Punishing the rich is not the answer to inequality, Nobel laureate Christopher Pissarides says

From the Guardian. Excerpts:

"Governments should combat inequality by using their tax revenues to create jobs, rather than simply redistribute money from the rich to the poor, a leading economist said this week in Davos.

Christopher Pissarides, professor of economics at the London School of Economics, told the World Economic Forum annual meeting that citizens around the world suffer extreme inequality, but punishing people on high incomes is not the answer.

“I don’t think taxing high incomes and simply taking the money and passing it on as transfers to lower incomes can work in today’s open globalised world,” Pissarides, who won the Nobel prize for economics in 2010, said in a briefing on income inequality.

Redistribution takes away the incentive for lower-skilled people to acquire skills and go into the labour market, he argued, and creates disincentives for higher earners to stay in the country, work hard and look for new ventures to make money.

Instead, he called for governments to use more imaginative ways of rebalancing incomes by creating more and better jobs at the lower end and investing in better education."

"Asked by a member of the audience to give his view on a report by anti-poverty charity Oxfam, which reported that by next year 1% of the world’s population will own more wealth than the other 99%, Pissarides said: “It’s a shocking statistic and given the inequality it’s not difficult to construct other shocking statistics. It’s obviously something to worry about, but my view is that the real issue, and what you should really address, is poverty.

“I think we’d be doing better by emphasising ways of reducing poverty rather than by sensationalising the issue by saying how much the very rich people are worth.”"