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Inequality and the Anglo-American Economic Model

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  • George Irvin

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Abstract

The rollback of the state and the redistribution initiated during the Reagan-Thatcher period in the US and Britain has resulted in these countries being the least egalitarian in the OECD, with wages increasingly de-coupled from productivity growth and gains accruing to top CEOs. The view that inequality is attributable solely to the new premium on human capital is challenged; it is argued that inequality has resulted from mainly from personal tax breaks and the corporate drive for ‘shareholder value’. The social costs are evident from the sociological and epidemiological evidence. Equally, inequality has helped fuel US consumer spending, facilitated by low interest rates, holding gains and credit deregulation. The result is a ‘triple deficit’. The risk is that by relying exclusively on market-led devaluation, a crisis of confidence will result; righting financial imbalances requires not merely a Plaza-type solution, but a major reversal in the growth of inequality.

Suggested Citation

  • George Irvin, 2007. "Inequality and the Anglo-American Economic Model," ICER Working Papers 26-2007, ICER - International Centre for Economic Research.
  • Handle: RePEc:icr:wpicer:26-2007
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    File URL: http://www.bemservizi.unito.it/repec/icr/wp2007/ICERwp26-07.pdf
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    References listed on IDEAS

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    3. Thomas Piketty & Emmanuel Saez, 2007. "How Progressive is the U.S. Federal Tax System? A Historical and International Perspective," Journal of Economic Perspectives, American Economic Association, vol. 21(1), pages 3-24, Winter.
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    5. Carola Frydman & Dirk Jenter, 2010. "CEO Compensation," Annual Review of Financial Economics, Annual Reviews, vol. 2(1), pages 75-102, December.
    6. Offer, Avner, 2007. "The Challenge of Affluence: Self-Control and Well-Being in the United States and Britain since 1950," OUP Catalogue, Oxford University Press, number 9780199216628.
    7. McKinnon, Ronald & Schnabl, Gunther, 2006. "Devaluing the dollar: A critical analysis of William Cline's case for a New Plaza Agreement," Journal of Policy Modeling, Elsevier, vol. 28(6), pages 683-694, September.
    8. Papatheodorou, Christos & Pavlopoulos, Dimitris, 2003. "Accounting for inequality in the EU: Income disparities between and within member states and overall income inequality," MPRA Paper 209, University Library of Munich, Germany.
    9. Ian Dew-Becker & Robert J. Gordon, 2005. "Where Did Productivity Growth Go? Inflation Dynamics and the Distribution of Income," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 36(2), pages 67-150.
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