Is globalisation a leading cause of rising inequality in high-income countries? The outcome of the debate on this question may determine whether the US will remain open to trade. If policymakers do not craft an imaginative response, protection against imports may be the outcome, regardless of its (non-existent) merits. Ben Bernanke, chairman of the US Federal Reserve, laid out the issues in a thought-provoking speech last week.* He embedded his analysis in three principles: “That economic opportunity should be as widely distributed and as equal as possible; that economic outcomes need not be equal but should be linked to the contributions each person makes to the economy; and that people should receive some insurance against the most adverse economic outcomes, especially those arising from events largely outside the person’s control.” The question is how these principles apply today. It has become more compelling as inequality has risen. The remainder of Martin Wolf’s column can be read here (FT.com subscribers only). Discussion from our guest economists is free.
© The Financial Times Ltd 2015 FT and 'Financial Times' are trademarks of The Financial Times Ltd.