Summary Of Inequality What Can Be Done By Anthony B Atkinson

The unsolved issue of inequality is still at the forefront of public debate. In Inequality, What Can be Done? by Anthony B. Atkinson, Atkinson sets out proposals that will bring about a shift in the distribution of income towards less inequality. Atkinson seeks to show what can be done now to reduce the extent of inequality. The world faces great problem, but the future is very much in our control. It has been commonly addressed that the improvement of education and skills is the solution to inequality however, we must rethink fundamental aspects in our society such as capital sharing, progressive taxation, as well as employment and pay in the future to limit economic and social inequality.
Atkinson devotes much of his time towards the research

on inequality. He brings his theoretical and practical experiences to understand its diverse problems. He presents a set of policies that could bring a shift in the distribution of income in developed countries. Atkinson addresses that the problem is not that the rich are getting richer, but society is failing to tackle poverty, and the economy is rapidly changing to leave most people behind.

To reduce inequality, we must go beyond placing new taxes on the wealthy to fund existing programs. We need new ideas. Atkinson presents his new set of policies in five areas: technology, employment, social security, the sharing of capital, and taxation. He defends these against the common arguments and excuses for inaction: that intervention will shrink the economy, that globalization makes action impossible, and that new policies cannot be afforded.
“Proposal 1: The government should offer via national savings bonds a guaranteed positive real rate of interest on savings, with a maximum holding per person” (Atkinson 168). The rate can be taken in correspondence to the medium-term expected rate of real growth of household income per head (averaged to smooth out cyclical fluctuations), allowing for the fact that household incomes cannot be expected to grow as fast as national income. If the real rate of interest for small savers can be guaranteed to match the rate of growth, then their savings will not fall behind, “Proposal 2: There should be a capital endowment (minimal inheritance) paid to all at adulthood” (Atkinson 170). The age these individuals

will receive this inheritance is at the age of 18. In the UK, Le Grand proposes that this should be financed by increasing inheritance taxation. Atkinson proposes moving a lifetime capital receipts tax, and that the revenue should be allocated to the financing of the capital endowment. Although there are arguments against hypothecation of tax receipts in general, here there is a good case for making a link between the tax-and-benefit sides of the equation. Revenue from the tax would have to be higher.

Adding restrictions for the use of the minimum inheritance would add significantly to the administrative cost. One restriction is towards the investment in education or training. Possible permitted uses could include down payments on houses or flats, or the establishment of a small business, “Proposal 3: A public Investment Authority should be created, operating a sovereign wealth fund with the aim of building up the net worth of the state by holding investments in companies and in property” (Atkinson 175). A sovereign wealth fund is a state-owned investment fund. Sovereign wealth funds are used by many nations to generate profit that will benefit the nation’s economy as well as its citizens. Its primary function is to stabilize the nation’s economy through diversification and to generate wealth for future generations. One of the most recent sovereign wealth funds was established in France in 2008, Le Fonds stratégique d’investissement (Structural Investment Fund). It forms part of a longer history: the fund comes under the jurisdiction of the Caisse des Dépôts that was founded in 1816. The fund is answerable to Parliament and is a long-term investor in the service of the public interest. The

same year that the fund was established in France, the UK set up the UK Financial Investments, a company responsible for managing the investments made by the government in the recapitalization of banks (and the investment in UK Asset Resolution. The total values of the assets depend on the share prices and the extent of the shareholding retained. On March 31, 2014, it was around 40 billion pounds. The policy of the UK Coalition government is to sell these assets and to continue with the sales of other state assets, such as the Royal Mail, “I believe that the policy should be reversed. The state should be seeking to build up its net worth by enlarging its holdings of shares in companies and of property. Put differently, the net worth of the state is a measure of what we pass on to future generations, and the establishment of a sovereign wealth fund is a vehicle for achieving intergenerational equity. In Norway, the sovereign wealth fund was established to ensure that the benefits from North Sea oil production accrued was not just for the current generation, but also for future generations. There is a rule limiting annual spending to 4 per cent, on average of the fund. Norway is not the only country to have benefitted from the North Sea oil. Many wonder what could have happened if the UK had created such a fun in 1968 and had spent only the real return (that is, had accumulated not only the government revenues, but also sufficient revenue from the fund income to maintain its purchasing power). Norway’s spending out of the fund has been broadly equal to the real return in recent years. There was a hypothetical graph that demonstrated how the existence of the fund would have changed the state net worth. This hypothesis indicated that if the UK had established a sovereign net worth in 1968, there state net worth would be higher. Therefore, if the UK Investment Authority ever decided to make such an investment, it would be used in regard to the wider social impact in terms of the provision of housing as well as the immediate short-run profit. It would also provide a source of funding for infrastructure investment and for climate change mitigation. This would allow for a fairer distribution between generations.