ESG Season4 20th meeting
DATE: 21th Oct. 2012 10:00-12:00
PLACE: Kanda, Tokyo
MEMBERS: Ogawa, Murakami, Mizutani, Shimada, Yoshida
This week's cover article was insightful. Their insistence is that "A new form of radical centrist politics is needed to tackle inequality without hurting economic growth". They point out that the world in the beginning of 21st century is similar to the end of 19th century known as "Gilded Age" or "Progressive era" when the economy enlarged thanks to new technologies and on the contrary, inequality of the society came up in people's eyes. The newspaper pointed out this similarity and they show us some suggestions. Their suggestions are worth reading but what strikes me the most is their question in the beginning of the article, which is "Does inequality need to be tackled?". Their answer is yes and they explain why they think so. But most of the people including me inequality is someone else's business and are unaware of it. We cannot hesitate to answer the question as our own business.
Inequality and the world economy
A new form of radical centrist politics is needed to tackle inequality without hurting economic growth
The end of 19th century
=“Progressive era(進歩主義時代)”
=globalization/ new inventions/ unequal era
“Gilded Age(金ぴか時代)” “conspicuous consumption(顕示的消費)”
“Robber baron(泥棒男爵)” “Downton Abbey”
The aim of this era was to make society fairer without reducing its entrepreneurial vim.
Modern politics needs to undergo a similar reinvention—to come up with ways of mitigating inequality without hurting economic growth. That dilemma is already at the centre of political debate, but it mostly produces heat, not light. At the core, there is a failure of ideas. A far more dramatic rethink is needed: call it True Progressivism.
To have or to have not
The Economist says that inequality has reached a stage where it can be inefficient and bad for growth.
(1) Does inequality really need to be tackled? (They say yes but why?)
(2) What is the logic of them? (merits/ demerits of inequality)
Compete, target and reform
The Economist says that there is the need for a True Progressive agenda. They have suggestion, which steals ideas from both left and right to tackle inequality in three ways that do not harm growth.
1. A Rooseveltian attack on monopolies and vested interests.
2. Target government spending on the poor and the young
3. Reform taxes: not to punish the rich but to raise money more efficiently and progressively
Different parts of this agenda are already being embraced in different countries. Such cross-dressing is a sign of change, but politicians have a long way to go.
(1) What is “Roosevelitan attack”?
(2) What is the “target” both in emerging world and rich world?
(3) How do they think to reform taxes?
My Choice
The IMF’s annual meetings
The fund ponders fiscal consolidation
As you know, the annual meetings were held in
Tokyo last week. Why did they open in Tokyo? What was discussed? What should we
keep in mind after the meeting? There is a short article in the Economist so I
choose the topic.
What I want to discuss
(1) It was one of the largest international
conferences held in Japan in a last decade. Was it successful? Have you ever
join that kind of meetings? How was it?
(2) What was and should be in near future the
IMF and World Bank’s purpose as an international organization?
(3) What kind of outlook should we share with
financiers and policy makers around the world? (What should we keep in mind?)
What the article suggests
■The fund’s new
sets of global forecast (outlook)
The world economy is weakening, and it is not just a euro-area problem.
Emerging-market growth is slowing, too. Even so, emerging markets get a good
bill of health overall.
■Prescriptions are
obvious
America and Japan è The fund urge to
end budgetary politicking(政治運動)
Britain, France and the Netherlands è Even the impact
of fiscal consolidation(財政再建) is “large,
negative, and significant”, the interest rate is historically low, so many
could buy some time, reducing deficits more gradually so as to spread out the
hit to growth.
■The substance and
timing of fiscal policy: “Slower, fairer, smarter”
(1) Shifting the balance towards increasing
tax revenue, rather than cutting spending, would mean consolidation is
less likely to increase inequality.
(2) Evidence suggests that generous unemployment benefits tend to
increase joblessness. A better approach would be to fund job-search programmes and switch towards in-work benefits,
including subsidised child care.
Other discussion
True Progressivism from Leaders
A little help from the invisible hand from Finance and Economics (Shimada)
