July 13, 2019 by Project Syndicate by Clair Brown, Simon Sällström
The United States has the resources to create a better capitalist system, and it is clear which policies can improve wellbeing today and create a more equitable and sustainable economy for future generations. Now the country needs to elect a president and Congress that can build this system.
Our research team at the University of California, Berkeley, has created the Sustainable Shared-Prosperity Policy Index (SSPI) to measure policies that support a meaningful life in a sustainable world. The SSPI ranks 50 countries based on three broad criteria: policies that structure markets with rules and taxes; measures to protect the environment; and government programs that support healthy, educated people along with the infrastructure and human rights that establish a well-functioning society. By gathering data on over 50 policy indicators, the SSPI provides a practical roadmap toward creating an economy that cares for people and the environment.
Either Warren or Sanders would be a better bet for reform than Biden. (Photo: Shawn Thew/EPA-EFE/Rex)
The candidates in the 2020 U.S. presidential race are proposing an array of economic policies frequently described as either free-market or socialist. These labels often confuse the American public. In particular, capitalism is widely—and wrongly—understood to be synonymous with free markets. In fact, it includes all economic systems with private ownership of property, from free markets to social democracy.
These various forms of capitalism require basic rules governing how markets operate, such as protection of property and the rule of law. Most capitalist societies also have social programs to protect the most vulnerable. Governments in capitalist economies therefore face two fundamental choices. First, they can either set market rules for the common good, or delegate this task to big business under the guise of “free markets.” Second, they can design universal social programs with the aim of reducing inequality and protecting the environment, or scale them back in order to minimize government spending in these areas.
The choices governments make strongly influence levels of inequality, greenhouse-gas emissions, and overall well-being. To evaluate the Democratic candidates’ economic policies properly, therefore, we must understand their proposals for structuring markets and creating or expanding social programs.
U.S. President Donald Trump disparages such measures as “socialism,” and instead praises free markets without acknowledging that markets need rules to function. Rather than having government set the rules, Trump prefers to let multinational corporations decide how to operate their own markets. Yet in Big Tech and many other increasingly concentrated sectors, deregulation does not increase competition; on the contrary, it allows big companies to rig things in their favor.
Consider the energy sector, where Trump has put Big Coal, Oil, and Gas in charge of U.S. climate policies. Corporate bosses now determine how much they may pollute and how fast they need to develop renewable-energy capacity, while the U.S. remains addicted to fossil fuels. In the health-care industry, big pharmaceutical companies are free to set drug prices, and large insurers reap one-quarter of the sector’s revenues. The military-industrial complex rules the Pentagon, investment banks control Wall Street, and big agricultural conglomerates hold sway over America’s farmland.
Market concentration allows a few large multinationals to control an industry, resulting in high prices and excessive executive pay. Big incumbents crush newcomers in order to maintain their market power, and then use excess profits to help elect friendly lawmakers and lobby for policies that support their continued dominance—often undermining the power of popular democratic movements.
Several Democratic presidential candidates have highlighted these problems. Elizabeth Warren, for example, blames big-business corruption for worsening inequality and the climate crisis, and undermining American democracy. Bernie Sanders has called for a grassroots political revolution to create a social democracy in the U.S.
Although Warren and Sanders differ on the details, both want to put government back in charge of structuring markets for the common good—including higher taxes on the wealthy and big business, along with stricter enforcement of antitrust and environmental laws. Both candidates also advocate government social programs aimed at providing everyone with health care, childcare, higher education, adequate housing, and decent jobs, along with a social safety net to support them in hard times.
Other Democratic hopefuls have also advocated some of these measures, but more centrist candidates say such programs would be too expensive or even undermine freedom, thereby echoing a standard right-wing critique. Former Vice President Joe Biden, for example, recently told wealthy donors that “nothing would fundamentally change” if he became president. Yet the U.S. capitalist system needs a major revamp in order to tackle the climate crisis and unacceptably high levels of inequality. European countries have demonstrated how broad government programs, flourishing economies, and freedom go hand in hand.
Some are mapping the way forward. Nobel laureate economist Joseph E. Stiglitz says progressive capitalism could greatly help to reduce wealth-snatching and create a more sustainable, equitable economy. And the Poor People’s Moral Budget advocates progressive social programs funded via taxes and the redirection of existing federal spending.
Our research team at the University of California, Berkeley, has created the Sustainable Shared-Prosperity Policy Index (SSPI) to measure policies that support a meaningful life in a sustainable world. The SSPI ranks 50 countries based on three broad criteria: policies that structure markets with rules and taxes; measures to protect the environment; and government programs that support healthy, educated people along with the infrastructure and human rights that establish a well-functioning society. By gathering data on over 50 policy indicators, the SSPI provides a practical roadmap toward creating an economy that cares for people and the environment.
All U.S. presidential candidates should present their plans for the economy so that voters can assess how the alternatives will affect their quality of life. People need to know whether they will have access to health care, higher education, and childcare, along with a secure job that pays a decent wage and allows time for a balanced life with family, friends, and community.
This is surely not too much for citizens of a rich country to expect and demand. America has the resources to create a better capitalist economy, and we know which policies can improve wellbeing today and for future generations. Now the country needs to elect a president and Congress that can build this new system.
© 2019 Project Syndicate
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JANUARY 3, 2019 BY JUSTIN EWERS
California Summit releases 2019 Roadmap to Shared Prosperity to take on “defining challenge of our time”
The California Economic Summit announced the launch today of its new 2019 Roadmap to Shared Prosperity, an updated plan for the state and California’s regions to work together to combat rising income inequality, growing economic insecurity, and declining upward mobility.
Governor-elect Gavin Newsom has called these issues the “defining economic challenge of our time,” and as he prepares to take office next week, the Summit conveners, California Forward and the California Stewardship Network, are committed to supporting his administration’s efforts to take them on. This year’s Roadmap, based on the input of more than 500 participants at the 2018 Summit in Santa Rosa, offers some of the best thinking in the state about how to organize this work and maximize its impact.
California’s economy continues to be among the world’s most productive, but the public, private, and civic sector leaders working through the Summit recognize that this unprecedented engine of growth, which has attracted people eager to live the “California Dream” for generations, is not working for far too many people.
It’s not just that one in five Californians—7.4 million people—are living in poverty. It’s not just that the high cost of living is making it difficult for millions more to make ends meet—with fully half of California households now struggling to rent or buy a home in their community. It’s not just that a changing climate is threatening more communities with more frequent—and more extreme—natural disasters, or that the wealthiest 5 percent of Californians are earning almost as much as the next 60 percent.
It’s not just any one of these issues. It’s all of them.
For California to successfully take on any one of them, it will have to take on them all. Since its first event in 2012, this has been the central premise behind the Summit, which has emerged as one of the state’s only cross-sector platforms for capturing the best ideas from every region—and promoting comprehensive, triple bottom line solutions that match the scale of California’s challenges.
This year’s Roadmap continues this work, with an updated strategy to “Elevate CA” by investing in early childhood education and a smarter safety net to help millions of California move out of poverty. The Summit continues to advance its “Million Challenges”—targeted initiatives to expand the state’s skilled workforce, lower housing costs, create more livable wage jobs, and invest in sustainable water infrastructure. The Roadmap also offers details plans for encouraging rural economic development and promoting resiliency in regions recovering from wildfires, while also helping more communities tap the potential of new federally-designated Opportunity Zones.
Tying all of these initiatives together is the Summit’s new, draft “CA Dream Index,” a scorecard the administration can use to track progress on all of these fronts—and begin to hold itself accountable to closing the growing gap between the California we have, and the California we need.
Click here to view the full 2019 Roadmap to Shared Prosperity.Categories:Summit2019 Summit
Global Database of Shared Prosperity
What Is The Global Database Of Shared Prosperity?
- The most recent figures on annualized consumption or income growth of the bottom 40 per cent and related indicators for 91 countries circa 2010-2015
- A response to a rising demand for cross-country comparable data on shared prosperity
- A means to a richer and more contextual analysis of shared prosperity at the country level
The World Bank Group’s goal of promoting shared prosperity has been defined as fostering income growth of the bottom 40 per cent of the welfare distribution in every country, and is measured by annualized growth in average real per capita consumption or income of the bottom 40 per cent. At the outset, other details for constructing this indicator were left for countries to decide, resulting in a lack of comparability between countries if they chose different time-periods or databases when making their estimates.
In response to the rising demand for cross-country comparisons, the World Bank Group established a process for measuring shared prosperity in an internationally comparable way, addressing issues such as the choice of time period and the selection of databases for computing the indicator in order to produce numbers that would be relatively comparable across countries.
As a result of these efforts, the World Bank Group has developed the Global Database of Shared Prosperity – a collection of comparable shared prosperity data from 91 countries circa 2011-2016 (available in .pdf and .xlsx).
Methodology and Usage
The Global Database of Shared Prosperity (GDSP) includes the most recent figures on annualized consumption or income growth of the bottom 40 per cent and related indicators for 91 countries, which are roughly comparable in terms of time period and interval. All numbers were vetted by an internal Technical Working Group, using the methodology described here.
Survey years are selected with the aim (i) to match the time periods as closely as possible across all countries, while including the most recent data; and (ii) to ensure the widest possible coverage of countries, across regions and income levels. While we recommend that this database be used for cross-country comparisons and benchmarking, colleagues should feel free to make their own decisions on the choice of surveys/years for computations of shared prosperity when cross-country comparison is not a consideration.
When looking at a particular country’s context, it is also important to consider a wider range of indicators that relate to shared prosperity, going beyond the World Bank indicator of consumption or income growth of the bottom 40 per cent, for a richer and more contextual analysis.
The Team
The Global Database on Shared Prosperity, circa 2007 – 2012 was created by the Global Poverty Working Group (GPWG), an interdisciplinary technical working group established to improve the quality and frequency of poverty and inequality data, comprising members from the Poverty and Equity Global Practice and the Development Economics Vice Presidency (DEC) Research Group and Data Group.
Contacts
Database and Methodology:
Nobuo Yoshida, Lead Economist at nyoshida@worldbank.org
Minh Cong Nguyen, Economist at mnguyen3@worldbank.org and
Jose Montes, Data Scientist at jmontes@worldbank.org
Media inquiries:
Elizabeth Howton, Communications Lead at ehowton@worldbankgroup.org
