How Can Economic Policy Strike a Balance Between Economic Efficiency and Income Equality?
نویسنده
چکیده
Can income equality be combined with high economic efficiency and rapid economic growth? Fortunately, we need not answer such a general question. Indeed, the question is poorly phrased. The relationship between income and wealth distribution on one hand, and efficiency/growth on the other, depends on how a certain distribution of income and wealth has come about. For example, if a given redistribution of income is a result of a more even distribution of land holdings and human capital, the implications for economic efficiency and growth would certainly differ from equally large redistributions via more progressive taxes and more generous benefit systems,1 not to mention income equality brought about by strict wage and price controls in confrontations with market forces or the nationalization of physical and financial assets. Moreover, the consequences for economic efficiency and growth of government transfers and taxes of given size also depend on how the benefit systems are constructed in detail and how exactly they are financed.
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General Discussion: How Can Economic Policy Strike A Balance Between Economic Efficiency and Income Equality?
Mr. Katz: I greatly enjoyed Assar’s paper and largely agree with almost everything he said. I have a couple of points I want to make. The first is, while I think he does an excellent job of saying what we think policy should be, I think some of the political economy worries and whether we will have them, actually are related to something he talked about—the growing intergenerational potential c...
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