Yannick Profile picture
21 Feb, 19 tweets, 6 min read
**LONG THREAD ** There are important confusions about the necessity of economic growth and the potential of redistribution for global equality circulating on twitter. @MaxCRoser (whose work I btw for the most part highly appreciate, OWID is great etc.) claims that economic
growth is great because *GDP per capita* correlates with health indicators such as life expectancy and low child mortality. So far so good. On the other hand, he also claims redistribution would never suffice to lift everyone to a decent standard of living because
the average “income” of the world is just 16$/day PPP per person, so like ~$5800 a year. The latter is derived from @BrankoMilan Povcal net which measures “disposable household income” which really in many low income countries means nothing but *expenditure*
(the true extent of how much is expenditure and how much actual income is not known to me but Milanovic himself says looking at the global median consider it to be consumption expenditure). Average *GDP per capita* in 2019 is already around ~$17 000, average *disposable income*
* barely $6000. Using the latter to argue that we do not have enough financial and physical assets available to care for everybody does not hold up. GDP tells us more about how many financial and physical assets we can theoretically mobilize as global society
society (GDP capital formation for example also includes the spends of households on houses, this is not included in consumer surveys on disposable income). And! GDP is just a flow variable either, none of these numbers says anything about the physical assets that already exist
as a stock! So actually to talk about redistribution vs. growth for poverty alleviation you would need to consider wealth too! But it does not end there. The inequality surveys by @BrankoMilan using disposable income leave out two further mega important things when considering
considering potential of income redistribution vs. economic growth for poverty alleviation:
1)The rich are not well represented in the household surveys. They hardly participate in the surveys and if so, they are unlikely to report accurately and this is something @BrankoMilan
notes in his work but @MaxCRoser does not take into account. So there are very high *official* expenditure and income amounts that are not taken into account in these surveys and the true global average disposable income is probably underestimated.
For example money spent on yachts or mansions by billionaires and multimillionaires is not recorded. This data is better grasped through tax account data as by @World Inequality Lab.
2)Secondly, besides not measuring well the *official* income and expenditure of the rich, there is also a vast amount of financial assets *inofficially* hidden away from the rest of the world which never ever appears on any of the aforementioned data.
According to the expert economist on this topic Gabriel Zucman this is *at least* $7.6 trillion and this was in 2015. So, these financial assets are the equivalent of more than half of China’s economy. Distributing that pie over all poor people would have massive effects alone.
All these issues come before even discussing that income of course is not a perfect measure of life quality but only in relation to the production and consumption systems that we operate in.
And of course the fact that many sectors (such as fossil fuels, military, drugs etc.) have a lot of destructive features that are included in measures of GDP, national incomes and even household incomes (when people use charcoal for example indoors).
**Disclaimer**, I do not claim with this thread that I for sure know that redistribution of income and wealth suffices to make everyone well enough off and it is clear to me that redistribution is politically challenging, perhaps impossible from realist’s perspective.
. But idealism is necessary to push the boundaries of the possible and what I do say is that assessing the potential of income redistribution vs. the necessity for further aggregate economic growth
to create a world where everybody is well enough off based on Povcal’s *disposable income* alone is insufficient reporting about the issue.
@jasonhickel @MaxCRoser @BrankoMilan @JKSteinberger @KateRaworth @g_kallis Maybe of interest to the discussions unfolding. Feel free to ignore the thread.

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