The International Monterey Fund is constantly observing the economies of the globe and providing in depth reports and predictions. The main goal of the Fiscal monitor is to help governments change policy to lessen income inequality while keeping up efficiency. The latest communications from the IMF include a statement about how global inequality is going down (Jim Bang mentioned this in class about how even though the advanced economies are experiencing greater inequality however vast amounts of the globe population that has been pulled out of starvation-level poverty). They also describe some of the benefits that are associated with less income inequality such as higher economic growth and less polarization in politics. They suggest policies like reform of income taxation, universal basic income, and public spending policies on education and healthcare. It has been observed that income inequality globally has been reduced by international trade. For example, when Japan started trading with the rest of the world they saw their standards of living greatly increase. Japan is also has much better income distribution then the United States.
Article:
http://econospeak.blogspot.com/2017/10/imf-fiscal-monitor-progressive-taxation.html#links
The fact that Japan’s standard of living increased when they opened to trade makes a lot of sense. We have learned that when countries open to trade, they begin to specialize, wages begin to rise, and they are able to increase consumption. One thing to look at nationally and internationally is how inflation is tending relative to income levels to be able to gauge buying power, especially here in the U.S.
ReplyDeleteTo some extent I disagree to the statement "income inequality globally has been reduced by international trade". Japan is one the country with export of manufactured goods and export of electronics of good quality. Country which are in a developing stage such as Pakistan has not been able to benefit from trade. The reason is that, Pakistan export mostly primary goods, while it has to import high tech technology. Due to huge trade deficit, income inequality remains a problem. It seems that those who are better are getting better while those who already at a worse stage and getting even more worse.
ReplyDeleteIt might be possible that due to trade countries can grow much faster and improve there life standards more quickly. However it is important to understand that who are the winners and looser in trade. Considering two countries A and B. If these two countries are engaged in trade then clearly one might get a higher revenue while other might face loss in trading. If country A has a higher trade surplus than the standard of living will increase in A. Since Japan is exporting high valued added goods, and its trade balance is usually surplus than clearly japans standard of living will increase. So income inequality will improve if the country makes a trade surplus.
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