On 26thApril, 2019, the members of Liberty Discussion Group sat down at Gaia Restaurant and Coffee Shop to discuss the article ‘Standard Economics Is Wrong. Inequality and Unearned Income Kills the Economy’ by Joseph Stiglitz.
In the article, the author about talks about how traditional economic theories have not been able to analyse the nature and causes of inequality and have seemingly abandoned this topic. He thereby attempts to explain the causes of inequality and particularly emphasizes on rents (which is considered to be unearned income) as major source of unequal distribution of income and wealth in society. The author further explains that political system and institutional setup have major role in determining the distribution of income in the society and goes on the blame the current institutional setup that we have as the reason behind top income earners ability to expropriate rents. He focuses on solving the problem of inequality as it causes economic instability and might adversely affect overall growth of the society.
The discussants were divided among themselves while discussing about inequality as a problem. Some of them viewed that inequality is not the primary problem that we should be concerned about and instead we should focus on reducing poverty and improving living standards of the people. Whereas, other participants pointed out that inequality might lead to conflict in the society and hence economists and policymakers should try to reduce it to a desirable extent.
Some participants also argued that owners of capital are getting a large share of income without putting much effort while the labourers, despite working very hard are only getting a small share. And, as return on capital (specifically financial capital) is greater that the wages earned by the labourers, the global inequality is even increasing more. They claimed that without being much productive, the owners of financial capital are getting larger share of the income and hence the taxes on return on capital should be increased and redistributed.
As, time was limited, members could not discuss more on these issues even though they desired to. But as always, members can always continue their discussion on the Facebook group.