 So in view of the time and in view of the fact that we have five speakers on this on this on this panel I'm going to be relatively brief What I want to do is to just make a couple of points to seed the discussion And I want to talk about some global patterns of inequality We're often told that that we're in a we're in an age of rising inequality And indeed for those living in OECD countries this this may indeed be right And indeed for those living in Asian economies, this may be right But of course there's tremendous diversity and that's my first point that I want to emphasize which is that there's tremendous diversity in the patterns of inequality in the world as we As I said for OECD countries there has been rising inequality as we conventionally measure it and For the large Asian economies there's been rising inequality as we conventionally measure it But of course we all know that for Latin America there's been decreasing inequality in the last 15 to 20 years And this particular pattern has been much analyzed and much much talked about So it's not just a story of rising inequality globally In sub-Saharan Africa, I gather there was a panel yesterday on this. I think the data are all over the place For some countries inequality is rising for some countries. It's falling some countries stable So it's it's not entirely clear what whether there is a common pattern or not For MENA Middle East, North Africa It seems as though the pattern of inequality again as we conventionally measure it is relative has been relatively stable And that actually raises some interesting questions itself and I'll come back to that And finally if we were to take a country like China and look deeply into China's pattern of inequality trends of inequality over the last Since since the reform process we have the first 10 years of Falling inequality the next 20 years or so of sharply rising inequality, and that's what we most know about But I think one would say that from from about the mid 2000s There are indications of that increase in inequality plateauing and on some indicators probably even beginning to turn down So so actually the global pattern is really quite diverse And I think as analysts we should be perhaps more interested in that in the diversity of those patterns as well as whatever common trends There are and why the common common global forces of technology, etc Are manifesting themselves in such different ways in these different in these different contexts? So let me take MENA as an example Middle Eastern, North Africa We're told again We are told in the popular press that it was inequality that caused the Arab Spring But actually in equality as we commonly as we commonly measure it as economists commonly measure it in terms of our genies Which come out of our household surveys in in for example in Egypt and Tunisia have been relatively stable Where in fact in many in some cases falling before the Arab Spring? And that actually raises some very interesting questions to my mind as to as to whether in fact We're measuring inequality, right? Whether the way we measure in court right has any connection at all to political turmoil or what what's going on? What exactly explains in terms of in terms of our thinking about inequality? What what's the relationship of that to the political upheaval that we saw in these in these countries? So that's a point that I put to you and a fair some discussion is going on some analytical work is going on in this in this area Let me turn then secondly to China And I want to talk a little bit about what might be what we might be seeing now, which is a turning point in Chinese inequality That in fact it could well be that from the mid 2000s There's some stabilization and perhaps even a Turndown of Chinese inequality and we might ask ourselves why what might be the underlying forces behind this thing still very high Of course, but there's stabilization and perhaps turning down So let's think in very simple analytical terms in terms of just think of two sectors rural and urban and think of inequality Is being a weighted sum of the two inequalities? As well as of course the difference in the means between the two sectors and the population weights of the two sectors So in a standard way you'd think of the overall tile for example as being a function of the of the sectoral means of the sectoral inequalities and the population weights in the two in the two sectors and in effect I think what has been happening in the Chinese context is that the that the within sector Inequalities are being stabilized because of changes in policy because of social security provisions and so on The mean differences between the sectors are also beginning to stabilize It's been argued by for example Jabo Zhang and others that the Lewis turning point may have been reached in the in the Chinese context Where in fact because the tightness of the labor market rural wages are now started rising As well and a third factor which I think is less appreciated by economists Analysts is that the simple population weight of the two sectors also affects overall inequality holding the sectoral means constant and holding the sectoral inequalities constant simply shifting population share from the low From the low mean low inequality sector to the high mean high inequality sector from rural to urban has an effect independent effect on inequality and that's the so-called kuznets effect the kuznets process and kuznets emphasize this a lot Juzong's Wang and I have done some analysis which shows that for several Asian Economies are holding everything else constant. Where do they lie in terms of this population shift part and China is in terms of our analysis is actually beyond the point of urbanization where inequality as a result of further urbanization Is now beginning to have a negative effect on inequality Okay, India for example is on the other side of the kuznets hump so to speak where urbanization in and of itself pure the pure effective urbanization would be to increase inequality in the case of India But China is over that kuznets hump So actually increased urbanization will further decrease inequality in the Chinese in the Chinese case So there's an example. I think of of the great Chinese turnaround in inequality. We may be about to see it in the next seven to ten years So We have we have the men a case which has its own particular diversity in particularities We have the China case which has its own particularities and diversities Let me now turn to OECD countries And this is the this is the the column that Joe that Joe and I did and let me just talk a little bit about about that And of course much of the discussion in the OECD context is of course Framed by Piketty and the post Piketty discourse and we have really to The way the way that we can think of it is that if we go back 60 years We have two great stylized facts that Caldor Nicholas Caldor put forward In terms of his of the experience of the 50 previous years of advanced economy Growth and development the two great style at two of the great stylized facts that Caldor put forward were Constancy of factor shares constancy of the capital output ratio and Constancy a constancy of the of the share of capital in total output and constancy of the capital output ratio Okay, and Generation of models including the solo model and all its variants devoted themselves to try to explain the Constancy of these great of these great numbers of these numbers And of course no sooner had that had had that project been completed that the stylized facts began to change on us Okay, and of course that the thing that Tomah and others have emphasized is that the share of capital is rising and The capital output ratio has been rising in the last 20 to 30 years And if that's the case we find it's going to be very difficult to actually explain those in the context of a Standard solo f of K comma L model unless the last issue substitution has values, which which we don't see empirically and That's that's a conundrum that we face How can we explain these new stylized facts with a class of models which are developed to explain the old stylized facts? And I think that's that's a theoretical challenge that we face in fact It's very difficult to do it it one can't do it if we strictly interpret the wealth that the week the wealth data That we have that that Piketty uses in his in his in his analysis as being the solo K It's it would be very difficult for us to actually make that make that whole thing consistent So Joe has Joe has argued in his in his writings But really we need to think much more in the context of rents to explain the increasing share of capital We need really need a theory of rents to different factors in order to explain the new stylized facts as they're developing And he gives the following example, which I think is very very interesting and we refer to this also in our in our in our column Suppose for whatever political economy reason The government gives a guarantee to banks Too big to fail whatever whatever it is guaranteed to banks. They will not be allowed to fail Well, of course, this isn't in this is that this guarantee can be explicit or it can be implicit Well, this of course increases the value of bank shares and pushes up though that that particular Component of the wealth distribution. So in fact, and of course, there's an implicit There's an implicit liability on everybody else in the economy as a result of this implicit guarantee And what we've had what we see therefore is a is a redistribution of national output is essentially the increase in the wealth leads to Is a related to an increase in purchasing power of the people who control that wealth It's a redistribution with actually no no change in any output aspect of it at all There's there's been no change in output. Nothing at all has changed It's simply this guarantee which has led to a redistribution of wealth Which has led to this redistribution of purchasing power over the over the economy So in a sense, we need a theory of rents in order to ex and and if we have a theory of rents, we can better explain according to this column that Joe and I wrote the new stylized facts and we certainly cannot explain these new stylized facts with the Standard solo model with marginal productivity theory of dis offer of distribution So those are my those are my observations We have a very diverse pattern of distribution around the world men are Question is how can our standard models? How can our standard measures of inequality standard measures of distribution? Derived from household surveys relate at all to the political process They don't seem to in this in this case for China a highly differentiated pattern of inequality change over the last Since a reform process and we may now be seeing actually a great turnaround in Chinese inequality And we need to understand why and how of that and thirdly in the case of OECD countries We actually need new theories in order to understand these new stylized facts because the old theories cannot explain them Thank you you have Two to three more minutes to explain how you define the diversity of inequality From the sector point of view not by countries point of view Could you pose the question again to me? Yeah, you can explain a little bit to us your observation on the Different aspect of all inequality not only to Income in a code inequality, okay, which are coming By sector by sector Well, let me take up one issue which I was going to I was going to discuss in some detail if we'd had the time but So one response to the pick a tea type to the pick a tea type Data and and discourse is you know, it's not really inequality of outcome that matters at all Inequality of outcome is obviously increased and this we see that in the data. It's inequality of opportunity. That's important And so long as inequality of opportunity is under control and that's going down It doesn't really matter whether the quality of outcome has increased or not and this is again something that I've written about More recently. This is now inequality of what is the is the question? So perhaps I can say a few words here I see my good friend Chico here and he can he can also join in in this thing So from a normative point of view The sort of the John Romer line of argument. What is that line of argument? It is that you can think of outcome. Let's say it's income or you get whatever it is It's determined by two things an individual circumstance those things which are outside the control of an individual and An individual's quote-unquote effort those things which are in control and the control of the individual So if I can attribute That bit of inequality to circumstance and some bit of the inequality to effort That bit which I can attribute to circumstance is truly illegitimate inequality And that bit which I can attribute to the effort of the individual the things that are under the control of the individual The individual works hard and all this sort of stuff then in some sense that is legitimate inequality and Underlying the notion that the rise in inequality that we observe is not is not necessarily of too much concern is What if that rise in inequality is is the result of effort rather than? Circumstance rather than that in fact, it's legitimate rise in inequality and from a normative point of view it should not be a concern at all and I and I and others have critiqued this position and said that really The the distinction between inequality of outcome and inequality of opportunity is a very difficult one to make In practice empirically But it's also very difficult in my view to make conceptually to separate out Even conceptually those things which the individual controls and those things with the individual does not control Is that is very difficult and the example that I give in my in my writings is what happens? When the effort of one individual becomes a circumstance of another individual Okay, the effort doctrine you can think of parents effort becoming the circumstance of the children Okay The effort doctrine then says The outcome of that effort is perfectly legitimate and you should not therefore intervene The circumstance doctrine says Whatever is outside the control of this individual should not should not be Should indeed it is indeed legitimate to address that thing So I give that to you as a conceptual issue Which I think is which I think is is is a difficulty for this literature, but leaving that to one side I think empirically it's difficult to separate these two out and and that's that's been another aspect of this literature that I've been that I've been working on