Asset-Centred Redistributive Policies for 
Sustainable Development 
Pierre Kohler 
United Nations - DESA/DPAD/DSP, New Yor...
CONTEXT 
I UNDESA/DPAD 
I World Economic and Social Survey 2014 on “Reducing 
Inequality for Sustainable Development” 
I B...
PROPOSED APPROACH 
I Most analyses/policies 
I “Redistributive policies” = “fiscal policies” 
I Focus on income flows 
I O...
OBJECTIVES OF THE PAPER 
I Propose an asset-centred analytical model of redistributive 
policies explaining why stocks of ...
PAPER OUTLINE - 
Asset-Centred Redistributive Policies for Sustainable 
Development 
1. REDISTRIBUTIVE POLICIES, IN-EQUITY...
AN ASSET-CENTRED ANALYTICAL FRAMEWORK 
Two analytical figures: 
1. Private income-generating assets, redistributive policy...
Figure: Private income-generating assets, redistributive policy 
instruments and the income cycle
Figure: Public income-generating assets and the revenue-expenditure 
cycle
LINKAGES TO IN-EQUITY AND UN-SUSTAINABLE 
DEVELOPMENT 
Stylized facts and linkages: 
I The declining impact of redistribut...
Figure: The declining impact of redistribution and rising income 
inequality at the global level 
0 2 4 6 8 
Increase in G...
Figure: Redistribution of income and in-equality of outcome 
Southern Africa 
Western Europe 
Northern Europe 
Northern Am...
Figure: Redistribution of income-generating assets and in-equality of 
opportunity (i) human capital 
Melanesia 
Southern ...
Figure: Redistribution of income-generating assets and in-equality of 
opportunity (ii) wealth 
20 40 60 80 100 
2 3 4 5 6...
Figure: Redistributive policies and the un-sustainable use and 
un-equitable access to natural resources for present and f...
REDISTRIBUTIVE POLICY TRENDS IN A CHANGING 
CONTEXT 
Stylized facts: 
I Since 2000, public social spending (as a share of ...
TOWARDS PROGRESSIVE ASSET-CENTERED 
REDISTRIBUTIVE POLICIES FOR SUSTAINABLE 
DEVELOPMENT 
I Definitions 
I Policies and in...
Redefining equity and development in sustainable terms 
I Focusing on asset inequality, not income poverty 
I Enabling tra...
Building institutions and designing policies enabling 
asset-centred redistributive policies for equity and 
sustainable d...
Fostering international cooperation 
I Bridging the gap with ODA for public social spending and revenue 
mobilization 
I P...
Asset-Centred Redistributive Policies for 
Sustainable Development 
Pierre Kohler 
United Nations - DESA/DPAD/DSP, New Yor...
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Asset-Centered Redistributive Policies for Sustainable Development

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Development and Ecological Economics session at 12th International Conference

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Asset-Centered Redistributive Policies for Sustainable Development

  1. 1. Asset-Centred Redistributive Policies for Sustainable Development Pierre Kohler United Nations - DESA/DPAD/DSP, New York September 25, 2014
  2. 2. CONTEXT I UNDESA/DPAD I World Economic and Social Survey 2014 on “Reducing Inequality for Sustainable Development” I Basic motivation for looking at redistributive policies/this paper I The growing concentration of wealth and income stands in sharp contrast with the increasingly cooperative nature of wealth production and creation processes I Eradicating poverty without reducing inequality is impossible in our finite world I Policy solutions need to simultaneously address issues of resource allocation, income distribution and the scale of the economy I Redistributive policies are part of any solution
  3. 3. PROPOSED APPROACH I Most analyses/policies I “Redistributive policies” = “fiscal policies” I Focus on income flows I Overall objective: economic growth I This paper proposes an alternative stock-flow approach to redistributive policies that encompasses income flows, but which is centred on the stock of income-generating assets I Focus on income-generating assets better reveals blindspots with regard to economic efficiency and, especially, social equity and environmental sustainability I Overall objective: sustainable development
  4. 4. OBJECTIVES OF THE PAPER I Propose an asset-centred analytical model of redistributive policies explaining why stocks of income-generating assets (e.g. human capital and wealth, including natural resources) matter for in-equity and un-sustainable development I Review set of existing policies I Make policy recommendations based on the comparison of existing policies with the potential scope of redistributive policies
  5. 5. PAPER OUTLINE - Asset-Centred Redistributive Policies for Sustainable Development 1. REDISTRIBUTIVE POLICIES, IN-EQUITY AND UN-SUSTAINABLE DEVELOPMENT 1.1 An asset-centred analytical framework 1.2 Stylized facts about redistributive policies and linkages to in-equity and un-sustainable development 2. REDISTRIBUTIVE POLICY TRENDS IN A CHANGING CONTEXT 2.1 Public expenditures and social spending 2.2 Revenue mobilization 3. TOWARDS PROGRESSIVE ASSET-CENTERED REDISTRIBUTIVE POLICIES FOR SUSTAINABLE DEVELOPMENT 3.1 Definitions 3.2 Institutions and policies 3.3 International cooperation
  6. 6. AN ASSET-CENTRED ANALYTICAL FRAMEWORK Two analytical figures: 1. Private income-generating assets, redistributive policy instruments and the income cycle 2. Public income-generating assets and the revenue-expenditure cycle Questions: I What are those two cycles? Who owns what? And what is the role of income-generating assets? I How are those two cycles linked? I What are the linkages to in-equity and un-sustainable development?
  7. 7. Figure: Private income-generating assets, redistributive policy instruments and the income cycle
  8. 8. Figure: Public income-generating assets and the revenue-expenditure cycle
  9. 9. LINKAGES TO IN-EQUITY AND UN-SUSTAINABLE DEVELOPMENT Stylized facts and linkages: I The declining impact of redistribution and rising income inequality at the global level I Redistribution of income and in-equality of outcome I Redistribution of income-generating assets and in-equality of opportunity I Human capital I Wealth I Redistributive policies and the un-sustainable use and un-equitable access to natural resources for present and future generations
  10. 10. Figure: The declining impact of redistribution and rising income inequality at the global level 0 2 4 6 8 Increase in Gini net since 1970 (in points) 30 35 40 45 50 55 Gini index (in points) 1970 1980 1990 2000 2010 year Gini net (LHS) Gini market (LHS) Increase in Gini net since 1970 (RHS) I 7 points increase, 75 per cent of world population I Limitations of Gini indicator, SWIID database (version 4.1) I The role of taxes and transfers: why taxes matter?
  11. 11. Figure: Redistribution of income and in-equality of outcome Southern Africa Western Europe Northern Europe Northern America Northern Africa Eastern Asia South America Middle Africa Central Asia Eastern Africa Caribbean South-Eastern Asia Western Africa Central America Southern Asia Western Asia Eastern Europe Southern Europe Australia and New Zealand Melanesia 20 25 30 35 40 45 Total revenue (as a share of GDP) 0 5 10 15 Decline in post-tax Gini index Western Europe Eastern Europe Northern America Southern Africa Western Asia Eastern Asia Northern Africa Caribbean South America Central Asia Eastern Africa Middle Africa Southern Asia Western Africa Central America South-Eastern Asia Northern Europe Southern Europe Australia and New Zealand Melanesia 25 30 35 40 45 50 Total expenditures (as a share of GDP) 0 5 10 15 Decline in post-tax Gini index I Larger public sectors reduce inequality more significantly I Progressivity/regressivity of revenue mobilization/expenditure matters: Southern Africa vs. Southern Europe (VAT and capital expenditure)
  12. 12. Figure: Redistribution of income-generating assets and in-equality of opportunity (i) human capital Melanesia Southern Africa Southern Asia South-Eastern Asia South America Eastern Asia Central America Caribbean Western Asia Western Africa Eastern Africa Northern America Middle Africa Eastern Europe Northern Africa Central Asia Northern Europe Southern Europe Australia and New Zealand Western Europe 30 40 50 60 Gini index 2 4 6 8 10 12 Public expenditure on health Melanesia Southern Asia South-Eastern Asia South America Eastern Asia Central America Northern America Middle Africa Eastern Africa Northern Africa Southern Africa Western Africa Caribbean Central Asia Western Asia Eastern Europe Australia and New Zealand Southern Europe Northern Europe Western Europe 30 40 50 60 50 60 70 80 Life expectancy I MDG: social spending fosters human development and economic growth I More unequal subregions tend to allocate fewer resources to human development, resulting in lower life expectancy/education
  13. 13. Figure: Redistribution of income-generating assets and in-equality of opportunity (ii) wealth 20 40 60 80 100 2 3 4 5 6 7 1900 1914-1 8 1929 1939-4 5 1980 2000 2010 EU capital stock/GDP (LHS) US capital stock/GDP (LHS) EU top 10 per cent wealth share (RHS) US top 10 per cent wealth share (RHS) EU top 10 per cent income share (RHS) US top 10 per cent income share (RHS) I Piketty data: capital stock accumulation and the mutually reinforcing dynamic between wealth and income inequality I Controversy about r>g...
  14. 14. Figure: Redistributive policies and the un-sustainable use and un-equitable access to natural resources for present and future generations Korea Australia Germany United Kingdom Italy United States Japan Spain France Canada Turkey Brazil South Africa China Argentina Mexico India 0 5 10 15 20 CO2 emissions per capita (metric tons) -1 0 1 2 3 4 Environmental tax revenue (as a share of GDP) Note: High income=blue; upper middle income=maroon; lower middle income=green. I Higher environmental tax revenue is associated with lower carbon emissions per capita, but environmental taxes remain underexploited I Regressive? What about progressive consumption taxes related to quantities consumed (e.g. frequent flyer tax instead of rewards)?
  15. 15. REDISTRIBUTIVE POLICY TRENDS IN A CHANGING CONTEXT Stylized facts: I Since 2000, public social spending (as a share of GDP) increased in most developing regions, but less than in developed regions, except for LAC I Social protection (pensions, unemployment insurance, etc.) as a share of GDP is 3 to 6 times higher in developed countries I Total government revenue amounted to 42 % of GDP in developed countries in 2010, around 35 % of GDP in transition economies and in the Middle East and North African countries, and between 20% to 28 % of GDP in other developing regions I Shifting towards regressive tax structures I Declining environmental tax revenue I Dwindling net wealth taxes I Tax abuses: tax avoidance and tax evasion on the rise I Privatization of public income-generating assets
  16. 16. TOWARDS PROGRESSIVE ASSET-CENTERED REDISTRIBUTIVE POLICIES FOR SUSTAINABLE DEVELOPMENT I Definitions I Policies and institutions I International cooperation
  17. 17. Redefining equity and development in sustainable terms I Focusing on asset inequality, not income poverty I Enabling trade-offs between economic growth, social equity and environmental sustainability I Redefining the metrics of equity and development
  18. 18. Building institutions and designing policies enabling asset-centred redistributive policies for equity and sustainable development I Modernizing tax administration for increased and progressive tax revenue mobilization I More progressive tax systems for reducing inequality of outcome I Shifting the tax base towards wealth for enhancing equality of opportunity I Shifting the tax base towards environmental externalities for incentivizing sustainable production and consumption, and shorter value chains I Socializing natural resource rents and/or ownership to ensure sustainable use and equitable access for present and future generations I Redistributing income-generating assets for economic democracy and sustainable development I Investing in people: a rights-based approach to human development
  19. 19. Fostering international cooperation I Bridging the gap with ODA for public social spending and revenue mobilization I Promoting financial transparency to prevent tax abuses by HNWIs and TNCs I Addressing harmful tax competition through unitary taxation to combat tax avoidance I Taxing mobile capital (unilaterally) to eradicate extreme wealth and reduce international inequality
  20. 20. Asset-Centred Redistributive Policies for Sustainable Development Pierre Kohler United Nations - DESA/DPAD/DSP, New York September 25, 2014

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