Leading economist tells TASC/FEPS conference of threats to economic stability posed by inequality
19th June 2015
A leading international economist will today propose a range of measures to tackle economic inequality. They will include the introduction of a ‘living wage’, a Government-backed employment guarantee and a 65% top marginal tax rate on the highest incomes to tackle economic inequality.
Professor Sir Tony Atkinson (Nuffield College, Oxford) – author of Inequality: What Can Be Done? – will be speaking at independent, progressive think-tank TASC’s sixth Annual Conference in the Croke Park Conference Centre, Dublin.
The conference is organised by TASC jointly with the Federation of European Progressive Studies (FEPS) on the theme Economic Inequality – What Can Be Done? It will be attended by more than 100 policy makers (including An Tánaiste, Joan Burton TD), researchers and civil society representatives.
Sir Tony Atkinson says that inequality unfairly punishes those who suffer bad luck and undermines economic growth and social cohesion. This is why, he argues, that the issue of economic inequality has now come centre stage in political debate across the world, with the US President, Barack Obama, and the Head of the IMF, Christine Lagarde, both declaring that reducing inequality is high on their agenda.
“Inequality is now seen as threatening the very sustainability of the world economic system. While there seems to be a consensus on this matter, however, what many political leaders have not said is what they would do about it. While there are repeated calls for equitable growth, little clue has been given as to how this is to be achieved.”
Sir Tony Atkinson argues that there is nothing inevitable about the levels of inequality experienced in Ireland and right around the world and at the conference he will set out a series of policy proposals that he feels could bring a genuine shift in the distribution of income towards those experiencing inequality.
“In relation to employment and wages, Governments around the world should adopt an explicit target for reducing unemployment and offer a guarantee of employment - at the minimum wage for up to 35 hours per week - in socially useful areas, for example like meals-on-wheels and childcare. This would help tackle the proliferation of unstable hourly jobs that make it so hard for the working poor to earn a living. In addition, policy makers need to adopt policies – such as research funding programmes – that encourage technological innovation that increases the employability of workers rather than replace them.
“Each country should put in place a national pay policy which would include setting the minimum wage at the Living Wage level. A code of practice should also be adopted for dealing with higher pay.”
Professor Sir Tony Atkinson will also set out strong proposals in relation to income tax, inheritance and savings policies.
“To reduce inequality, we need to see a return to a more progressive approach to income tax with marginal tax rates increasing up to a top rate of 65% for high earners. Governments should change how inheritances are treated so that the tax from large inheritances is used to create a capital endowment or minimum inheritance for all citizens on reaching adulthood. This capital could be used to fund their education and training.”
Other ideas which will be set out by Sir Tony Atkinson at today’s conference to tackle inequality include:
• Strengthening competition policy so that it has an explicit responsibility to take the distribution of wealth into account;
• Creation by Governments of sovereign wealth funds to invest in promising new businesses;
• Ensuring workers can be represented by trade unions on equal terms with employers
“The world faces great problems, but collectively we are not helpless in the face of forces outside our control. The future is very much in our hands. If we want to reduce inequality then this can be achieved,” Professor Sir Tony Atkinson will conclude.
Also speaking at the conference, TASC’s Policy Analyst, Cormac Staunton, will say that the Top 1% in Ireland have doubled their share of national income since the 1970s. He will highlight other key data including:
• Ireland is the most unequal country in the OECD when looking at incomes before taxes and transfers;
• The top 10% hold half of Ireland’s wealth. The bottom half shares to 12% of all wealth;
• The share of national income going to people at work fell from 65% in 1990 to less than 56% in 2009.
Cormac Staunton says that the causes of economic inequality are complex and that wealth and income are not the only factors leading to such inequality – public services and the cost of living are also important.
“Ireland is caught in a low-tax triangle. Because we have low taxes, we require people to put their hand in their pockets for many services, like GP visits, that might be free-of-charge or subsidised in other countries. Ireland has a cost of living that is 20% above the EU average. This worsens economic inequality.
“Investing in public services – like the recent welcome introduction by Government of free GP care for over 70s and under 6s – will do more to break the cycle of inequality than further cutting income taxes which will mainly benefit those on highest incomes,” Cormac Staunton concludes.
FOR FURTHER INFORMATION, CONTACT:
Pat Montague, Montague Communications, 087-2549123