Anthony B. Atkinson’s Inequality: What Can Be Done? challenges the textbook notion of markets and argues for active government intervention.
The book proposes bold policies to reconcile efficiency and fairness while acknowledging limits to direct application in Japan.

2016-02-03

This is from the Sunday book review section.

“Inequality: What Can Be Done?” by Anthony B. Atkinson.
Reviewed by Takashi Oshio, Professor at Hitotsubashi University.

This is a major work on inequality and poverty, following Thomas Piketty’s Capital in the Twenty-First Century and Angus Deaton’s The Great Escape.
The author, alongside Deaton, is a world authority who has studied inequality and poverty both theoretically and empirically.
Many expected him to share the Nobel Prize in Economics with Deaton last year.
Piketty is also among the researchers who were strongly influenced by Atkinson.

As Piketty points out in the preface, this book is fully devoted to an action plan presenting policy proposals to correct inequality.

Capital in the Twenty-First Century focuses on the concentration of wealth at the top and proposes a global progressive tax on capital, but it is questionable whether that alone can solve the problem.
The Great Escape broadens the perspective to health inequality as well as income, yet its policy proposals mainly center on aid to developing countries, leaving something to be desired for those seeking prescriptions for domestic inequality.

The policy proposals in this book are radical.
Traditional economic thinking holds that as long as equality of opportunity is secured, markets should be left to pursue efficiency, with redistribution addressed afterward as needed.

This book argues that the markets depicted in textbooks do not exist in the first place and that governments should actively intervene in markets with distribution in mind.
It even contends that if technological innovation such as IT tends to widen inequality, governments should guide innovation in ways that correct inequality.

Furthermore, the author argues that efficiency and fairness are not always in a trade-off relationship and that pursuing fairness can sufficiently enhance efficiency.

The book presents fifteen concrete proposals to reduce inequality.
These include strengthening the progressivity of income taxes, expanding child allowances, public employment guarantees through minimum wages, capital grants to all citizens upon reaching adulthood, and strengthening the bargaining power of labor unions.

Criticism has already emerged, with some calling it a “return to the 1960s and 1970s,” as noted by The Economist.
Anticipating such reactions, Part III of the book is devoted to rebutting the expected criticisms.

One drawback of the book is that its content is somewhat inward-looking toward the United Kingdom.
Without knowledge of the social and economic policies developed in the UK since the Thatcher era, some parts are difficult to understand.
Not all policy proposals can be directly applied to Japan.

Nevertheless, many readers should experience the power of this book.