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“…there are many “lost
Einsteins”…especially among women, minorities, and children from low-income
families.”[1]
The contribution of more inclusive and equitable development
to wellbeing and social justice is well recognised. Perhaps the impact on
economic progress is less well appreciated. Indeed it is sometimes assumed there
is a trade-off between strong economic performance and equality, sometimes
referred to as efficiency v equity[2].
There is an increasing amount of evidence that there need
not be a trade-off, indeed there can be considerable synergy between the two. For
example, secure, fair employment, where employees having a stake in the
business, can help boost innovation and productivity. Daron Acemoglu and James
Robinson[3] have
argued this type of relationship is at the heart of economic development
processes and distinguish between the long term performance of ‘inclusive’ and
‘extractive’ economies.
The IMF
have highlighted that inequality can be damaging to economic performance.[4] A recent book[5]
by Heather Boushey of the Washington Centre for Equitable Growth focusses on
how inequality ‘obstructs, subverts and distorts’ economic growth. For example,
as inequality lowers aggregate demand because the better off have a lower
propensity consume and save more than those at the bottom end of the income
distribution. Inequality also forces the less well off into debt to finance
consumption and can help make the economy more precarious and less resilient.
She also
cites a relatively recent study by Alex Bell and others, that adds a further
interesting dimension to this issue. By analysing data from patent
records in the US and linking them to tax records, they found that children’s
chances of becoming inventors are heavily influenced by characteristics at
birth, such as their race, gender, and parents’ socioeconomic class. Children
from families in the top 1% of income were 10 times more likely to become
inventors as those from below-median income families.
Even more tellingly they found that these gaps persisted
even among children who performed similarly in maths tests in early childhood -
maths ability was found to be highly predictive of innovation success in later
life. This suggests that there is likely to be significant innovative potential
being stifled through inequality and it led them to coin the term ‘lost Einsteins’
to capture this waste.
It is further evidence of the need to see increased equality
not just as an important goal to improve wellbeing and social justice, but as a
contributor to more innovation, higher productivity and better economic performance.
[1] Who Becomes an Inventor in America? The
Importance of Exposure to Innovation - Alex
Bell, Raj Chetty, Xavier Jaravel, Neviana
Petkova, John Van Reenen -The Quarterly Journal of
Economics (May 2019)
[5] Unbound:
How Inequality Constricts Our Economy and What We Can Do About It, Heather
Boushey (2019)
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