Dani Rodrik writes:  The belief that boosting equality requires sacrificing economic efficiency is grounded in one of the most cherished ideas in economics: incentives. Firms and individuals need the prospect of higher incomes to save, invest, work hard, and innovate. If taxation of profitable firms and rich households blunts those prospects, the result is reduced effort and lower economic growth. Communist countries, where egalitarian experiments led to economic disaster, long served as “Exhibit A” in the case against redistributive policies.

In recent years, however, neither economic theory nor empirical evidence has been kind to the presumed tradeoff. Economists have produced new arguments showing why good economic performance is not only compatible with distributive fairness, but may even demand it.  In high-inequality societies, where poor households are deprived of economic and educational opportunities, economic growth is depressed. Then there are the Scandinavian countries, where egalitarian policies evidently have not stood in the way of economic prosperity.

Early this year, economists at the International Monetary Fund produced empirical results that seemed to upend the old consensus. They found that greater equality is associated with faster subsequent medium-term growth, both across and within countries.
Moreover, redistributive policies did not appear to have any detrimental effects on economic performance. We can have our cake, it seems, and eat it, too.
Economics is a science that can claim to have uncovered few, if any, universal truths. Like almost everything else in social life, the relationship between equality and economic performance is likely to be contingent rather than fixed, depending on the deeper causes of inequality and many mediating factors. So the emerging new consensus on the harmful effects of inequality is as likely to mislead as the old one was.
Consider, for example, the relationship between industrialization and inequality. In a poor country where the bulk of the workforce is employed in traditional agriculture, the rise of urban industrial opportunities is likely to produce inequality, at least during the early stages of industrialization. As farmers move to cities and earn higher pay, income gaps open up. And yet this is the same process that produces economic growth; all successful developing countries have gone through it.
In China, for example, rapid economic growth after the late 1970s was associated with a significant rise in inequality. Roughly half of the increase was the result of urban-rural earnings gaps, which also acted as the engine of growth.
Or consider transfer policies that tax the rich and the middle classes in order to increase the income of poor households. Many countries in Latin America, such as Mexico and Bolivia, undertook such policies in a fiscally prudent manner, ensuring that government deficits would not lead to high debt and macroeconomic instability.
On the other hand, Venezuela’s aggressive redistributive transfers under Hugo Chávez and his successor, Nicolás Maduro, were financed by temporary oil revenues, placing both the transfers and macroeconomic stability at risk. Even though inequality has been reduced in Venezuela (for the time being), the economy’s growth prospects have been severely weakened.
Latin America is the only world region where inequality has declined since the early 1990s. Improved social policies and increased investment in education have been substantial factors. But the decline in the pay differential between skilled and unskilled workers – what economists call the “skill premium” – has also played an important role. Whether this is good news or bad for economic growth depends on why the skill premium has fallen.
If pay differentials have narrowed because of an increase in the relative supply of skilled workers, we can be hopeful that declining inequality in Latin America will not stand in the way of faster growth (and may even be an early indicator of it). But if the underlying cause is the decline in demand for skilled workers, smaller differentials would suggest that the modern, skill-intensive industries on which future growth depends are not expanding sufficiently.
In the advanced countries, the causes of rising inequality are still being debated. Automation and other technological changes, globalization, weaker trade unions, erosion of minimum wages, financialization, and changing norms about acceptable pay gaps within enterprises have all played a role, with different weights in the United States relative to Europe.  While technological progress clearly fosters growth, the rise of finance since the 1990s has probably had an adverse effect, via financial crises and the accumulation of debt.

It is good that economists no longer regard the equality-efficiency tradeoff as an iron law. We should not invert the error and conclude that greater equality and better economic performance always go together. After all, there really is only one universal truth in economics: It depends.

Across Latin America the pink tide continues to rise.  As opposed to red, pinks relfect more moderate socialist ideas.  Leaders eschew pro-market, free-trade-policies such as privitization and deregulaion.  Anti-poverty policies are the cornerstone of the movement.

When Hugo Chavez died last year, some said pink tide would fade. Since then, Dilma Rousseff fended off a strong challenge in Brazil and in Bolivia Ewa Morales easily won a third time of office.

Leftist politicians have been so popular that more conservative politicians have to move to the center to stay in contention.  Efforts to overturn social security programs have been abandoned.

Extension of term limits in some countries has caused democrats to cry foul.  Some left leaders are accused of not leaning left enough.  Mr. Morales is critisized for supporting a market economy.

Tabare Vasquez victory in Uruguay shows that after 16 years the Pink Tide is still rising.

Women make up two-thirds of Asia’s poor, according to the UNDP, which means that women are twice as likely as men to suffer from poverty. And poverty is continuing to rise among Asia’s women, not only because they have lower incomes, but because of discriminatory attitudes which result in lower capabilities and opportunities. Asia has one of the world’s worst gender gaps, with Africa being the only continent behind it, based on a combination of indicators covering economic participation, educational attainment, health and survival, and political empowerment. Asia is the worst region in the world for women’s health and survival relative to that of men.

In short, the benefits of Asia’s very rapid growth are not being shared in the region. And naturally the adverse situation of Asia’s women trickles down to many children, except for a family’s eldest son who is usually spoiled rotten. Child poverty is a particularly important issue in countries like Laos, Mongolia, the Philippines and Vietnam where one-third or more of the population are children.

It may seem surprising that the state of poverty is not so rosy in Asia. Many Western tourists are dazzled by the bright lights of Shanghai, Singapore, Hong Kong and Bangalore. But poverty is substantially a rural phenomenon in Asia, with more than half of Asia’s population living in the countryside.

The rural poor represent over three-quarters of Asia’s total poor population. Many of the rural poor are subsistence producers, family farmers or landless agricultural producers. And the poverty of urban slums is usually hidden away from tourists, despite the new fad of “slum tourism” in cities like Mumbai and Jakarta. To reduce rural poverty requires improving agricultural productivity, rural infrastructure, and access to social services. Poverty in Asia