Global musings heading towards Merrion Street
Joseph Stiglitz; argues that inequality is inefficient. Photograph: Eric Luke Staff Photographer
The usefulness of reports such as the one released on Tuesday by the Organisation for Economic Co-operation and Development, Society at a Glance 2014 , is worth consideration. It contains a lot of data, which is analysed and set out in tables showing the position of OECD member states vis-a-vis each other. The data is often dated by the time it is ready for comparision across such a wide range of jurisdictions.
For instance the table showing Ireland had since the crash seen a doubling of the number of households in which no one was working, compared the situation in 2007 with that in 2012. Reports that tell us, for example, that life is harder since the crash are of limited value.
But even taking such points into account, exercises such as this one by the OECD are useful as they present a picture of what has occurred during the slump, and serve to highlight the challenges that policymakers and societies face.
A key issue is where policymakers focus their efforts. To put it another way, identifying what issue will be given priority is arguably as big a decision as the policies settled on. For instance, a range of major global organisations are wrestling with the issue of taxation and how to increase it in ways that will least affect economic growth. As the OECD report points out, indirect taxes are largely regressive and do not have the same effect on inequality as do progressive taxes on income that are frowned upon by those whose focus is on growth.
Reports such as Society at a Glance and last year’s Taxing Times from the IMF, which floated the idea of taxing the super-wealthy, give an indication as to how these global debates are progressing. Even the most recent Davos gathering had inequality as its focus. Some, such as economist Joseph Stiglitz, have drawn attention to the negative effects of inequality on economic growth and on democracy. These debates are not academic: sooner or later these global musings end up dictating particular announcements in our annual budgets.