James K. Galbraith

Inequality and Industrial Change: A Global View

Part I. Introduction to Theory and Method: 1. The macroeconomics of income distribution James K. Galbraith 2. Measuring inequality and industrial change Maureen Berner and John K. Galbraith Part II. Inequality, Unemployment and Industrial Change: 3. The American wage structure: 1920-1947 Thomas Ferguson and James K. Galbraith 4. Inequality in American manufacturing wages, 1920-1998: a revised estimate James K. Galbraith and Vidal Garza Cantu 5. Industrial change in the OECD: new evidence from the STAN Amy Calistri and James K. Galbraith 6. Inequality and unemployment in Europe: the American cure Pedro Conceicao, Pedro Ferreira, and James K. Galbraith Part III. Inequality and Development: 7. Towards a new Kuznets hypothesis: theory and evidence on growth and inequality Pedro Conceicao and James K. Galbraith 8. Measuring the evolution of inequality in the global economy James K. Galbraith and Lu Jiaqing 9. Economic regionalization, inequality, and financial crises James K. Galbraith and Lu Jiaqing 10. Inequality and state violence: a short report James K. Galbraith and George Purcell 11. Grading the performance of Latin American regimes, 1970-1995 James K. Galbraith and Vidal Garza Cantu 12. The evolution of industrial earnings inequality in Mexico and Brazil Paulo Du Pin Calmon, Pedro Conceicao, James K. Galbraith, Vidal Garza Cantu and Abel Hibert 13. The legacy of the HCI: an empirical analysis of Korean industrial policy James K. Galbraith and Junmo Kim 14. Inequality and economic development: concluding reflections Part IV. Technical Appendices: 15. Constructing long and dense time series of inequality using the Theil statistic Pedro Conceicao and James K. Galbraith 16. Cluster and discriminant analysis on time series as a social science research tool James K. Galbraith and Lu Jiaqing.

The Distribution of Income

Inequality has become perhaps the foremost preoccupation of modern empirical economics. Yet the conventional theoretical explanations of changing inequality rest on premises long ago demolished on logical grounds. This paper summarizes a Keynesian theory of income distribution. The theory integrates macroeconomic and distributive phenomena and so accounts for the empirical relationship between the changing shape of the distribution and major macroeconomic events.

Inequality and Unemployment in Europe: The American Cure

In this paper we show that inequality and unemployment are related positively across the European continent, within countries, between countries and through time. This contradicts the often-repeated view that unemployment in Europe is attributable to rigid wage structures, high minimum wages and generous social welfare systems. In fact, countries that possess the low inequality such systems produce experience less unemployment than those that do not. Moreover, large inter-country inequalities across Europe aggravate the continental unemployment problem. There is no paradox in low American unemployment. It stems in part from that countrys continent-wide programs of redistribution, including the Social Security System, the Earned Income Tax Credit, the federal minimum wage, and a uniform regime of monetary policy geared toward full employment, all of which reduce inter-regional inequality and all of which we recommend for adoption by the European Union.

Measuring the Evolution of Inequality in the Global Economy

This paper provides a summary of information in the UTIP data set on the evolution of industrial earnings inequality in the global economy. At present the data set covers 66 countries, with annual observations going back to 1972 in most cases and to 1963 in many. Our measure of changing inequality, based on the group-wise decomposition of the Theil statistic across industrial categories, appears to be a sensitive barometer of political and economic conditions in many countries, and the percentage change in this index appears to be meaningfully comparable across countries. We also measure and detect regional patterns of similarity in the movement of inequality through time.

Who Are These Economists, Anyway?

FALL 2009 85 of those economists who got it right. They are not named.Their work is not cited. Their story remains untold. Despite having been right on the greatest economic question of a generation—they are unpersons in the tale. Krugman’s entire essay is about two groups, both deeply entrenched at (what they believe to be) the top of academic economics. Both are deeply preoccupied with their status and with a struggle for influence and for academic power and prestige—against the other group. Krugman calls them “saltwater” and “freshwater” economists; they tend to call themselves “new classicals” and the “new Amen. While normal ecclesiastic practice places this word at the end of the prayer, on this occasion it seems right to put it up front. In two sentences, Professor Paul Krugman, Nobel Laureate in Economics for 2008 and in some ways the leading economist of our time, has summed up the failure of an entire era in economic thought, practice, and policy discussion. And yet, there is something odd about the role of this short paragraph in an essay of over 6,500 words. It’s a throwaway. It leads nowhere. Apart from one other half-sentence, and three passing mentions of one person, it’s the only discussion—the one mention in the entire essay— Who Are These Economists, Anyway?

Inequality and Financial Crises: Some Early Findings

We employ the UTIP data set on the evolution of earnings inequality in manufacturing in the global economy to illuminate two questions. First, do regional patterns of similarity in the movement of large macroeconomic aggregates, such as real GDP, imply underlying similarities of industrial structure, so that knowledge of one national economy in a GDP cluster can reasonably be assumed to convey useful information about the others? We show that this is not generally the case. Particularly, regional comovement of GDP in Asia, which is very strong, masks deep dissimilarities in underlying employment structures -- and, we argue, a range of potential sources of transmissible financial crisis. Second, what are the consequences of crisis for inequality? We show that crises typically generate increases in inequality, but more so in less developed countries, and more so in regions that are more liberal in their policy regimes.

Economic Inequality and Political Power: A Comparative Analysis of Argentina and Brazil

In this paper we analyze the distribution of pay and changing trends of inequality in Argentina and Brazil, illuminating the specific winners and losers, by region and by economic activity (sector). In both countries we find that inequality rose in the neoliberal period, but that it declined following the severe crises of neoliberal policy, in 1993 in Brazil and in late 2001 in Argentina. This period of post-neoliberalism is characterized in both countries by a decline in the economic weight of the financial sector and a recovery of the position of the civil service. In both countries, the rise in inequality leading to the crisis produced an increase in the relative position of the major metropolitan centers; this positional advantage also declined modestly in the post-crisis recovery period.

Innovation, Evolution and Economic Change

The book begins with a penetrating analysis of the main features of today’s capitalism and in particular the conflict between shareholders and managers. It moves on to focus on the consequences of globalization in the decision-making processes of large corporations and represents an important step in the development of a theory of fraud and corruption within corporations. In the final part, the authors address and explore the consequences of the domination of influential groups over major social and political decisions, on the blurred boundaries between the public and the private sectors and its consequences in the fields of technological regulation and the evolution of public services. In so doing, the authors question the meaning and power of democracy in today’s society.

Cluster and Discriminant Analysis on Time-Series as a Research Tool

This paper presents a procedure for studying industrial performance and related issues such as changes in the wage structure. This procedure combines cluster analysis and discriminant analysis as a package, and applies this package to time series data. This enables us to organize industrial data into groups with similar wage or performance histories and then to extract summary time-series showing the main pattern of variation in performance between groups.

Institutional Structures and Policies in an Environment of Increasingly Scarce and Expensive Resources: A Fixed Cost Perspective

In this paper, we provide a model that permits systematic and even quantitative assessment of the policy implications of increasingly scarce and expensive resources. Specifically, we model the return to investment as a function of fixed cost, discount rate, uncertainty, project duration and the volume of output. Institutions can be understood as the accumulation of past fixed investments, which lower the variable cost of economic activities but constrain choices open to future policymakers. How much to invest in fixed assets and how institutions respond to a changing environment are the key questions as the cost of nonrenewable resources rises.