G & G
Experienced joggers will tell you that, when considering or assessing a run outside, weather conditions (other than severe) are mostly irrelevant. Another irrelevancy has now developed, perhaps of more import. It is addressed in a remarkably fresh, insightful cover story in this week's Economist magazine. More of this in a moment.
The pie metaphor, long used as a framework within which government policy is devised and judged, is still cited frequently by those on the left and right sides of the economic spectrum. Witness, for example, the so-called "fundamentally" different positions of the Obama and Romney camps. The debate occurs between, on the one hand, those arguing that what matters most, or completely, is policy that promotes growth, with the benefits thereof accruing to various sectors in society on their own. In short, when aiming for greater social and economic welfare, it's about increasing the overall size of the pie. Not so much, says the left. The fruits of growth need to be re-directed, through enlightened government intervention, to the needy, or, at least in richer countries (as we hear rather often from Mr. Obama), to the middle class. Re-distributing the existing pie will mitigate market excesses, and the rate at which the pie grows won't be harmed significantly by such policy, this side contends.
So has the debate raged. And not just recently, but starting over 200 years ago, when innovation quite suddenly sparked a new era of human productivity. This was called an "industrial revolution" in 18th/19th-century Britain, and it grew inexorably - with notable ups and downs - to sustained, secular and unprecedented expansion of well-being, first in all Western countries, then in Asian, and now Latin American and African, economies. Such growth, and its extraordinary benefits, is arguably the central theme of the 19th and 20th centuries. But, is it still - in the 21st? Is growth in a secular stall, and is inequality - never not an issue - really on the rise? And if rising, is this of itself a core cause of slower - or a cessation of - expansion?
Startling, fundamental questions. So, back to the Economist's cover story (and a much broader report entitled "World Economy" in the same issue). A re-think - an update, a re-fresh - of the "pie" framework is required, argues the essay. Inequality, as measured by the Gini coefficient, has risen, within any one country (even in Sweden) over the past generation, though not on a global basis, as the poorer economies have been catching up with the richer. And, "in a world of nation states, it is inequality within countries that has political (and social) salience". So, does this merit a new, national policy emphasis, that is, for example, should growth advocates be paying more attention to inequality?
In a word, yes. Inefficient, corporate and state-owned monopolies (think Russia, India and China), and declining social opportunity (think youth unemployment in most developed economies) are just two symptoms of inequality exerting a brake on growth. To mitigate the former, and thus enhance the latter, the Economist suggests less of the old rhetoric, and more focus on such things as breaking up monopolies, whether in China or on Wall Street, reigning in government entitlement spending, with the savings going to education, and reforming tax regimes by lowering rates and sharpening enforcement (think Greece, among many others).
Radical, centrist thinking.....and so germane to freeing political, ideological logjams.