Are we more or less equal than before? Money can tell us, teachers say

People talk a lot these days about inequality. Who wins? Who loses ? An obvious way to measure disparities involves a cold, accountable currency, and who owns it.

A new course ending this spring at the University of Virginia attempted to answer the questions that students — and frankly, the rest of us — have about how democracy reconciles issues of inequality, such as economic disparity.

The four professors who teach the ambitious Democracy and Inequality course are Jennifer Bair, professor of sociology; Bob Bruner, Dean Emeritus of the Darden School of Business; Kerem Cosar, professor of economics; and Sonal Pandya, associate professor of politics.

Of course, they each approach the course from their respective academic lenses. And the course itself addresses various forms of inequality, such as political participation and environmental justice, in addition to economic concerns.

“My colleagues and I wanted to create a course that combines our different perspectives on democracy and inequality, and that would be accessible to first- and second-year students,” Pandya said. “We use case studies to help students understand the different ways democracy shapes economic inequality. Students practice applying this knowledge to current issues, including the COVID-19 pandemic and the rise of Russian oligarchs.

So, UVA Today put all four squarely: Are we, as human beings, economically speaking, more or less equal than we were before?

A basic rule: saying “it’s complicated” was not allowed, even if the problem undoubtedly is.

As their platform notes, democracy can be both a safeguard against inequality and fail to address unequal access to resources. The professors also point out that just because a country calls itself democratic does not mean that it always follows democratic principles.

To further complicate the picture, Western democracy often accords with the concept of a “free market” economy, in which the government can regulate, but not completely control, corporations. However, not all democracies pull their levers in the same way.

The answers selected by the professors to the question here may well challenge what you thought you knew about democracy.

Bair on income inequality: We are less equal in the United States, more equal in the world

“If the question is, ‘Are we more or less equal today than 50 years ago? then the answer depends on who “we” are. Income (and especially wealth) inequality in the United States has increased. But a different picture emerges if we look at this issue from a global point of view.

“If we want to understand trends in total global inequality, we need to look at its two components: inequality within countries (the kind of inequality that we know has increased in the United States) and inequality between countries.

“When we measure inequality between countries, we usually weight countries by their population, because otherwise, for example, Belize and China are equivalent units. Inequality within countries has increased in many countries, but not all.

“Yet aggregate global inequality has actually declined slightly over the past 15 years or so, largely due to strong growth in middle incomes in China and India.

“Two caveats: It is important to keep in mind that this is a decline in income inequality, not wealth inequality. Moreover, when we talk about democracy and inequality, what matters is not just trends, but what people think is happening. People perceptions of inequality may matter more than real tendencies, in terms of policies and policies they support.

Bruner on robust market economies: they are associated with less inequality

“The body of respected research finds growing economic inequality in the United States since about 1980. It’s a conclusion so widely reproduced that it’s now conventional wisdom, but it deserves close scrutiny.

“For example, many students seem to believe that economic freedom and a market economy cause economic inequality – that is, more economic freedom, more inequality. But seen in many countries, the opposite seems true: more economic freedom, less inequality. The two are inversely correlated (-38%).

“A final surprise was the perception among students that banks, stock markets and the financial sector of the economy are important causes of economic inequality. Certainly, the huge compensation packages reported in the US financial sector contribute to this perception. But in many countries, the data show the opposite result: the more financially developed a country (measured in terms of banks, stock markets, legal institutions, etc.), the lower the economic inequality (correlation of -36 %).

“Last summer, the International Monetary Fund agreed with this view and concluded that “…improvements in financial contracts, markets, and intermediaries expand economic opportunity, reduce persistent inequality, and tighten the distribution of wealth.” income.

“This and other information warrants further research, as the results indicate association, but not causation. Additionally, the economic relationships explored in the course are potentially quite complex and perhaps best described in multivariate models. Finally, , relationships can change over time.

“In short, it seemed to me that the course triggered a healthy evaluation of conventional wisdom. The scope for exploration and critical evaluation of this course is enormous.

Cosar on competition: technology helps both “superstars” and new players

“Two technological factors are constantly increasing the size of markets by integrating them beyond space and borders: the drop in freight costs, thanks to giant container ships, and the possibility of exchanging services previously non-tradable, thanks to digitization. Barriers that previously protected local small and medium-sized businesses from intense competition are being broken down. This results in a “superstar effect”: more productive suppliers can capture a larger and larger share of the markets. We see it not only in physical products, but also in digital media. In this sense, the world is becoming more and more unequal.

“At the same time, however, some other new technologies reduce the high set-up costs to enter the market. Suppliers can offer niche products on a smaller scale. The analogy in digital media is of teenagers recording a song from their bedroom and going viral on social media, like YouTube. In this sense, access is becoming more democratic and the world is becoming more egalitarian.

Pandya on voting: We’re a bit more equal in terms of income, but that doesn’t mean much

“Participation inequality refers to the gap in voter turnout between rich and poor citizens. In the United States, overall voter turnout has slowly increased over time, but turnout inequities persist. In the 2020 election, 65% of US citizens earning $40,000 a year voted, while 88% of those earning more than $75,000 a year voted.

“Voting is the fundamental mechanism by which citizens hold elected officials accountable and responsive to their needs. Inequality of participation reinforces economic inequality by diminishing the voice of poor citizens in the policy-making process.

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