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Prof. Bourguinon, a leading expert on inequality in developing
countries, reviewed different aspects of the relationship between
inequality and growth, and concluded that the two dimensions of
development could each influence the other positively or negatively
but the key focus should be on “institutions” as the fundamental
determinant of growth and development. For this reason, he
advocated shifting the focus of research from measuring and
explaining income inequalities to examining how inequalities arise
from differential opportunities. He noted that top Chinese leaders
asked him how much inequality is too much inequality, and that he
answered that inequality becomes a problem when wealth inequality
in the current generation creates unequal opportunities for the next
generation. For this reason, governments should take an active role
in creating new opportunities in a progressive way (e.g. through
education, microfinance, etc.).
One of the highlights of the conference was the presentation for the
first time ever of preliminary estimates of recent wealth inequality in
China based on three different nationally representative household
surveys. Prof. Jijun Tan of Southwestern University of Finance and
Economics reported that according to the China Household Finance
Survey, which surveyed over 28,000 households in 29 provinces,
China’s wealth gini coefficient was 0.78 in 2011. Their survey had
previously reported an income gini coefficient of 0.61 for 2011,
which attracted great media attention and public discussion because
it was much higher than those reported by China’s National Bureau
of Statistics (0.47) or other national surveys (0.52-0.54). Prof. Shi Li
of Beijing Normal University, a well-known expert on inequality in
China, presented an estimate of China’s wealth gini coefficient of 0.76
in 2010 using survey data from the nationally representative China
Family Panel Study conducted by Peking University of over 14,000
Rising inequality has recently become a hot topic globally. Pope
Francis has highlighted the issue, and Thomas Piketty’s recent
book Capital in the 21st Century has provided new evidence
on rising wealth inequality in the US and Europe that has led
to heated discussions about the reliability of the evidence and
appropriate policy responses. Inequality also is rising rapidly in
many emerging markets, especially China, with new markets
for housing and capital playing an important role. To explore
these issues in depth, HKUST IEMS co-sponsored a conference on
Wealth Accumulation and Inequality of Opportunity in October
2013 with HKUST’s School of Humanities and Social Science
(HKUST), the French Centre for Research on Contemporary China
(CEFC), and GATE Lyon Saint-Etienne, bringing together leading
economists, sociologists, and historians from France, Hong Kong
and China.
The two keynote speakers were well-known French economists
Thomas Piketty and Francois Bourguignon (formerly Chief
Economist of the World Bank). In his opening speech, Prof.
Piketty explained why global inequality levels are on the rise
and may reach 19th century levels. Citing remarkable newly
constructed data for the US, UK, and France spanning decades,
he argued that the main drivers of rising inequality are a higher
after-tax return to capital exceeding the rate of economic growth,
fueled by the power of global capital markets, which leads to
inherited wealth growing faster than earned wealth and a higher
concentration of wealth over time. This trend is reinforced by
rising income inequality particularly in America where there has
been an exorbitant rise in top labor incomes and a decline in
top tax rates. To counter these trends he proposed imposing a
progressive tax on inherited wealth.
CONFERENCE ON WEALTH ACCUMULATION AND
INEQUALITY OF OPPORTUNITY
(2013.10.18-19)
