Lecture 18 Reading Summary

Leveler growth benefits the wealthy

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Unformatted text preview: he best → Countries least involved in the global markets have remained the world’s poorest → Protectionism would hurt poor consumers more than it would help low- skilled workers → Changes in the technology of production are a bigger problem → Increase in trade and economic integration can reduce inequality of income and consumption o Two possible reasons: §༊ With less obstacles to imports and with intensified price competition §༊ Weakens the advantages enjoyed by the rich and undermine the economic privileges that perpetuate inequality Special Worker Entitlements → Property rights are protected, but labour rights are unacknowledged → In developing countries, some policies may hurt the people they are meant to protect → High labour costs can induce employers to invest in labour saving technologies which would mostly hurt the poor who do the work Under- pricing Public Services → Prices that are too low reduce public supply of the underpriced service → The poor are the last in line [to receive public services] What Does Work Worker- Based Growth → Economic growth based on the intensive use of labour reduces income inequality → Lack of natural resources can be a hidden blessing (e.g. Switzerland and Hong Kong) → Best encouraged by avoiding the wrong policies Education: The People’s Asset → As education is shared more broadly, other assets will be less important → Needs a kick- start from public policy Democracy → Authoritarian policies can produce equality → The one- person, one- vote system can offset the privileged buying political power → Good politics is good for equalizing growth Opportunities, Not Transfers → Subsidies meant for the poor are often taken by the middle- and upper- class → For public spending to be effective: o It should concentrate on programs that reach everyone but benefit the poor most o The poor’s access to opportunities should be improved by giving them tax breaks and vouchers for public services that would help them become effective consumers Strengthen Domestic Policies for Global Integration → industrial countries are highly integrated among themselves but relatively closed to poor countries’ products and services Learning to Live with Inequality → Much of today’s inequality may be the natural result of the t...
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