2. CONTEXT
I UNDESA/DPAD
I World Economic and Social Survey 2014 on “Reducing
Inequality for Sustainable Development”
I Basic motivation for looking at redistributive policies/this
paper
I The growing concentration of wealth and income stands in
sharp contrast with the increasingly cooperative nature of
wealth production and creation processes
I Eradicating poverty without reducing inequality is impossible in
our finite world
I Policy solutions need to simultaneously address issues of
resource allocation, income distribution and the scale of the
economy
I Redistributive policies are part of any solution
3. PROPOSED APPROACH
I Most analyses/policies
I “Redistributive policies” = “fiscal policies”
I Focus on income flows
I Overall objective: economic growth
I This paper proposes an alternative stock-flow approach to
redistributive policies that encompasses income flows, but
which is centred on the stock of income-generating assets
I Focus on income-generating assets better reveals blindspots
with regard to economic efficiency and, especially, social equity
and environmental sustainability
I Overall objective: sustainable development
4. OBJECTIVES OF THE PAPER
I Propose an asset-centred analytical model of redistributive
policies explaining why stocks of income-generating assets
(e.g. human capital and wealth, including natural resources)
matter for in-equity and un-sustainable development
I Review set of existing policies
I Make policy recommendations based on the comparison of
existing policies with the potential scope of redistributive
policies
5. PAPER OUTLINE -
Asset-Centred Redistributive Policies for Sustainable
Development
1. REDISTRIBUTIVE POLICIES, IN-EQUITY AND
UN-SUSTAINABLE DEVELOPMENT
1.1 An asset-centred analytical framework
1.2 Stylized facts about redistributive policies and linkages to
in-equity and un-sustainable development
2. REDISTRIBUTIVE POLICY TRENDS IN A CHANGING
CONTEXT
2.1 Public expenditures and social spending
2.2 Revenue mobilization
3. TOWARDS PROGRESSIVE ASSET-CENTERED
REDISTRIBUTIVE POLICIES FOR SUSTAINABLE
DEVELOPMENT
3.1 Definitions
3.2 Institutions and policies
3.3 International cooperation
6. AN ASSET-CENTRED ANALYTICAL FRAMEWORK
Two analytical figures:
1. Private income-generating assets, redistributive policy
instruments and the income cycle
2. Public income-generating assets and the revenue-expenditure
cycle
Questions:
I What are those two cycles? Who owns what? And what is the
role of income-generating assets?
I How are those two cycles linked?
I What are the linkages to in-equity and un-sustainable
development?
9. LINKAGES TO IN-EQUITY AND UN-SUSTAINABLE
DEVELOPMENT
Stylized facts and linkages:
I The declining impact of redistribution and rising income
inequality at the global level
I Redistribution of income and in-equality of outcome
I Redistribution of income-generating assets and in-equality of
opportunity
I Human capital
I Wealth
I Redistributive policies and the un-sustainable use and
un-equitable access to natural resources for present and future
generations
10. Figure: The declining impact of redistribution and rising income
inequality at the global level
0 2 4 6 8
Increase in Gini net since 1970 (in points)
30 35 40 45 50 55
Gini index (in points)
1970 1980 1990 2000 2010
year
Gini net (LHS) Gini market (LHS) Increase in Gini net since 1970 (RHS)
I 7 points increase, 75 per cent of world population
I Limitations of Gini indicator, SWIID database (version 4.1)
I The role of taxes and transfers: why taxes matter?
11. Figure: Redistribution of income and in-equality of outcome
Southern Africa
Western Europe
Northern Europe
Northern America
Northern Africa
Eastern Asia
South America
Middle Africa
Central Asia
Eastern Africa
Caribbean
South-Eastern Asia
Western Africa
Central America
Southern Asia
Western Asia
Eastern Europe
Southern Europe
Australia and New Zealand
Melanesia
20 25 30 35 40 45
Total revenue (as a share of GDP)
0 5 10 15
Decline in post-tax Gini index
Western Europe
Eastern Europe
Northern America
Southern Africa
Western Asia
Eastern Asia
Northern Africa
Caribbean
South America
Central Asia
Eastern Africa
Middle Africa
Southern Asia
Western Africa
Central America
South-Eastern Asia
Northern Europe
Southern Europe
Australia and New Zealand
Melanesia
25 30 35 40 45 50
Total expenditures (as a share of GDP)
0 5 10 15
Decline in post-tax Gini index
I Larger public sectors reduce inequality more significantly
I Progressivity/regressivity of revenue mobilization/expenditure matters:
Southern Africa vs. Southern Europe (VAT and capital expenditure)
12. Figure: Redistribution of income-generating assets and in-equality of
opportunity (i) human capital
Melanesia
Southern Africa
Southern Asia
South-Eastern Asia
South America
Eastern Asia
Central America
Caribbean
Western Asia
Western Africa
Eastern Africa
Northern America
Middle Africa
Eastern Europe
Northern Africa
Central Asia
Northern Europe
Southern Europe
Australia and New Zealand
Western Europe
30 40 50 60
Gini index
2 4 6 8 10 12
Public expenditure on health
Melanesia
Southern Asia
South-Eastern Asia
South America
Eastern Asia
Central America
Northern America
Middle Africa
Eastern Africa
Northern Africa
Southern Africa
Western Africa
Caribbean
Central Asia
Western Asia
Eastern Europe
Australia and New Zealand
Southern Europe
Northern Europe
Western Europe
30 40 50 60
50 60 70 80
Life expectancy
I MDG: social spending fosters human development and economic growth
I More unequal subregions tend to allocate fewer resources to human
development, resulting in lower life expectancy/education
13. Figure: Redistribution of income-generating assets and in-equality of
opportunity (ii) wealth
20 40 60 80 100
2 3 4 5 6 7
1900 1914-1 8 1929 1939-4 5 1980 2000 2010
EU capital stock/GDP (LHS) US capital stock/GDP (LHS)
EU top 10 per cent wealth share (RHS) US top 10 per cent wealth share (RHS)
EU top 10 per cent income share (RHS) US top 10 per cent income share (RHS)
I Piketty data: capital stock accumulation and the mutually reinforcing
dynamic between wealth and income inequality
I Controversy about r>g...
14. Figure: Redistributive policies and the un-sustainable use and
un-equitable access to natural resources for present and future
generations
Korea
Australia
Germany
United Kingdom
Italy
United States
Japan
Spain
France
Canada
Turkey
Brazil
South Africa
China
Argentina
Mexico
India
0 5 10 15 20
CO2 emissions per capita (metric tons) -1 0 1 2 3 4
Environmental tax revenue (as a share of GDP)
Note: High income=blue; upper middle income=maroon; lower middle income=green.
I Higher environmental tax revenue is associated with lower carbon
emissions per capita, but environmental taxes remain underexploited
I Regressive? What about progressive consumption taxes related to
quantities consumed (e.g. frequent flyer tax instead of rewards)?
15. REDISTRIBUTIVE POLICY TRENDS IN A CHANGING
CONTEXT
Stylized facts:
I Since 2000, public social spending (as a share of GDP)
increased in most developing regions, but less than in
developed regions, except for LAC
I Social protection (pensions, unemployment insurance, etc.) as
a share of GDP is 3 to 6 times higher in developed countries
I Total government revenue amounted to 42 % of GDP in
developed countries in 2010, around 35 % of GDP in
transition economies and in the Middle East and North
African countries, and between 20% to 28 % of GDP in other
developing regions
I Shifting towards regressive tax structures
I Declining environmental tax revenue
I Dwindling net wealth taxes
I Tax abuses: tax avoidance and tax evasion on the rise
I Privatization of public income-generating assets
16. TOWARDS PROGRESSIVE ASSET-CENTERED
REDISTRIBUTIVE POLICIES FOR SUSTAINABLE
DEVELOPMENT
I Definitions
I Policies and institutions
I International cooperation
17. Redefining equity and development in sustainable terms
I Focusing on asset inequality, not income poverty
I Enabling trade-offs between economic growth, social equity and
environmental sustainability
I Redefining the metrics of equity and development
18. Building institutions and designing policies enabling
asset-centred redistributive policies for equity and
sustainable development
I Modernizing tax administration for increased and progressive tax
revenue mobilization
I More progressive tax systems for reducing inequality of outcome
I Shifting the tax base towards wealth for enhancing equality of
opportunity
I Shifting the tax base towards environmental externalities for
incentivizing sustainable production and consumption, and shorter
value chains
I Socializing natural resource rents and/or ownership to ensure
sustainable use and equitable access for present and future
generations
I Redistributing income-generating assets for economic democracy
and sustainable development
I Investing in people: a rights-based approach to human development
19. Fostering international cooperation
I Bridging the gap with ODA for public social spending and revenue
mobilization
I Promoting financial transparency to prevent tax abuses by HNWIs
and TNCs
I Addressing harmful tax competition through unitary taxation to
combat tax avoidance
I Taxing mobile capital (unilaterally) to eradicate extreme wealth and
reduce international inequality
