Absolute and Change in Income Levels Per Household Member for 2000-2010(unadjusted for inflation as measured by CPI)GINI Coefficient (Dispersion of Income Levels) for 2000-2010Singapore (0.47) has higher GINI than ChinaSingapore (47) has high GINI ranking in the WorldQuoteThe ST Interview of Associate Professor Aneel Karnani of the University of Michigan in The Straits Times (14 Sep 2011) offers additional thoughts on what’s happening with regards to social inequality in Singapore. Social mobility and social inequality are interlinked. High social mobility is a tool to lower social inequality. According to Professor Aneel, income inequality is an inevitable by-product of free market economics. Technology and globalisation are two major factors why there is increasing social inequality in affluent countries, including Singapore.Professor Aneel argued why despite being a firm supporter of free economics, he believes some degree of wealth distribution is necessary. A high degree of social inequality would lead to exploitation of the most vulnerable. I would add that having a large number of the underclass desperate for their livelihoods may lead to widespread social unrest and even to the overthrowing of regimes, as seen from the Arab Spring uprisings. Several Arab governments were forced down because of public anger. It was sparked off by a poor and desperate street vendor in Tunisa who burnt himself to death to protest against harassment and humiliation by the authorities. There is high social inequality in the Arab world.Professor Aneel argued that our inequality is even higher if we factor in the large pool of transient blue collar workers who are not captured in the Gini statistics. Many such workers have been brought in as cheap labour, which has suppressed wages at the lower end of the population.http://yeejj.wordpress.com/2011/09/14/social-inequality/QuoteRichard Wilkinson, a British researcher in social inequalities in health and the social determinants of health compares and analyses inequalties in various countries. Singapore has the widest rich-poor gap among countries he analyses.We feel instinctively that Singapore with its huge income gap is somehow going wrong. Richard Wilkinson charts the hard data on economic inequality, and shows what gets worse when rich and poor are too far apart: real effects on health, lifespan, even such basic values as trust.Richard Wilkinson: How economic inequality harms societies<a href="http://www.youtube.com/watch?v=cZ7LzE3u7Bw" target="_blank">http://www.youtube.com/watch?v=cZ7LzE3u7Bw</a>http://www.youtube.com/watch?v=cZ7LzE3u7Bw&feature=player_embedded----------------------------------------------------It is one matter to say "who is surprised?" to mean most people are generally aware of such gaps.However, it is another matter that those people who know such gaps exist, ALSO appreciate the reasons contributing to the gap and the social consequences of the gap.QuoteThe instability of inequalityUnless relative economic roles of the market and state are rebalanced, protests will get more severeby Nouriel Roubini 04:46 AM Oct 17, 2011This year has witnessed a global wave of social and political turmoil and instability, with masses of people pouring into the real and virtual streets: The Arab Spring; riots in London; Israel's middle-class protests against high housing prices and an inflationary squeeze on living standards; protesting Chilean students; the destruction in Germany of the expensive cars of "fat cats"; India's movement against corruption; mounting unhappiness with corruption and inequality in China; and now the "Occupy Wall Street" movement in New York and across the United States.While these protests have no unified theme, they express in different ways the serious concerns of the world's working and middle classes about their prospects in the face of the growing concentration of power among economic, financial and political elites. The causes of their concern are clear enough: High unemployment and underemployment in advanced and emerging economies; inadequate skills and education for young people and workers to compete in a globalised world; resentment against corruption, including legalised forms like lobbying; and a sharp rise in income and wealth inequality in advanced and fast-growing emerging-market economies.Of course, the malaise that so many people feel cannot be reduced to one factor. For example, the rise in inequality has many causes: The addition of 2.3 billion Chinese and Indians to the global labour force, which is reducing the jobs and wages of unskilled blue-collar and off-shorable white-collar workers in advanced economies; skill-biased technological change; winner-take-all effects; early emergence of income and wealth disparities in rapidly growing, previously low-income economies; and less progressive taxation.The increase in private- and public-sector leverage and the related asset and credit bubbles are partly the result of inequality. Mediocre income growth for everyone but the rich in the last few decades opened a gap between incomes and spending aspirations. In Anglo-Saxon countries, the response was to democratise credit - via financial liberalisation - thereby fuelling a rise in private debt as households borrowed to make up the difference. In Europe, the gap was filled by public services that were not fully financed by taxes, fuelling public deficits and debt. In both cases, debt levels eventually became unsustainable.Firms in advanced economies are now cutting jobs, owing to inadequate final demand, which has led to excess capacity, and to uncertainty about future demand. But cutting jobs weakens final demand further, because it reduces labour income and increases inequality. Because a firm's labour costs are someone else's labour income and demand, what is individually rational for one firm is destructive in the aggregate.The result is that free markets do not generate enough final demand. In the US, for example, slashing labour costs has sharply reduced the share of labour income in GDP. With credit exhausted, the effects on aggregate demand of decades of redistribution of income and wealth - from labour to capital, from wages to profits, from poor to rich, and from households to corporate firms - have become severe, owing to the lower marginal propensity of firms/capital owners/rich households to spend.The problem is not new. Karl Marx oversold socialism but he was right in claiming that globalisation, unfettered financial capitalism, and redistribution of income and wealth from labour to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fuelled by credit bubbles and asset-price booms and busts.Even before the Great Depression, Europe's enlightened "bourgeois" classes recognised that, to avoid revolution, workers' rights needed to be protected, wage and labour conditions improved, and a welfare state created to redistribute wealth and finance public goods - education, health care and a social safety net.The push towards a modern welfare state accelerated after the Great Depression, when the state took on the responsibility for macroeconomic stabilisation - a role that required the maintenance of a large middle class by widening the provision of public goods through progressive taxation of incomes and wealth and fostering economic opportunity for all.Thus, the rise of the social-welfare state was a response (often of market-oriented liberal democracies) to the threat of popular revolutions, socialism, and communism as the frequency and severity of economic and financial crises increased. Three decades of relative social and economic stability then ensued, from the late '40s until the mid-'70s, a period when inequality fell sharply and median incomes grew rapidly.Some of the lessons about the need for prudential regulation of the financial system were lost in the Reagan-Thatcher era, when the appetite for massive deregulation was created in part by the flaws in Europe's social-welfare model. Those flaws were reflected in yawning fiscal deficits, regulatory overkill, and a lack of economic dynamism that led to sclerotic growth then and the euro zone's sovereign-debt crisis now.But the laissez-faire Anglo-Saxon model has also now failed miserably. To stabilise market-oriented economies requires a return to the right balance between markets and provision of public goods. That means moving away from both the Anglo-Saxon model of unregulated markets and the continental European model of deficit-driven welfare states.Even an alternative "Asian" growth model - if there really is one - has not prevented a rise in inequality in China, India and elsewhere.Any economic model that does not properly address inequality will eventually face a crisis of legitimacy. Unless the relative economic roles of the market and the state are rebalanced, the protests of this year will become more severe, with social and political instability eventually harming long-term economic growth and welfare. PROJECT SYNDICATENouriel Roubini is chairman of Roubini Global Economics, Professor of Economics at the Stern School of Business, New York University, and co-author of Crisis Economics. http://www.todayonline.com/Commentary/EDC111017-0000079/The-instability-of-inequality
The ST Interview of Associate Professor Aneel Karnani of the University of Michigan in The Straits Times (14 Sep 2011) offers additional thoughts on what’s happening with regards to social inequality in Singapore. Social mobility and social inequality are interlinked. High social mobility is a tool to lower social inequality. According to Professor Aneel, income inequality is an inevitable by-product of free market economics. Technology and globalisation are two major factors why there is increasing social inequality in affluent countries, including Singapore.Professor Aneel argued why despite being a firm supporter of free economics, he believes some degree of wealth distribution is necessary. A high degree of social inequality would lead to exploitation of the most vulnerable. I would add that having a large number of the underclass desperate for their livelihoods may lead to widespread social unrest and even to the overthrowing of regimes, as seen from the Arab Spring uprisings. Several Arab governments were forced down because of public anger. It was sparked off by a poor and desperate street vendor in Tunisa who burnt himself to death to protest against harassment and humiliation by the authorities. There is high social inequality in the Arab world.Professor Aneel argued that our inequality is even higher if we factor in the large pool of transient blue collar workers who are not captured in the Gini statistics. Many such workers have been brought in as cheap labour, which has suppressed wages at the lower end of the population.http://yeejj.wordpress.com/2011/09/14/social-inequality/
Richard Wilkinson, a British researcher in social inequalities in health and the social determinants of health compares and analyses inequalties in various countries. Singapore has the widest rich-poor gap among countries he analyses.We feel instinctively that Singapore with its huge income gap is somehow going wrong. Richard Wilkinson charts the hard data on economic inequality, and shows what gets worse when rich and poor are too far apart: real effects on health, lifespan, even such basic values as trust.Richard Wilkinson: How economic inequality harms societies<a href="http://www.youtube.com/watch?v=cZ7LzE3u7Bw" target="_blank">http://www.youtube.com/watch?v=cZ7LzE3u7Bw</a>http://www.youtube.com/watch?v=cZ7LzE3u7Bw&feature=player_embedded
The instability of inequalityUnless relative economic roles of the market and state are rebalanced, protests will get more severeby Nouriel Roubini 04:46 AM Oct 17, 2011This year has witnessed a global wave of social and political turmoil and instability, with masses of people pouring into the real and virtual streets: The Arab Spring; riots in London; Israel's middle-class protests against high housing prices and an inflationary squeeze on living standards; protesting Chilean students; the destruction in Germany of the expensive cars of "fat cats"; India's movement against corruption; mounting unhappiness with corruption and inequality in China; and now the "Occupy Wall Street" movement in New York and across the United States.While these protests have no unified theme, they express in different ways the serious concerns of the world's working and middle classes about their prospects in the face of the growing concentration of power among economic, financial and political elites. The causes of their concern are clear enough: High unemployment and underemployment in advanced and emerging economies; inadequate skills and education for young people and workers to compete in a globalised world; resentment against corruption, including legalised forms like lobbying; and a sharp rise in income and wealth inequality in advanced and fast-growing emerging-market economies.Of course, the malaise that so many people feel cannot be reduced to one factor. For example, the rise in inequality has many causes: The addition of 2.3 billion Chinese and Indians to the global labour force, which is reducing the jobs and wages of unskilled blue-collar and off-shorable white-collar workers in advanced economies; skill-biased technological change; winner-take-all effects; early emergence of income and wealth disparities in rapidly growing, previously low-income economies; and less progressive taxation.The increase in private- and public-sector leverage and the related asset and credit bubbles are partly the result of inequality. Mediocre income growth for everyone but the rich in the last few decades opened a gap between incomes and spending aspirations. In Anglo-Saxon countries, the response was to democratise credit - via financial liberalisation - thereby fuelling a rise in private debt as households borrowed to make up the difference. In Europe, the gap was filled by public services that were not fully financed by taxes, fuelling public deficits and debt. In both cases, debt levels eventually became unsustainable.Firms in advanced economies are now cutting jobs, owing to inadequate final demand, which has led to excess capacity, and to uncertainty about future demand. But cutting jobs weakens final demand further, because it reduces labour income and increases inequality. Because a firm's labour costs are someone else's labour income and demand, what is individually rational for one firm is destructive in the aggregate.The result is that free markets do not generate enough final demand. In the US, for example, slashing labour costs has sharply reduced the share of labour income in GDP. With credit exhausted, the effects on aggregate demand of decades of redistribution of income and wealth - from labour to capital, from wages to profits, from poor to rich, and from households to corporate firms - have become severe, owing to the lower marginal propensity of firms/capital owners/rich households to spend.The problem is not new. Karl Marx oversold socialism but he was right in claiming that globalisation, unfettered financial capitalism, and redistribution of income and wealth from labour to capital could lead capitalism to self-destruct. As he argued, unregulated capitalism can lead to regular bouts of over-capacity, under-consumption, and the recurrence of destructive financial crises, fuelled by credit bubbles and asset-price booms and busts.Even before the Great Depression, Europe's enlightened "bourgeois" classes recognised that, to avoid revolution, workers' rights needed to be protected, wage and labour conditions improved, and a welfare state created to redistribute wealth and finance public goods - education, health care and a social safety net.The push towards a modern welfare state accelerated after the Great Depression, when the state took on the responsibility for macroeconomic stabilisation - a role that required the maintenance of a large middle class by widening the provision of public goods through progressive taxation of incomes and wealth and fostering economic opportunity for all.Thus, the rise of the social-welfare state was a response (often of market-oriented liberal democracies) to the threat of popular revolutions, socialism, and communism as the frequency and severity of economic and financial crises increased. Three decades of relative social and economic stability then ensued, from the late '40s until the mid-'70s, a period when inequality fell sharply and median incomes grew rapidly.Some of the lessons about the need for prudential regulation of the financial system were lost in the Reagan-Thatcher era, when the appetite for massive deregulation was created in part by the flaws in Europe's social-welfare model. Those flaws were reflected in yawning fiscal deficits, regulatory overkill, and a lack of economic dynamism that led to sclerotic growth then and the euro zone's sovereign-debt crisis now.But the laissez-faire Anglo-Saxon model has also now failed miserably. To stabilise market-oriented economies requires a return to the right balance between markets and provision of public goods. That means moving away from both the Anglo-Saxon model of unregulated markets and the continental European model of deficit-driven welfare states.Even an alternative "Asian" growth model - if there really is one - has not prevented a rise in inequality in China, India and elsewhere.Any economic model that does not properly address inequality will eventually face a crisis of legitimacy. Unless the relative economic roles of the market and the state are rebalanced, the protests of this year will become more severe, with social and political instability eventually harming long-term economic growth and welfare. PROJECT SYNDICATENouriel Roubini is chairman of Roubini Global Economics, Professor of Economics at the Stern School of Business, New York University, and co-author of Crisis Economics. http://www.todayonline.com/Commentary/EDC111017-0000079/The-instability-of-inequality
Author
Topic: Gap Gap Gap (Read 1691 times)
