Nabila Tabassum Chowdhury > Recent Status Updates

"This suggests that plausible changes in technology are unlikely to explain the stratospheric increase in incomes at the very top. Nor, for that matter, can they explain the difference between United States and continental Europe; technological change has been similar in all rich countries."

"This skill-biased technological change clearly explains the increase in the return to college education."

"And this technological progress was to a large extent skewed against the less qualified."

"Starting in 1979, China launched market reforms. In 1984, India started taking baby steps toward liberalization. These countries would eventually become two of the largest markets in the world."

"Thomas Piketty, squarely blaming changes in policies, while most economists emphasize that the structural transformation of the economy, and particular changes in technologies, also had a lot to do with it."

"Among high school dropouts, high school graduates, and those with some college, real weekly earnings among full-time male workers in 2018 were 10 to 20 percent below their real levels in 1980.33 If there had been any trickle-down effect of lower taxes, as its advocates claimed, one would expect wage growth to have accelerated in the Reagan-Bush years. But the opposite happened."

"Taxes are important for redistribution, but the increase in inequality is a much deeper phenomenon than a mechanical effect of lower redistribution."

"But sometime after 1920, inequality crashed in all of these countries, like in the United States, and stayed down, unlike in the United States. There are small ups and downs, and Sweden actually has a significant upswing starting somewhere in the 1980s, but the levels remain very low by US standards."

"The turning point, like in the US, is somewhere very close to 1979, the year Mrs. Thatcher took over. Before 1979, the top income share falls steadily from 1920. After 1979, there is a similar rise, interrupted briefly by the global financial crisis of 2009. Unlike in the United States, inequality has not yet reached the 1920s levels, but it does not have that far to go."

"The increase in income inequality was accompanied by a rise in wealth inequality (income is what people earn every year; wealth is their accumulated fortune), although wealth inequality has not yet reached its early 1920s level. The top 1 percent wealth share in the United States rose from 22 percent in 1980 to 39 percent in 2014."

"1980 is the year Reagan was elected. It is also almost exactly the year the share of national income that goes to the richest 1 percent reverses fifty years of decline and starts a relentless climb in the United States."

"In the 1980s, while growth remained sluggish, inequality exploded."

"The reason why such radical changes were possible probably had a lot to do with the anxiety that came with slowing growth. Despite the fact that there is no evidence massive tax cuts for the rich promote economic growth (we are still waiting for the promised turnaround in growth in both the US and the UK), at the time the evidence was much less clear."

"Deregulation became the norm, though the integration with regulation-friendly Europe limited how far it could go."

"The last thirty years of US history should convince us that the evolution of inequality is not the by-product of technological changes we do not control: it is the result of policy decisions."

"Most tend to think, however, that robot-induced despair will become a problem in the future, after technologies have improved even further. But the problem of high and rising inequality has already been staring us in the face in many countries, nowhere more so than in the United States."

"A robot tax would likely lead companies to find new ways around it, further distorting the economy."

"South Korea announced the world’s first robot tax. The Korean plan reduces tax subsidies for businesses investing in automation and combines it with a tax on outsourcing, so that the tax on robots does not lead to outsourcing."

"Footnote: “The Robot That Takes Your Job Should Pay Taxes", Says Bill Gates"

"The problem with such firing costs is that they can make life very difficult for a manager faced with a nonperforming worker or an urgent need to downsize in order to survive. As a result, firing costs may discourage hiring in the first place, which would exacerbate unemployment."

"That unregulated automation could be bad for workers is also the instinct of most Americans on the right and the left."

"This tax advantage gives employers an incentive to automate, even if it would otherwise cost less to keep the workers."

"Workers without a college education have increasingly been pushed out of mid-skill jobs, such as clerical and administrative roles, into low-skill tasks, such as cleaning and security."

"There may well be no rebound from the fall in demand for labor resulting from this wave of automation and AI. Sectors that become more profitable may invest in new labor-saving technologies instead of hiring more workers. The new wealth may be used to purchase goods made in another country."

"The economic historian Robert Fogel showed that boys in England during this period were significantly undernourished compared even to slaves in the US South. 14 The literature of the time, from Frances Trollope to Charles Dickens, describes what was happening to the economy and society with a certain amount of unmitigated horror. Those were Hard Times indeed."

"Jobs were found for all those who wanted to work, despite rapid labor-saving technological progress."

"PLAYER PIANO WAS the very first novel published by the great American fabulist Kurt Vonnegut. It is a dystopia about a world where most jobs have disappeared. Written in 1952 in the wake of the great postwar expansion of jobs, it was either extremely farsighted or astoundingly misguided, but, either way, it’s a perfect novel for our times."

"This flies directly in the face of what we have learned over the past decades. The evidence is clear— inequality has risen dramatically in recent years, with searing consequences for societies across the world."

"Nothing in either our theory or the data proves the highest GDP per capita is generally desirable. Yet because we fundamentally believe resources can and will be redistributed, we fall into the trap of always trying to make the overall pie as big as possible."

"In Delhi and Washington and Beijing, it is in the name of growth that policy makers drag their feet when called upon to enact or enforce pollution regulations. Who benefits from this GDP growth remains an afterthought."