Tuesday, March 04, 2014

Tuesday Morning Links

This and that for your Tuesday reading.

- The Economist looks at the relationship between equality and growth, showing that there's at worst little evidence that fairer economies have any trouble matching their more-polarized counterparts - and best some indication that they perform better:
Inequality is more closely correlated with low growth. A high Gini for net income, after redistribution, corresponds to slower growth in income per person. A rise of 5 Gini points (moving from the level in America to that in Gabon, for instance) knocks half a percentage point off average annual growth. And holding redistribution constant, a one-point rise in the Gini raises the risk an expansion ends in a given year by six percentage points. Redistribution that reduces inequality might therefore boost growth.

If redistribution is benign, that could be because it substitutes for shaky borrowing. In their 2011 paper Messrs Berg and Ostry note that more unequal societies do poorly on social indicators such as educational attainment, even after controlling for income levels. This suggests that households with lower incomes struggle to finance investments in education. In a recent paper Barry Cynamon of the Federal Reserve Bank of St Louis and Steven Fazzari of Washington University in St Louis reckon most Americans borrowed heavily before 2008 to prop up their consumption. That kept the economy growing—until crisis struck. Sensible redistribution could mean the difference between a healthy growth rate and one that is decidedly subprime.
- Meanwhile, PressProgress highlights the glaring gap in income gains between the super-rich and the rest of us:

- Trish Hennessy's latest Index notes that decades of tax slashing have eliminated Canada's capacity to fund important social programs. And Pete Evans reports that so far, posturing about getting tough on corporate tax evaders hasn't led to any substantial results.

- But Megan Leslie points out that a fair corporate tax rate is one of the big ideas on offer from the NDP - even if it's one that may need to be discussed more frequently. 

- Finally, Timothy Taylor compares the employment philosophies of GM and Toyota, and raises the possibility that employers who train workers to perform a range of roles - and listen to their suggestions as to how to improve the workplace - may benefit significantly compared to those who try to limit workers to mindlessly repeating a single task.

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