Thursday, May 15, 2014

Inequality in the winner-take-all society (2)

The message of the former post was partial. It didn't raise suggestions for improvement in our unequal world. Fortunately, today's op-ed from Shiller adds some fresh air. He retrieves his book The New Financial Order: Risk in the 21st Century written a decade ago and proposes a new tool:
Inequality insurance would require governments to establish very long-term plans to make income-tax rates automatically higher for high-income people in the future if inequality worsens significantly, with no change in taxes otherwise. I called it inequality insurance because, like any insurance policy, it addresses risks beforehand.
This is only one of the six proposals that he develops in such an interesting book.The idea maybe good, the implementation is for sure uncertain. Govenments should commit to efficient redistribution approaches (although up to now I haven't seen them). And beyond this, the constraint again is the same as yesterday: global coordination on tax pressure and on inequality insurance design.

PS A year after Snowden leakage on how privacy has been systematically circumvented, check its impact in this report.

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