Are you protected from monopolies?

Attended  a good talk by Joseph Siglitz , followed by Branko Milanović as part of lecture series organized by Azim Premji Foundation on Wednesday. Thanks a lot Azim Premji Foundation to bring eminent personalities and organizing public lectures in Bangalore.

Explanation by  Branko how countries calculated global inequality was an eye-opener. Prior to 1980s,  global inequality seems to be studied in limited fashion without proper mechanism to collect data across countries. For example, to know average price of commodity, first we need to collect average prices of all countries, incorporate differences due to currency valuation and arrive at average price of commodity.

Yes, monitoring inequality was not easy task with less computer penetration, my curiosity brought to question ” Will Adhaar help to reduce economic and other inequalities ?” then I reminded myself Adhaar is already getting implemented like monopoly.

Key message from eminent speakers was close to “Will Foreign investment drive down prices and shift production to outside country?” I already observe that Indian suppliers are challenged to compete with foreign firms and may be this will  increase inequality.

Here are interesting facts in economics I learnt in session, written  down for my reference. Also recommend reading article OF THE 1%, BY THE 1%, FOR THE 1%.

Monopsony is a market similar to a monopoly except that a large buyer, and not seller, controls a large proportion of the market and drives the prices down. It is sometimes referred to as the buyer’s monopoly.

American Belief: Americans are die-hard optimists and believe that things are going to become better tomorrow. Today Americans are continuing to feel good, Are they really good?.

Trickle-down economics: Throw money at the top and benefits will trickle down and all people get benefited. This is not working anywhere including USA. Median income of common people is stagnant and working hours have increased. Looks that people are well-off as they worked harder. With increase in productivity, why wages are not growing? Should they not go up together?

Obama Administration pumped money in to economy and that did not trickle down to people in need and went to banks and bankers salary. Is the increase of inequality after 1990 a result of change in politics?

Multiple dimensions of growth in inequality

  • More money at top
  • More people in poverty
  • Reducing of middle class life expectancy
  • Inequality in wealth
  • Inequality in health
  • Inequality in access to justice.

Open Indian marker to Walmart to learn about corruption. When income stagnates, social pathology sprouts up.

Inequality in opportunity

While we talk that USA grew to current stage in 100 years and China did the same in 30 years, Can we start asking our-self. “Why only parts of country or small percentage of population have grown fast, while  the same growth is not shared by the entire country?”

Newspapers do not write what happens every day. They write unusual scenarios” For every one person who moved from inequality to equality, there is large section of population that has not been able to make this transition.

Children of the people who are impacted by inequality continue to be impacted, as education which helps in transition comes with baggage ” The education of child continue to depend on education of parent”. If inequality depends on parent, Can you choose the right parent when you are born?

Agriculture Developed or Advanced countries are keeping agriculture outside of free markets. Why are they not getting rid of agriculture subsidies?

Shared that Brazil sued USA on cotton subsidies.  the subsidy was neither reduced or removed. Instead USA gave money to Brazil and in return, Brazil was asked not to raise issue. He asked “Why does India not sue USA on cotton subsidies?” 

Agriculture labor is unskilled. Decreasing wages for unskilled workers and increasing returns to skilled workers. While average salary wages get calculated , the average wage is taken based on salary of skilled and unskilled workers. What does increase of average wage means? Inequality exists between skilled and unskilled. Is globalization good or bad for unskilled workers?

In addition to describing the root to create inequality, the speakers explored alternatives that can be explored to come for approaches to reduce inequality.

When question becomes “Can you Choose right country to be born to move away from inequality”, the real question is not any more in economics, it is in politics.  Already impacts are observed retirement security, child education and ability to own a home.

  • Decisions today will affect inequality decades later and hence the key is to rewrite rules of governance again.
  • Inequality has been a choice,we choose to live with. This is result of how economy has been structured via tax, legal and expenditure policies at governance level.
  • Equality and economic performance are compliments. You can get both. Needs awareness of inequality in society and focused working to reduce existing inequalities and stop further rise of  economic and other inequalities.

Can we redefine that development is to increase income for poor people irrespective of where they are, in their countries of birth or elsewhere? The speakers touch based following that I was not able comprehend fully.

  • Introduce concept of Citizenship rent : Every citizen gets before you were born in country.
  • Changes to concept of Migration and concept of national welfare state. Where you live is the most important determinant of your income that can reduce , Can we allows people to choose the right country to born, or at-least to live?