the protection of the environment because people will use less fossil fuels and will progressively switch to other types of energy and at the same time what the Indonesian government did 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 that there can be a synergy between the protection of the environment and the reduction of inequality in poor countries but also in rich countries.
Thank you for that, this environmental, yes, Facundo. Alvarado who is actually the feed coordinator of the report so you have seen four of us and here is faith Facundo go ahead just interrupting the questions let's continue I just wanted to make a comment about the world of development that is part of the report and the future thanks to the commenters for this and in particular thanks to Esther Duflo for the firstcomment about the distress that comes from making some assumptions, don't underestimate the stress that comes from and some of We allow ourselves to make some assumptions in the case of the developing world and I want to refer to that in this case.
One of the very positive results of DOMA Piketty's book in 2014 was that, as I mentioned Tom, many more developing countries began to release and published tax data that was hidden, unpublished, not shown regularly before to mention the largest in terms of population, where Brazil, Mexico, South Africa, India and this gain, these data provided are accurate, they are not perfect at all, they are certainly not perfect, but this provides a new window to analyze the distributional issues in countries where we only had surveys for distribution and, which is one of the many keys, in many ways, the construction of social statistics has been an invention of national states based on their needs and administrative functions. needs and you have to imagine the enormous machinery behind us we have national accounts, the size of income, balance sheets, surveys, price indices, export statistics, central banks, tax collections and in the world In development we have particular problems with all these sources and the difficulty of reconciling these sources puts enormous and enormous pressure on the assumptions we must make, since one of the positive results of Tomas's book was the provisional statistics, I hope and took two organisms governmental and official.
I hope that one of the results of this report of this type of work is to make sure that we ask invite governments to work collectively and substantially improve and substantially review the production of social statistics because we have a problem because we have national accounts on a very, very side. far from the surveys verify in terms of income in terms of wealth of fiscal data and when it is a fact that even for their own administrative needs we need to improve the reconciliation of data sources and I hope that one of the results of this report will be There will be some improvement in this regard.
This is just what I wanted to add. Thanks thanks. I say one thing about the environment because, to some extent, developing countries, particularly India, have played this for some time. Okay, it's our time to go ahead and not care about environmental policy, but they actually changed at COP21 and the reason is that it is also clear that the distributional effect of climate change is allowed and, in particular, most of the cost of climate change will be Developing countries already have experience and will experience it in the future due to their location and application. Also, 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 close connection. for developing countries between what produces co2 and what produces pollution and although the effect of co2 is in the distant future, the effect of co2 is now, so until relatively recently I think there was little political pressure behind the pollution in China and India, for example, which are responsible, you know, which will create a lot of global warming and have a huge level of pollution, but I think this is changing.
The Prime Minister, the Chief Minister of Delhi, spoke of the gas chamber to refer to the situation in Delhi in the winter month, so that is kind. That's a pretty strong word and when the Sri Lankan cricketer started collapsing, stepping on the field that kind of created a little bit of the West, yeah, so I think this, in a sense, the pollution is going to create such a Maybe, at least I hope so, but I tend to be optimistic, but I think it would generate social. Pressure to do something a little. I will say to the ghost pass, maybe at some cost, but probably not much, for example, there was some cost, they just didn't get towed, they didn't burn the policemen around Delhi, it would cost two hundred million dollars.
It's not much compared to the size of Delhi, for example, so it's possible that it's a cost, you know, some cost over time, of course, but again, like a second-order cost in terms of objectives to changing a fact outside of the cost in terms of quality of life might eventually be, but it might be realized that it is necessary and I think pollution is more likely to do it than climate change simply because it is right now. Thanks Rocco Santini from Island. I actually have two questions, if possible, so one is here in the report is for everyone, basically in the report you say that the trajectory of income inequality seen in the United States is largely due to massive educational inequalities and There are also arguments for the other direction of causality, and also if you think that this inequality in education can also lead to a high hierarchical structure in the disciplines and, Speaking of economics, James Heckman recently spoke about the year of the dictatorship of the five most important magazines. maybe you have something to say about that and the other question is specifically for Professor Zucman and I mean part of his work is about reasoning about how that can lead to a change in the high income tax rate and I could actually I don't see it from this angle, but in the United States it really changed over the course of the fifties, it's that right and I mean, if we can learn anything from them, I guess in 1954 there was the first decline in the unionization rate . and strike rates felt drastically relative to the 1940s, 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 have a figure. of changes that have occurred at the same time or around the same time in the US such a dramatic decline in progressive taxation and a decline in union density and the role of unions and, more generally, the power of worker bargaining and a sharp drop in the federal minimum wage and so on, so all of these things I'm not sure there is one that you know causes the others what is clear is that all of these policy changes have gone in the same direction.
We started seeing a lot of cases in the 1980s, sometimes before the big changes in tax progressivity in the US. We really started with Reagan's 1981 tax reform and then the 1986 tax reform where the top tax rate personal income tax, which is their minimum of 28 percent, and that's why, you know, the United States. The trajectory of inequality is so dramatic simply because all of these policy changes have happened no less than, you know, three tenuously, so maybe let me say one thing about the first question about education, so historically it's always been It is the case that education will expand so much It is known at the secondary and university level through the government, so it governs in all experiences, in reality it is the government that finances, it knows the large part of educational spending, that is why it's really a public decision and that's something we've seen, you know, in the United States.
States that have fiscal problems at the state level that fund a large portion of education, states have retreated from providing public education and that will likely worsen intergenerational mobility because it is the bottom half of the income distribution that benefits almost from public higher education. free and we are at a level in the United States where inequality in access to a good institution of higher education is extremely high, three surprising in the statistics we have gathered with Rush Jerry and others at the best school for thinking: Harvard Stanford etc. ., the proportion of students who come from the top one percent of families, between 15 and 20 percent, sixty percent of students come from the top 10 percent and there are less than 10 percent of students who come from the Bottom 50 percent, so it's actually the higher education system.
In the United States it is truly a powerful machine for entrenching inequality. My name is Max Lawson. I'm from Oxfam. I had a question about schizophrenia in the report on Europe because Europe is positioned as the good one to a certain extent, but I think we have also seen a rapid increase in inequality in places like Sweden and also reforms like tax reform here in France in this moment and I just wanted the panel to comment on Europe's trajectory in terms of policies and inequality because clearly, to some extent, it is trading on past glories, thank you very much and I think, yes, you realized that Europe, in terms Relatively, it performs better than the other regions that we have presented with that, but things could be much better in Europe as well, I mean, when we look.
In the situation even in France, in fact, since 1983, when policies are really changing, there is a 10% increase in the top 1%, as detailed work on France has shown, with incomes increasing much faster than the average. In terms of tax competition, as discussed earlier with Gabriel, I mean it was Europe that invented this rat, this competition all the way down in corporate tax rates, going from 40 percent to 30 percent to 20 percent zero. in some countries and tomorrow subsidies for companies. Specific ground needs to be established so that Europe can also do much better in the next decade to cope with increasing equality and the other thing that is particularly striking in Europe is this sharp decline in public wealth in European countries. -0 in the UK, close to zero in France or other countries and again on these issues, perhaps Europe can also look towards what is happening in other regions and potentially in the emerging world where so far China is preserving a quantity important. of public wealth to potentially have more leeway to invest in these important challenges of tomorrow maybe my colleagues also want maybe Bronco, yes, hi, Roger will consider the University of Melbourne.
I should start by saying that it has not gone unnoticed. that Australia didn't appear on any of those charts, so there's been a lot of talk about the role of capital in and and as a driver of inequality and I also talked about the solutions being things like education and taxes, but I haven't heard. a lot of mention of the labor market and what's happening there and what role technological change is playing and whether there should be focused policies around its management, but maybe it's just a matter of emphasis or the panel doesn't think that's the case. one of the big challenges moving forward, so a very short answer and maybe a manual or Gabriel maybe wants to add some points, so on the work in the labor market institution we also emphasize the importance of market regulations labor, we show, for example, the declining minimum wage in the US, so in the US the minimum wage was the highest in the world in the 1960s and actually decreased 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 employee representation on corporate boards and there are many interesting examples in the European context, for example in Germany, where employees are 50 percent represented on corporate governance bodies and in Sweden by 30 percent, so these are also interesting policies to pursue. implemented in certain countries and there is an interesting

discussion

in the UK at the moment on this topic where again progress can be made, so these are all also really important policies to limit capital concentration, just a word on this last point really The concentration of capital income is quite astonishing and until you realize that you start working with it you don't really realize it, but we are talking about geniuses in all the rich countries, from eighty-five to the ninety-five, so it's amazing. concentration to which I think not enough attention has been paid.
Perhaps what I am going to say is wrong but I think it is true that it could be the case that in the future technological progress takes a turn that affects inequality, but until Not now One was thinking about the new Exeter technology, it could be the case that it has a dramatic impact, but so far I don't know if it really has. We haven't gone deep enough into a new technology yet. I still have not gone. Deep enough into the job market to change it radically, so any changes you've seen over the years are certainly not primarily due to technology that hasn't been invented yet and perhaps not primarily due to technology can progress so that we don't know what's going to happen in the future, but clearly there can be a lot of pretty dramatic things happening even in the absence of that, soI think you're thinking, I mean, there's reason to be worried about what might happen to some of them in the future. with a different technology but it is a culprit who has not yet shown his head hello, thanks for the presentation that Stephanie conquered from the Free University of Berlin.
I have two questions, so first we were talking about the relevance of inequality, what role do you play? To look at people's perception of their own position in the distribution of wealth and income, there are some findings that point to the fact that people don't really know where in the distribution they can actually be found, so do they? how do they really do it? know how big the inequality is and if not who is going to be the driving force and that maybe politicians will put political pressure on the system to change and work on inequality, especially given the global declaration of whether globalization It has a future.
My controversial statement would be that the poorest 50% really have a future or really have the opportunity to become richer in the future. You know, this is a good question. I mean, as we know we know from studying history, changing inequality is difficult, it takes really strong progress to make a big difference, but I think what we can say today is that a century ago we were in a situation with a very high inequality and somehow societies have been able to address that problem and in a blunt way. reduce inequality with government increases, tax increases, welfare state increases and what we are seeing is that we face a similar challenge, so even though our governments are larger, the problem of Inequality is back and I think they know it because we care. people care about inequality, we will have to face it, but it is true, it will not be easy and it will not be, it is not clear when it will happen, it could take decades, but that is the challenge and our hope is that Precisely the report helps to know that the public understands the challenge of perception versus reality.
I mean, a great objective of the Wind World project is precisely to allow anyone to make their own opinion about the inequality situation in their country on a global level. compare your own income to the income of other groups in your society, so these are the efforts that we are trying to make with the Wind World website to try to allow as many people, as many as possible, to actually make these comparisons. and very often these comparisons are not possible due to lack of data at the top due to the large discrepancy between average income growth rates and what is seen in surveys in the case of India or other emerging countries, for example, so this is actually what we do.
We are trying to substantiate this and more facts that are really accessible to the majority. Martyn Wheel from King's College London talked about the income growth of the top 1% or the top 0 point 1 percent or whatever, suppose we take people. who were at zero point one percent five years ago, how do you think they would have increased their income? Surely that is a question at least as pertinent as what has happened to people who are in the zero point one percent now yes, well that is a good question, there have been several studies on mobility between income groups and how it affects the dynamics of inequality that we find and, generally, what you see is that there is a lot of persistence in the top group, so you know if you are in the top 0.1%, given here the priority of not will be a 2.1 project next year is very high, it can be around 70% 75% and you don't see many changes. see in the United States any change in that persistence over time, so if you can do lifetime income inequality statistics, we haven't done it, it raises a lot of complicated questions, but if you can do it So, I'm not sure it will show very different results. that the purely transversal wicked art that we have shown this morning very, very briefly about that, in reality, of course, the curves that we have seen today in the elephant map and the previous elephant map, they are actually anonymous, but if not We can do it, no. no no no no no no Mia Slee without individual data over time, but what Christopher Lightner and I did was actually keep the country decile for the percentiles at their 1988 position and then draw the curve and actually the results are not very different, you know? the main way, which is actually growth in the middle, no growth among the richest people, but basically among Western Europeans and Americans, and very high growth in the top 1% remains, but your question is Of course, very important.
I mean, ideally we would like to measure earnings exactly that way, but we just don't have it to date, so one thing that Americans have been telling themselves to feel better about the state of inequalities is that at least the mobility is greater, but now they know that the bad thing is in the manuals they analyzed fiscal data, but that is simply not the case when you analyze current generational mobility in the US. mobility is not, the possibility of a child of the The bottom 20% is between the 20% and the top 20% when it grows up it is not older and in the US as it is in France, but that is related to the previous perception Stefan stay Alberto Elizena and Eduardo Tezo have analyzed the perception of mobility and people still think that mobility is much higher in the US and I think that it has been politically positive and turning positively negative has helped people think that okay, I'm doing it wrong, but such Maybe my children are doing better, but now I think they have this perception that it is actually possible to be successful, but here, year after generation, they are not having success and that creates one thing in part that gap creates this enormous resentment that you feel. people because they feel that if I'm not succeeding I'm a loser or someone at least so I think this effort of bringing and publishing data but what is the situation both in terms of mobility, I guess it's not something that you object to, even in terms of inequality, it is quite central.
Okay, thank you very much, so let's finish with this beautiful question about mobility because we only have an hour for lunch, so I just want to do. We certainly won't cut corners. Thank you so much.

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