Thursday, 2 October 2014

Economics for Real People: Economic inequality: A problem in need of a solution?


Here’s what’s on this evening at the Auckland Uni Economics Group. Why not head along?

On Monday the NZ Herald revealed that ANZ New Zealand's David Hisco is NZ’s top-paid chief executive with a total pay package worth $4.1 million. That's a lot of money!  It's cases like this that fuel the debate about income inequality, about whether someone should earn so much more than the average worker.

  • How can economics inform this debate?
  • Is economic inequality something to be concerned about?
  • Or something to embrace!?
  • And do policies adopted by those concerned about inequality actually lead to the poorest
           becoming poorer?

In tonight's seminar we address these questions by drawing on powerful economic ideas and theories. While economic inequality is clearly of concern to many today (Piketty's best-selling Capital in the Twenty First Century is a case in point), we shall see that many of the great thinkers and ideas on the subject are largely ignored today.

        Date: Thursday, October 2
        Time: 6-7pm
        Location: Case Room Two, Level Zero, Owen G. Glenn Business School
                                (carparking under the Business School, entrance off Grafton Rd)

All are welcome to attend. We look forward to seeing you there.

PS: Keep up to date with us on the web at our Facebook group.


  1. I don't believe anyone can justify a salary that is (IIRC) about ten times what the PM earns.
    Having said that, "economic inequality" will always be with us. People are different - they have different levels of intelligence, education, skills and motivation. Because of all that, they will *always* have widely-different incomes.
    The pie-in-the-sky idea of trying to reduce E.I. makes as much sense as trying to empty the sea with a teaspoon.

  2. Economic thought (as distinct from economic mantra) can illuminate the discussion. The proof of market optimality is based on a number of assumptions one of which is constant returns to scale. It is my assertion that while there never have been constant returns to scale in many industries, this has not mattered because economies of scale were mitigated by distribution costs etc so the market worked reasonably well. Technology, globalisation, etc has reduced distribution costs making scale economies more pronounced and the result has been a trend to larger companies. The management of a large company have more riding on their decisions than the management of a small company, hence shareholders are willing to pay larger salaries to get the right people. Double the size of a company and you double the 'leverage' of the CEO. You don't increase the leverage of the worker - you just need more workers.


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