Tony Atkinson: Where is inequality headed?
Sir Anthony Atkinson is on a quest to understand 21st Century economic inequality. A British knight and Nuffield College Professor at Oxford University, Atkinson drew on the work of numerous scholars, to deliver a contemplative presentation concerning the recent history and direction of economic inequality in a number of countries.
Atkinson, whose work is centered on the study of economic disparities, analyzed data from a range of countries, attempting to discover geographic, political, and historical patterns that affect inequality. Considered a giant in the field of economic thinking about inequality, Atkinson has developed an eponymous, bottom-sensitive index to measure inequality.
An efficient and polished speaker, Atkinson left no grounds untouched in his treatment of inequality, beginning by addressing a growing public pessimism about its state and direction. Though the unwieldy rhetorical clashes of Tea-Party conservatives and the redistributionist “99 percent” have died down with the passing of election season, Atkinson feels that on the public agenda, inequality is still a divisive and pressing issue. While some, he noted, are concerned with inequality as a matter of fairness and social justice, it also has the potential to carry a number of negative consequences. These consequences, according to Atkinson, can range from general macro-economic instability to everyday issues such as poor public health and obesity.
Part of the problem in addressing inequality is developing measurements that closely account for, as Atkinson puts it, “what inequality exists among whom.” Most of the data points to overall inequality increasing globally over the last 30 years, with many variations across countries. The U.S. and Britain are among the countries experiencing what Atkinson calls a “salient increase” of more than 5 percentage points. Using indexes such as the Gini coefficient, a basic measure common in economic research, it is easy to find evidence of widespread increase. But this does not account for the statistically (and often politically) prickly issues of opportunity disparities, overall levels of wealth, and quality of life.
Regardless, for Atkinson the important thing when analyzing economic data is that “to use a single number of any kind to reflect the experience of over 300,000 million Americans will leave out important things.”
One of the most informative aspects of the talk was Atkinson’s insistence on moving beyond the basic explanations of inequality often given in elementary economics. The standard supply-side explanation posits that technology and globalization have, “shifted the demand for skilled labor, reducing the demand for unskilled labor.” Atkinson points out several problems with this theory. He argues that this view is too short-term, failing to examine the various phases of the post-World War Two period and not accounting for changing wage systems, social movement, and education levels. Notably, he points to a very simple explanation for the diversity of experience in inequality levels across countries. Different societies have different responses to inequality at the cultural and governmental level, and these, Atkinson argues, greatly affect the distribution of income.
Given this argument, it is not surprising that Atkinson puts the future of inequality in the hands of governments and citizens. But he holds no illusions that high wealth gaps are an easy fix.
Many Americans might disagree with Atkinson’s evaluation that public opinion is shifting in favor of more progressive taxes. Equally problematic is the issue of achieving government consensus on any issues affecting wealth distribution. Though economists like Atkinson can recognize and learn from significant periods in the past when inequality was reduced, they do not hold the keys to political progress. Measures to distribute wealth more equally across society cannot only concern financial regulation policy. As Atkinson concludes, “if one is really concerned about the effects of inequality it has to permeate all aspects of policy making.”