Pobuda Humanity in Economics

1. Auflage 2017
ISBN: 978-3-668-48151-0
Verlag: GRIN Verlag
Format: EPUB
Kopierschutz: 0 - No protection

E-Book, Englisch, 215 Seiten

The negligence of humanity in economics has already led to huge inequalities in different spheres. This book does focus on social inequality as the considered root-cause for economic inequality while noticing the interrelations between political, economic, and social inequalities. Therefore, the introduced normative concept aims at the establishment of a long-term perspective in the economic sphere, the fairly-distributed allocation of resources as a result of political interference, and the ensuring of equality of opportunity in the social sphere by realization of the 'Theory of liberal Fairness'. The intention is to enable citizens as well as societies coping with future challenges while putting the human being back in the center. To allow such a state, the 'Theory of reasonable Progress' is proposed as an economic system that is based on Ordoliberalism with some Keynesian elements. The inquiry begins with some theoretical economic concepts and examines the origins as well as different levels of inequality in three countries with their special adoption of a market economy while investigating in each of them the owners of social responsibility. It is followed by a selection of some applicable as well as practicable theories of justice and the compilation of diverse measures in form of a comprehensive tool kit for the establishment of fairness as a response to the growing inequalities in our society. Hereby, the ownership of social responsibility is shared between the public and the private sector. These outcomes will be utilized to develop a framework for the promotion of humanity in economics while also maintaining a high degree of fairness. Consequently, these concepts will be applied to the European Union as an example for their proposed functioning. From the text: - Economic theories; - Inequality levels; - Fairness; - Human-centred business; - European integration

Autoren/Hrsg.

Pobuda, Patrick

Leseproben

3 Inequality levels in regions with diverse economic systems
  The extent of inequality is perceived as rising in developed countries but one could say that governments and the better-offs shouldn’t be concerned about inequality as long as everyone is above the subsistence level (for ethical reasons) since it might be a result of their laziness and missing self-discipline. However, this view is essentially wrong since “the political equality that is required by democracy is always under threat from economic inequality, and the more extreme the economic inequality, the greater the threat to democracy. If democracy is compromised, there is a direct loss of wellbeing because people have good reason to value their ability to participate in political life, and the loss of that ability is instrumental in threatening other harm. The very wealthy have little need for state-provided education or health care; they have every reason to support cuts in Medicare and to fight any increase in taxes” (Deaton 2013:213). Therefore, middle classes should care about the rising inequality if they don’t want to be governed by the lobbyism practices of the wealthy ones, or by populism as answer from the left-behinds.   What are the levels and origins of inequality in Japan, Germany, and the USA with their different interpretations of a capitalistic market economy as well as of welfare aspects?   This chapter is meant to provide some historical as well as contemporary facts about inequality and its reasons. For this purpose, three major regions across the globe (Japan, Germany, and the United States) with different attitudes towards private businesses and government interventionism will be compared. A more proper example might be the Soviet Union since the proclaimed communism is a much better antithesis to the American meritocracy (and GER as the ‘third way’). However, the communistic system in the USSR was just a “partially centralized economy” (Harrison 2002:404). Furthermore, a comparison is difficult to conduct as available data on different inequalities in the Soviet Union (and Russia today) is rather insufficient and unreliable. Moreover, some research, for instance Slay (2009), suggests that despite of the socialism principles, poverty had been a serious concern in some regions of the former Soviet Union. Therefore, Japan is used, because the planned economy had a strong influence on the country’s development.   The level of equality in societies is implicitly measured by the extent of inequality. The goal of justice is ‘relative’ equality, while the research is concerned with inequality which has become an increasing threat for all areas of human life and is defined as “the unfair difference between groups of people in society, when some have more wealth, status or opportunities than others” (Oxford Dictionaries 2017a). Furthermore, “the issue of inequality is very close related, both in fact and analyses, to other very important economic and social phenomena such as poverty, polarization, segmentation, clusters, class or caste structure, exclusion, isolation, elitism, envy, status, and so on” (Kolm 2009:274).   The reasons for income and wealth inequality in developed countries are plentiful; however, the major assumptions can be briefly summarized (Dabla-Norris et al. 2015:18-22):    Technological Change: has strongly improved productivity and general well-being, but has also increased the skill premium which is resulting in higher income inequality and is, therefore, one of the main reasons for the gap widening in the OECD countries.    Globalization: labor-saving technologies as well as offshoring of production have led to a decline of employment in the manufacturing sector and have also reduced wages for unskilled workers (beside positive effects like specifications, trade increase, etc.)    Financial Deepening: rising financial flows, FDIs and portfolio investments (financial globalization), have increased top incomes in the financial sector and allow capitalists to seize global opportunities due to higher returns on capital for their ‘existing’ wealth.    Insufficient Policies: changes in labor market institutions (wage dispersion and higher share of part-time jobs), redistributive policies (rich-favored tax and transfer systems) and declined social mobility (e.g. due to unaffordable access to higher education).   These points, published by the International Monetary Fund, provide some hints on the general creation of inequalities and have (globally) some different impacts on countries.   Nevertheless, to get some impressions on the level of inequality in the set of states that is covered in this paper, the following indicators[8] were chosen and also briefly explained:    Public Social Expenditure describes the provision by public authorities/institutions of benefits to individuals and households to offer support during situations which adversely affect their welfare (in percentage of total general government expenditure).    Human Development Index is a measure of economic development and welfare that examines the criteria life expectancy, education, as well as income levels, and creates an overall score (from 0 to 1), where 1 represents the highest possible development. The inequality-adjusted HDI shows the loss of human development due to inequality.    Gini Coefficient is a standard measure of income inequality of a country's residents. That number ranges from 0, which means that everybody has identical incomes, to 1, which means that all income is distributed to only one person within the entire society.    Youth Unemployment Rate is the amount of unemployed people in the age between 15 to 24 expressed as a percentage of the youth labor force. It includes those, who reported to be without work, available for work, and who have taken active steps to find a job. Reasons for high figures might be structural issues and strict labor laws.   3.1 Japan: Transition from planned development to free market economy
  The State of Japan is characterized by an industrialized (Free) Market Economy with some elements of a planned economy which are almost entirely leftovers of its historical development. However, last decades were coined by deregulation efforts as well as privatization of some former state-owned conglomerates and corporations. (cp. Witt 2014)   The economy of Japan had to recover after World War Two: the country was severely devastated. Most large cities, industrial sites, and the infrastructure were damaged. Additionally, the population had to struggle with food shortages for several years. Wondrously, Japan could benefit from the political chaos which its armed forces left behind in Korea (by long occupation): the Korean War as a watershed which turned the Japanese economy from depression to recovery: local companies became suppliers of US and United Nations troops. After the war, the Japanese government decided to intervene and instead of “waiting for the market to determine the most ‘efficient’ allocation of available economic resources, Japanese policy-makers made a judgement about precisely which industries and economic sectors they considered to be strategically the most important, and set about encouraging their long-term development” (Beeson 2007:125). Rapid growth in 1960s and 1970s established Japan’s rise to one of the major economies.   There seem to be some differences between the Japanese model of capitalism (East Asian model: state-sponsored capitalism) and the capitalistic approach in other regions. Odagiri (2012:527) distinguishes between four different aspects of the Asian economic systems. Firstly, Korea, Taiwan, and Japan (mainly until WWII) were coined by business groups and main banks which were deeply connected with the government, politicians, and the military. But the chains are on the wane in recent time and competition has gotten a higher meaning. Secondly, there has also occurred a change in corporate governance – from 1990s onwards, shareholder influence is increasing and the traditional (close and lifelong) relationship between companies and their employees altered to a more professional awareness. Thirdly, the supplier-assembler relationships are also more tightly and are long-established (in comparison to typical western business relationships which are more profit-oriented). Fourthly, the importance of the government might be crucial for the success of the economic development after WWII, but it is not so different to other countries which have also supported their new industries. However, the public-sponsored “technological catch-up was more successful than in other regions of the world” (ibid:528). Generally, there is no cold and variable business atmosphere, what makes...