The chief economists for the International Monetary Fund, World Bank and Organisation for Economic Co-operation and Development discussed the issue of economic inequality in a roundtable in Washington on Saturday.
IMF Managing Director Christine Lagarde opened the forum, introducing the top economists of the three organizations, pointing out that it’s the first time women have led all three.
“Despite economic growth, there are still far too many people who are left out and we know from research that has been conducted in our institutions that excessive inequality hinders growth, erodes trust and fuels political tension,” said Lagarde, before starting the discussion.
“Why do you think that this has become such a major priority at this time despite the fact that this trend has been going on many years now,” asked Gita Gopinath, the Chief Economist at the IMF.
“We see a crisis of our institutions, declining trust of our democracy. There is a backlash not only against globalization but also against the elites, the experts and so on. And this all, to a certain extent, stems from this view that the elites have captured all the gains that we have made in the last few years at the expense of the rest,” answered Pinelopi Koujianou Goldberg, Chief Economist, World Bank.
Laurence Boone, the Chief Economist, Organisation for Economic Co-operation and Development, said international cooperation is critical to helping solve inequality – especially since some of the solutions will require joint action..
“We really need to strengthen again our institutions in the sense that people need to trust the government and governments must show that they are capable of having better governance. And, on this I would just say two things. The less skilled you are, the less you respect the government and the more worried you are about their capacity to help you. Which is another reason to help the lowest skilled people. And the last thing is the more we undermine multilateralism and I think this example of why the work we do is important. The more we undermine multilateralism, the more difficult it is going to be to reach an agreement on taxation, to understand how value changes are working and how we can actually help people locally and geographically to grasp the opportunity rather than be passive and suffering from them.”