[Script Info]
Title: 
[Events]
Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Okay, so it's very nice to be here tonight.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So I've been working on the history of income
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and wealth distribution for the past 15 years,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and one of the interesting lessons
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,coming from this historical evidence
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is indeed that, in the long run,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,there is a tendency for the rate of return of capital
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to exceed the economy's growth rate,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and this tends to lead to high concentration of wealth,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,not infinite concentration of wealth,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but the idea of the gap between r and g
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and the idea of the level of inequality of wealth
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,towards society tends to converge.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So this is a key force that\NI'm going to talk about today,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but let me say right away
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that this is not the only important force
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in the dynamics of income and wealth distribution,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and there are many other forces that play
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,an important role in the long run dynamics
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of income and wealth distribution.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Also, you know, there is a lot of data
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that still needs to be collected,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,so, you know, we know a little bit more today
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,than we used to know, but we still know too little,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and, you know, certain there\Nare many different processes
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,— economic, social, political —
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that need to be studied more.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,And so I'm going to focus today on this simple force,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but that doesn't mean that other important forces
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,do not exist.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So most of the data I'm going to present
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,comes from this database
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that's available online:
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the World Top Incomes Database.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So this is the largest existing
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,historical database on equality,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and this comes from the effort
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of over 30 scholars from several dozen countries.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So let me show you a couple of facts
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,coming from this database,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and then we'll return to r is bigger than g.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So fact number one is that there has been
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,a big reversal in the ordering of income inequality
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,between the United States and Europe
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,over the past century.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So back in 1900, 1910, income inequality was actually
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,much higher in Europe than in the United States,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,whereas today, it is a lot higher in the United States.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So let me be very clear:
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the main explanation for this is not r bigger than g.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,It has more to do with changing supply and demand
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,for skill, the race between education and technology,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,globalization, probably more unequal access
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to skills in the U.S.,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,where you have very top universities
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but where the bottom part of the educational system
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is not as good,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,so very unequal access to skills,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and also an unprecedented rise
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of top managerial compensation of the United States,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,which is difficult to account for\Njust on the basis of education.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So there is more going on here,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but I'm not going to talk too much about this today,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,because I want to focus on wealth inequality.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So let me just show you a very simple indicator
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,about the income inequality part.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So this is the share of total income
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,going to the top 10 percent.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So you can see that one century ago,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,it was between 45 and 50 percent in Europe
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and a little bit over 40 percent in the U.S.,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,so there was more inequality in Europe.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Then there was a sharp decline
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,during the first half of the 20th century,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and in the recent decade, you can see that
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the U.S. has become more unequal than Europe,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and this is the first fact I just talked about.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Now, the second fact is more about wealth inequality,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and here the central fact is that wealth inequality
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is always a lot higher than income inequality,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and also wealth inequality,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,although it has also increased in recent decades,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is still less extreme today
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,than what it was a century ago,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,although the total quantity of wealth
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,relative to income has now recovered
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,from the very large shocks
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,caused by World War I, the Great Depression,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,World War II.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So let me show you two graphs
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,illustrating fact number two and fact number three.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So first, if you look at the level of wealth inequality,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,so this is the share of total wealth
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,going to top 10 percent wealthholders,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,so you can see the same kind of reversal
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,between the U.S. and Europe that we had before
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,for income inequality.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So wealth concentration was higher
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in Europe than in the U.S. a century ago,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and now it is the opposite.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,But you can also show two things:
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,first, the general level of wealth inequality
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,are always higher than income inequality.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So remember, for income inequality,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the share going to the top 10 percent
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,was between 30 and 50 percent of total income,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,whereas for wealth, the share are always
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,between 60 and 90 percent.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Okay, so that's fact number one,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and that's very important for what follows.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Wealth concentration is always
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,a lot higher than income concentration.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Fact number two is that the rise
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in wealth inequality in recent decades
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is still not enough to get us back to 1910.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So the big difference today,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,wealth inequality is still very large,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,with 60, 70 percent of total wealth for the top 10,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,but the good news is that it's actually
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,better than one century ago,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,where you had 90 percent in\NEurope going to the top 10.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So today what you have
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is what I call the middle 40 percent,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the people who are not in the top 10
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and who are not in the bottom 50,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and what you can view as the wealth middle class
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,that owns 20 to 30 percent
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of total wealth, national wealth,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,whereas they used to be as poor, a century ago,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,when there was basically no wealth middle class.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So this is an important change,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and it's interesting to see that wealth inequality
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,has not fully recovered to pre-World War I levels,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,although the total quantity of wealth has recovered.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Okay? So this is the total value
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,of wealth relative to income,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and you can see that in particular in Europe,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,we are almost back to the pre-World War I level.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So these are, there are really two
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,different parts of the story here.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,One has to do with
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,the total quantity of wealth that will accumulate,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and there is nothing bad per se of course
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,in accumulating a lot of wealth,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and in particular if it is more diffuse
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and less concentrated.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So what we really want to focus on
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is the long-run evolution of wealth inequality,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and what's going to happen in the future.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,How can we account for the fact that
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,until World War I, wealth inequality was so high
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and if anything was rising to even higher levels,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and how can we think about the future?
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So let me come to some of the explanations
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and speculations about the future.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,Let me first say that, you know,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,probably the best model to explain
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,why wealth is so much
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,more concentrated than income
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,is dynamic, dynastic models
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,where individuals have long horizon
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,and accumulate wealth for all sorts of reasons.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,If people were accumulating wealth
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,only for life cycle reasons,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,you know, to be able to consume
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,when they are old,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,then the level of wealth inequality
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,should be more or less in line
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,with the level of income inequality.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,But it will be very difficult to explain
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,why you have so much more wealth inequality
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,than income inequality
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,with a pure a life cycle model,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,so you need a story
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,where people also care
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,about wealth accumulation for other reasons.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So typically, they want to transmit
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,wealth to the next generation, to their children,
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,or sometimes they want to accumulate wealth
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,because of the prestige, the\Npower that goes with wealth.
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,So there must be other reasons
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,for accumulating wealth than just life cycle
Dialogue: 0,9:59:59.99,9:59:59.99,Default,,0000,0000,0000,,to explain what we see in the data.