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Income inequality and its impact on economic management and growth

A Note by the Director (2012/04)

22-24 March 2012

Summary
A thoughtful group of participants and firm chairmanship led to a stimulating discussion of this complex issue, overcoming the apparent incongruity of debating it at Ditchley, itself the product of great income inequality in a previous age. We agreed that high and rising income inequality was a feature of much of the globe, though it was not new, universal or inevitable. We also agreed that it mattered in many advanced countries, arguably more than in the past, because it was more visible, because much of the wealth being acquired did not seem to reflect special performance or merit, for example in the financial sector, and because we might well be facing a prolonged period of low growth where high income inequality would be less acceptable. It also mattered in emerging economies, though tolerance might be greater there for as long as high growth was pulling people out of absolute poverty and lifting everyone’s boats with the rising tide.

Perceived fairness in terms of incomes mattered because it could lead to serious social unrest if nothing was done, particularly from median earners whose incomes were stagnant or falling; and because it could also lead to less social cohesion and greater stress-related problems, though there was not much hard evidence for the latter. More importantly, we believed high income inequality had negative effects on growth and economic efficiency, for a range of reasons, but perhaps most importantly because it entrenched high inequality of opportunity, which in turn restricted social mobility and led to a waste of talent. The risk of the rich capturing the political economy of even democratic countries in their own interests was also high.

Governments had the power to change things if they had the will, and if they could break out of the received wisdom that the market was an all-powerful, independent force. Action to raise incomes at the bottom and middle was thought by most to be more likely to be effective than trying to restrict pre-tax incomes at the top. Would continuation of previous measures to improve the life chances of the poor succeed given more time and effort, or was a new more interventionist paradigm now needed? Views differed, but a list of possible measures to make a difference was suggested, from a living wage policy to more active use of the tax system and regulation. Some of these were not likely to attract wide political support for now.  We were also conscious that this conference had a centre left focus. But we believed that political business as usual would be too risky, and that a new consensus on more radical action was not only required but also possible, given the wider debate about the need for a new model of responsible capitalism.

The facts
Our first concern, as so often, was to be sure what we were talking about.  Income inequality was not the same as poverty, and we should try to avoid conflating them.  It was also different from inequality of wealth, although obviously one tended to lead to the other.

What were the facts about income inequality?  It seemed to have grown significantly and rapidly in recent years in the US, and many other advanced countries. But this growth was not universal. France seemed to be an exception, for example.  Rates of inequality, at least measured by the (unsatisfactory) Gini coefficient, were also significantly different between, say, the Anglo-Saxon world on the one hand, and Japan and the Scandinavian countries on the other.  Income inequality was also increasing in some rapidly growing emerging economies, including China and India, though hundreds of millions were being lifted out of poverty at the same time.  But again it was not true of all non-advanced countries.  It was for example falling in most Latin American countries, albeit from very high levels.  So constantly rising income inequality should not be seen as inevitable.

Was rising income inequality a result of market failure, or the consequence of the normal workings of the market?  Views differed.  Markets were efficient at concentrating capital, and income tended to follow.  At the same time, if the balance of power between different basic actors in the market changed greatly, as it had, market failure was the likely result.  What were the causes?  They appeared many and different, and varied according to country/region.  But four specific drivers for the changes in advanced countries, acting in an intertwined way,  were identified:

  • technological change: new skills concentrated in certain, mostly service, areas were increasingly highly rewarded, while older, mostly manufacturing, skills became relatively unrewarded;
  • globalisation: new trade patterns and outsourcing were creating losers and hollowing out previously important sectors of advanced economies; the mobility of capital and skills favoured a small elite;
  • capture of politics by the rich: this could prevent for example high direct taxation, or regulation of excessive profits and rewards;
  • capture of too many of the opportunities and too much of the wealth by one generation, at the expense of the next one.

We also considered briefly whether there could be an optimum level of income inequality. Academic research some years ago had apparently suggested a Gini coefficient of around 0.40. But we thought Gini was an inadequate measure, and in any case conditions varied so much between countries that there could not be a meaningful answer to this question. One answer might be that the level of income inequality should not be so high as to prevent effective equality of opportunity.

Does high income inequality matter because it’s not fair? 
Some degree of income inequality was inevitable and accepted, and no doubt beneficial in stimulating entrepreneurship and hard work.  But beyond a certain point, and especially if it seemed to be a permanent state of affairs, it became an issue in people’s minds, and could weaken social cohesion.  Where this point lay was hard to define, and different in different countries – regions had markedly different levels of tolerance for income inequality, for what seemed to be cultural reasons.  Scandinavia had low tolerance, and high social cohesion, whereas Anglo-Saxon countries and eg China seemed to have high tolerance, and arguably lower social cohesion, though the links between the two phenomena were unproven. In any case, for most participants, the concern seemed to be more over the economic and social consequences of high income inequality than over the fact of it in itself

The level of tolerance also clearly varied according to economic circumstances.  If a national economy was growing healthily, the rising tide lifted all boats to some extent, and tolerance of those at the top doing particularly well seemed to be greater.  If growth was low or non-existent, and those at the bottom were worst-affected, as often seemed to be the case, income inequality immediately became more of an issue.  So was the current anger about the issue in the developed world merely a reflection of current low growth, likely to disappear once healthy growth levels returned?  Some believed so: current concerns would naturally diminish, as they had before, even if nothing was done about them.  Others thought that this time it might be different, for a number of reasons:

  • low growth might be here for a prolonged period in developed economies after the latest financial crisis, which was far from over.  Anger might therefore continue to grow over a long time;
  • income inequality was now much more visible than in the past, because of greater transparency and the spread of information through social media.  In other words, actual income inequality might not be much worse than in the past, but perceived income inequality certainly was;
  • many of those who had done best in recent years were from sectors, particularly financial services, where the very high rewards available were not seen as deserved, or related to any notable entrepreneurship or risk-taking with the beneficiaries’ own money. The financial crisis might prove to have been a game-changer;
  • the central importance of median incomes, especially if these were falling or stagnating, while the rewards at the very top were rising rapidly.

Most participants agreed that it was not the income of the rich and super-rich which caused anger as such, but how they had come by it.  Money from risk-taking effort and hard work (entrepreneurs) or particular talent (sportsmen, rock musicians etc) had a much greater level of acceptance than money from ‘rent-skimming’ activities, where those profiting were not seen to have any exceptional talent or merit.  The same applied to money from corruption in many developing economies. In the case of the financial sector in the latest crisis, the anger was doubled because those who had done so well out of the previous bubble were seen to have largely caused the crisis, and then had to be rescued by the taxpayer. Not only had they not been ‘punished’ for this, unlike the rest of the population, but they had continued to do very well. It was incidentally also agreed by most that the target of anger was not the top 5% or even 1%, but the very top 0.1% (and hopefully not just because most around the table were not in the latter group but might well be in the second!).

Was the degree of concern about extreme income inequality affected by what the rich or super-rich did with their money?  For example, could large-scale philanthropy mitigate anger or somehow legitimise great wealth?  The examples of the Carnegies and the Rockefellers in the past, or the great British Victorian philanthropists, using huge industrial or financial gains to do good, were much cited.  Bill Gates or Warren Buffet were contemporary examples.  But most felt that the greater visibility of the process of extreme wealth acquisition made it harder to ‘forgive’ now.  In any case philanthropy, however desirable in itself, could only be a complement to, not a substitute for, effective public policy.

Why should anger about unfairness matter?  Some argued that it really did not: most people did not ultimately care how many rich people there were or what they were doing with their money.  They were too busy getting on with their own lives, especially if they were poor and struggling. Others saw two kinds of significant risk from the politics of envy/anger, especially if the middle classes felt seriously cheated or threatened:

  • major social unrest or revolution if anger continued unabated or grew, even in apparently stable democracies. The most serious danger, at least in Europe, might come from the rise of populist right-wing parties, eg if the eurozone collapsed. The Arab spring had shown the power of unemployed graduates;
  • greater unhappiness/stress if income disparities were too great or seemed unbridgeable, perhaps leading for example to worse health problems for some, higher crime rates etc. 

The latter kind of ‘Spirit Level’ thesis was heavily contested, with participants arguing that correlations should not be confused with causes, and that hard evidence for this kind of conclusion was lacking.  Others thought there might be something in it, but accepted that the jury was still out as far as evidence was concerned.

Does high income inequality matter economically?
Does excessive or rapidly rising income inequality have a negative effect on economic efficiency and growth?  The experts thought that hard evidence was difficult to come by, in either direction.  There were examples of high income inequality/high growth countries, low income inequality/high growth countries and low income/low growth countries.  Nevertheless most participants thought that high income inequality, beyond a certain (again hard to define and no doubt varying) point, could, and in some cases did, have negative effects on economic growth. Various ways in which this could happen were put forward:

  • if the link between income level and performance was broken, at the bottom and middle as well as the top, the result was bound to be greater economic inefficiency in one way or another;
  • if the rich/super-rich took an increasing share of national wealth, less of this share was spent on consumption or productive investment (only so many Ferraris to buy or factories to set up), and therefore the effects on growth were negative;
  • the situation could be even worse in practice if the excess wealth were recycled  through the financial system into (unsustainable) loans for the poorer parts of the population.  This was part of the explanation for the latest financial crisis;
  • at a certain point, which we had perhaps now reached in some countries, high income inequality was not just an outcome, but also a driver of particular kinds of monetary or fiscal policy, because the old recipes no longer worked. It was not clear that the new policies were better;
  • rather than stimulating entrepreneurship to try to emulate the rich, excessive income inequality could lead to despair at the chasm separating the poor from those at the top of the pile, and therefore apathy;
  • the rich/super-rich could take control of the political economy through the influence of money on politics, and the power of their lobbies.  This favoured perpetuation of rent-creaming situations, and restricted opportunities for those below;
  • if high income inequality created a self-perpetuating elite, social and economic mobility would decline, with consequent waste of talent and entrepreneurial dynamism in the rest of the population. There was some evidence of this already happening in the US.

The last point was much debated in different guises.  Many thought that high income inequality could be tolerated if there was a reasonable degree of equality of opportunity.  High inequality of opportunity was more dangerous from every point of view than high inequality of income.  However the two were not in fact readily separable, since high income inequality led inexorably, in the absence of other interventions, to high inequality of opportunity.  The wealthy could ensure in all kinds of ways that their children had the best opportunities: education, health, networks, access to capital/credit etc.  It became progressively harder for the rest of the population to compete.

What about the solutions? 
Was this all the inevitable result of globalisation, in the face of which we were effectively helpless, and without effective levers to change things significantly? Were the possible solutions likely to prove worse than the disease? The idea of inevitability was rejected.  Governments had the power and the capability to change outcomes, however difficult this might be, if they could summon up the will.  If governments did not intervene, the only alternative might be the street. Doing so needed to involve rethinking the received wisdom that the market was all-powerful or something which existed independently, outside the conditions created by people and governments.  In practice all markets depended on the context created by governments, in the shape of regulations, legal systems and a myriad of other protections and controls.  This context could be changed if governments chose to do so. It was true that globalisation, and the mobility of capital, skills and people, made it much harder for individual governments to act on their own to regulate particular sectors or behaviours without being ‘punished’ by the markets, or having to resort to protectionist measures of one sort or another. But this did not mean it was impossible, although greater international cooperation in these areas would be very valuable. It was meanwhile important not to suggest that globalisation itself was a problem, since it brought more benefits than costs, though the same might not be true of the ‘financialisation’ of global activity.

Before we arrived at specific suggestions, some prior issues had to be thrashed out.  What were we really trying to achieve? Most thought that direct attempts to control pre-tax incomes were doomed to fail, as they had before.  The answers had therefore to lie elsewhere.  Should we be acting to restrain post-tax incomes at the top or helping those at the bottom?  Many thought we should effectively ignore the rich, and concentrate on raising incomes at the bottom.  But some argued that the super-rich were pulling away from the rest so fast, and capturing political systems so effectively, that we could not afford not to tackle this problem.  Still others argued that the real issues were in the middle if median incomes were stagnant or falling, as they had been for example in the UK and US.  Unless this process could be reversed, and/or the gap between them and the top reduced in some way, we were heading for real trouble, politically and economically.

The other prior argument was whether the kind of measures which had already been tried in recent years, for example in the US or UK, in order to help the life chances of those at the bottom should be given more time to work and/or intensified.  Some believed that such policies, including those designed to keep children in the earliest years of life and improve education in general, and selective tax credits, were essentially the right ones. However the majority thought either that such measures were inadequate and ineffective, or that they were already being rolled back by later governments. (As a general point, the tendency of governments in highly oppositional political cultures not to allow time for policies to work, and to want to put in place a new lot of initiatives with theoretically short timescales to produce results, was seen as a major problem in tackling deep-rooted issues like income inequality.)

 A significant number of participants thought the problem of rising income inequality was so serious that a new paradigm altogether was needed: transformative rather than redistributive, based precisely on recognition that the market was not sacrosanct, and that governments could change contexts and cultures if they were determined enough.  ‘Nudging’ behaviour in the right direction was hardly likely to prove sufficient. The argument that measures to reduce high income inequality necessarily involved discouraging innovation and entrepreneurship, or reducing freedom, needed to be tackled head-on. Tackling rent-seeking would not affect growth. The tax and benefit system should not just be associated with encouraging those who did not want to work or immigrants.

Others thought the notion of a paradigm shift of this kind essentially pie in the sky, even if it were desirable, and preferred to stick to the art of the politically possible. It was also recognised that, despite the effects of the financial crisis, public opinion in advanced countries did not yet seem ready for such a shift, even where it looked to be in the interests of the majority.  More time and deeper effects of the crisis might be needed before a real paradigm shift became possible.  For example, the paradigm shift in UK politics in the 1980s under Mrs Thatcher had been thirty years in the making, and was made possible by a succession of dramatic failures in the 1970s.

Nevertheless, the example of Brazil and other Latin American countries was seen as significant: the problem of income inequality had become so glaring that something had had to be done if a further cycle of revolutions/coups were to be averted; the advent of democracy had created conditions where this could happen; and the elite and rich had joined a consensus that serious action was necessary, if only in order to save their own skins.  This had allowed successive governments to bring in policies such as the Bolsa Familia and a minimum wage. These had made a real difference to those at the bottom of the pile, while leaving the rich virtually untouched.  Could such a consensus be created for more radical social and economic action to bring up bottom and/or median incomes in advanced countries, on the basis of those at the top end of the income scale recognising that the alternative would be far worse? This would respond to the increasing current debate about what might constitute responsible capitalism, and to calls for a new social contract. 

Against this background, a number of measures were proposed:

  • a policy of providing a ‘living wage’ for all.  This should come from actual wages for work if possible, from return not only to full employment, but also to better jobs.  A higher minimum wage could be part of this, as well as strengthening the bargaining power of workers, which had largely disappeared in much of the private sector.  Action through benefits and tax credits would no doubt still be needed, but should not be the only device, since both were not only highly expensive and vulnerable to abuse, but also tended to be unpopular;
  • higher inheritance taxes, to tackle the pernicious problem of high income inequality entrenching high inequality of opportunity.  There was little public support for such measures at present, including among poorer sections of society, but a good intellectual case could be made for them;
  • more progressive direct taxation. Again a strong case would have to be made, but it was not impossible to make.  Governments had lost confidence in their ability to use the tax system in ways it had been originally designed for;
  • a shift towards taxes on unearned income (eg land, property, rents in the financial system), and away from labour or productive capital;
  • better regulation of financial markets, to discourage risk-taking and rent-seeking, and promote productive investment;
  • new attempts to create national investment bank-type solutions, to channel more of existing wealth into productive outlets, or to support private sector growth in neglected regions, with the aim of creating better quality and better paid jobs;
  • tougher action on tax avoidance, particularly at the top;
  • building stronger institutions which could foster different cultures and over time create the possibility of effective self-regulation (seen by most as unrealistic in present circumstances);
  • greater rights/activism by shareholders and better corporate governance, to restrain excessive executive pay, and help put an end to the current constant upward ratchet effect which Board Remuneration Committees seemed unable or unwilling to break.  Worker representatives on such Committees might help (though some around the table strongly doubted this);
  • further moves towards transparency, to help create a culture of unacceptability for excessive rewards unlinked to merit or performance;
  • encouraging greater employee ownership of companies, for example by taxing such companies significantly less;
  • decentralisation of decision-making, making it harder for politics to be captured by small elites, and allowing for greater experimentation;
  • action to improve housing for all, eg by encouraging more house-building.  Physical surroundings counted for life chances;
  • continuing action to improve education for all, particularly in the first, highly formative years, but also continuing thereafter, since education remained the single best way of improving the life chances of those at the bottom and indeed in the middle;
  • better and universally available child care, to allow women to work more easily, since double incomes could make a huge difference.

On the latter point, the value of education in improving life chances and levelling the playing field was a constant theme of our discussions.  But we recognised that it was not a panacea.  The entrenched advantages of the children of the highest income earners went well beyond education: family support, connections, opportunities to travel etc.  Moreover the value of a college/university education in terms of getting a better paid job seemed to be diminishing, just as its cost was rapidly increasing.  Many of those at the bottom of the scale might be increasingly discouraged from bothering.  More apprenticeships/vocational training was one answer to this, but was it enough?  We also had a fascinating if somewhat UK-centric discussion of the advantages of full equal opportunity in education, represented by the comprehensive school reform of the 1960s, which seemed in the end to have diminished upward social mobility, compared to more selective/hothouse approaches which would at least help talent at the bottom of the socio-economic pile come through, even if unfair in other ways.

It was recognised that most of the prescriptions listed above were for advanced economies, and perhaps particularly relevant to the Anglo-Saxon countries.   The emerging economies were at an earlier stage of growth and development, and the nature of the social contract was very different. Policy solutions would need to vary accordingly. But that could easily change over time. Such a presumption might even be already built into attitudes now. In other words workers in countries like China and India accepted that in the current phase of rapid economic growth, where hundreds of millions were being lifted out of poverty, social safety nets were unaffordable and high income inequality inevitable.  But they would expect this to change once a certain point had been reached in average income per capita.  More of the kind of prescriptions talked about here would then become relevant and necessary. There was already a lively debate in some countries about the need for more inclusive growth.

Conclusion
It was encouraging that we reached a degree of agreement about the importance of doing something about high income inequality, and about what such measures might look like.  However we were conscious that, perhaps through a natural process of political interest and self-selection among those accepting the invitation, our group had a strong centre-left bias and lacked strong voices pushing for more market-based approaches, or querying the costs of the kind of measures we had been discussing. We also spent too little time discussing how to overcome the difficulty of many of the actions described being taken in one country alone, without too many negative consequences because of the mobility of capital and talent. We did not for example really look at how international institutions could help.  Nevertheless I hope this Note can be an important contribution to an increasingly central debate in many economies.  The problem is unlikely to go away even when normal growth resumes in advanced economies. Political business as usual is therefore unlikely to be enough. Some controlled experimentation of new policies looks to be worth trying.

This Note reflects the Director’s personal impressions of the conference.  No participant is in any way committed to its content or expression.

 

PARTICIPANTS
Chair: The Rt Hon James Purnell (UK)
Chair, Institute of Public Policy Research (2010-).  Formerly: Member of Parliament (Labour) for Stalybridge and Hyde (2001-10); Secretary of State for Work and Pensions (2008-09); Secretary of State for Culture, Media and Sport (2007-08); Minister of State for Pensions, Department of Work and Pensions (2006-07); Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (2005-06).

CANADA
Mr Thomas Milroy
BMO Capital Markets (1993-); Chief Executive Officer, BMO Capital Market, Toronto (2008-).  Formerly: Vice-Chair and Global Head of Investment and Corporate Banking (I&CB); Executive Managing Director and Head of I&CB.

Mr David Morhart
Deputy Minister, Department of Infrastructure, Government of Alberta (2011-).  Formerly: Chief, Oil Sands, Strategy and Operations; Deputy Minister, Social Development, Province of British Columbia; Public Security Commissioner and Deputy Solicitor General; CEO, British Columbia Ambulance Service; Assistant Deputy Minister, Provincial Treasury.

Professor Nikita Nanos
President, Nanos Research Corporation; Research Associate Professor, State University of New York; Fellow, Marketing Research and Intelligence Association (MRIA); Contributing Writer, Institute for Research in Public Policy's Policy Options Magazine; Member, Editorial Advisory Board, Journal of Professional Communication.  Formerly: National President, MRIA; Publisher, Canadian Journal of Marketing Research.

Professor John Richards
Professor, School of Public Policy, Simon Fraser University, Vancouver; Roger Phillips Chair in Social Policy, C.D. Howe Institute, Toronto; Visiting Professor, International University of Business Agriculture and Technology, Dhaka.

PEOPLE’S REPUBLIC OF CHINA
Dr Liu Kaiming
Co-Founder and Executive Director, The Institute of Contemporary Observation, Shenzhen; International Advisory Board Member, Business and Human Rights Resources Centre; Evaluation Consultant to EU Commission on China-EU collaboration on rule of law, human rights, social development and civil society (2006-).  Formerly: Advisory Board Member, Social Accountability International (2003-07); Journalist, Shenzhen Legal Daily (1997-2001).

EGYPT
Professor Karima Korayem
Professor of Economics, Al-Azhar University, Cairo; Fellow, Comparative Research Program on Poverty (CROP), Norway; Member of the Research Competition Committee, Arab Center for Research and Policy Studies, Qatar; International Consultant for UN, ILO, IDRC, WB, OECD (1979-).

FINLAND/USA
Dr Sari Pekkala Kerr
Economist and Senior Research Scientist, Wellesley Centers for Women, Wellesley College, Massachusetts (2010-); Scientific Secretary, European Regional Science Association.  Formerly: Government Institute for Economic Research, Helsinki; Adjunct Professor or Visiting Scholar, Economics Departments of: MIT, Boston University, University of Kent at Canterbury.

GERMANY
Dr Ulrike Stein
Senior Economist, Macroeconomic Policy Institute, Hans-Böckler Foundation, Düsseldorf.

IMF/GERMANY
Dr Michael Kumhof
Deputy Division Chief, Modeling Unit, Research Department, International Monetary Fund.  Formerly: Assistant Professor, Stanford University (1998-2004); Corporate Account Executive, Barclays Bank PLC, Singapore (1991-93).

INDIA
Ms Jyoti Malhotra
Freelance Journalist, Delhi; Consultant, Federation of Indian Chambers of Commerce and Industry; Contributor: Business Standard, India; Express Tribune, Pakistan; The National, UAE.

Dr Shekhar Shah
Director General, National Council of Applied Economic Research, New Delhi (2011-).  Formerly: World Bank: Regional Economic Adviser for South Asia; Sector Manager for Public Sector and Governance, Eastern Europe and Central Asia; Deputy Research Administrator, Research Department; Lead Economist for Bangladesh (1989-2011); Program Officer for International Economics (South Asia), Ford Foundation (1984-89).

INDONESIA
Dr Djoni Hartono
Researcher and Lecturer, Faculty of Economics, University of Indonesia.

IRELAND
Mr Julian McCrae
Director of Research, Institute for Government, London.  Formerly: Deputy Director, Prime Minister's Strategy Unit; Head of Corporate Tax Strategy, HM Treasury; Special Adviser, Department for Work and Pensions; Programme Director, Institute for Fiscal Studies.

ITALY
Mr Massimiliano La Marca
Economic Policy Specialist, Policy Integration Department, International Labour Organisation (2010-).  Formerly: Economist, Division on Globalisation and Development Strategies, United Nations Conference on Trade and Development.

KENYA
Dr Mwangi Kimenyi
Senior Fellow and Director, Africa Growth Initiative, Brookings Institution; Associate Professor, Department of Economics, University of Connecticut; Research Fellow, University of Oxford.  Formerly: Founding Executive Director, Kenya Institute for Public Policy Research and Analysis (1999-2005).

MEXICO
Mr Pablo Yanes
Director General, Social Development Evaluation Council of the Federal District, Mexico (2008-); Member, International Executive Committee, Basic Income Earth Network.

OECD/ITALY
Mr Alessandro Goglio
Counsellor, Directorate for Employment, Labour and Social Affairs, Organisation for Economic Co-operation and Development (OECD); Contributor, OECD publication, Divided We Stand: Why Inequality Keeps Rising.  Formerly: Adviser to the Secretary-General, OECD (2009-10).

SERBIA/ARGENTINA
Ms Marija Pantelic
Weidenfeld Scholar, pursuing research on livelihood and healthcare access inequity in South Africa, Centre for AIDS Interdisciplinary Research, University of Oxford (2011-).  Formerly: Monitoring and Evaluation Officer, USAID economic growth projects, Serbia (2009-11); Independent Evaluator, Development Consulting Group, Serbia (2010-11).

UK
Mr Jonathan Baume
FDA (1989-); General Secretary, FDA (1997-).  Formerly: Employment Law and Equality Issues Specialist, Trades Union Congress (1986-89).

Mr Sam Coates
Deputy Political Editor, The Times.

Mr Philip Collins
Columnist and Leader Page Editor, The Times; Chair of Trustees, Demos.  Formerly: Chief Speech Writer to the Prime Minister (Tony Blair).

Ms Rowena Davis
Journalist and Writer, New Statesman, The Guardian; Labour Councillor, Southwark; Regular Contributor, Sky News, BBC Sunday Politics show; Author, Tangled Up in Blue.

Sir John Gieve KCB
Chairman Vocalink; Non-Executive Director: CLS, Homerton Hospital; Trustee, NESTA; Chairman, Clore Social Leadership Programme.  Formerly: Deputy Governor, Bank of England (2006-09); Permanent Secretary, Home Office (2001-05); Director, HM Treasury (1998-2001).  A Governor of The Ditchley Foundation.

Ms Deborah Hargreaves
Director, High Pay Centre.  Formerly: Chair, High Pay Commission; Business Editor, The Guardian (2006-10); Financial Editor then News Editor, Financial Times.

Mr Paul Johnson
Director, Institute for Fiscal Studies (IFS) (2011-).  Formerly: Deputy Director and Head, Personal Sector Research Programme, IFS; Financial Services Authority; Department for Education and Skills; Director, Public Services and Growth Directorate, and Chief Micro-Economist, HM Treasury; Deputy Head, Government Economic Service; Research Fellow and Associate of Frontier Economics, IFS.

The Rt Hon Tessa Jowell MP
Member of Parliament (Labour), Dulwich and West Norwood (1997-); Dulwich (1992-97); Shadow Minister for the Cabinet Office and for London and the Olympics (2010-); Senior Fellow, Institute of Government.  Formerly: Minister for the Cabinet Office (2009-10); Minister for London (2009-10); Minister for the Olympics (2007-2008, 2009-2010); Secretary of State for Culture, Media and Sport (2001-07).  A Governor of The Ditchley Foundation.

Mr Anatole Kaletsky
Editor at Large, The Times; Chief Economist, GaveKal Dragonomics; Chairman, Institute for New Economic Thinking.  Formerly: New York Bureau Chief and International Economics Editor, Financial Times (1979-90); Economics Correspondent, The Economist (1976-79).

Professor John Kay
Visiting Professor, London School of Economics; Fellow, St John's College, Oxford; Fellow, British Academy and Royal Society of Edinburgh; Writer, Broadcaster and Author.  Formerly: Professor, London Business School and Oxford University; Founding Director, Saïd Business School, University of Oxford; Research Director, Institute for Fiscal Studies.

Dr Gavin Kelly
Chief Executive, Resolution Foundation.  Formerly: Deputy Chief of Staff to the Prime Minister (2007-10); Member, Council of Economic Advisors, HM Treasury; Senior Advisor to the Secretary of State, Department for Education and Department for Communities and Local Government; Deputy Head, Prime Minister's Strategy Unit; Director of Research, Institute for Public Policy Research and the Fabian Society.

Mr Andrew Knight
Chairman, J Rothschild Capital Management Limited (2008-); A Governor and Member of the Council of Management, The Ditchley Foundation.

Ms Rachel Lomax
President, The Institute for Fiscal Studies (2006-); Non-Executive Director: HSBC Holdings, BAA, The Scottish American Investment Company (SAINTS), Reinsurance Group of America, Arcus Infrastructure Fund; Trustee: Royal National Theatre, Centre for Economic Policy Research, Imperial College London.  Formerly: Deputy Governor, Monetary Stability, and a Member of the Monetary Policy Committee (2003-08), Bank of England.

Mr Frances O’Grady
Deputy General Secretary, Trades Union Congress (2003-); Member: Low Pay Commission, High Pay Commission, IPPR Growth and Prosperity Advisory Panel, Commission on Living Standards.

Dr Faiza Shaheen
Senior Researcher (Economic Inequality), New Economics Foundation. Formerly: Labour Market Analyst, Centre for the Cities; Research Positions, National Children's Bureau and Save the Children.

Ms Sonia Sodha
Senior Policy Adviser, Office of the Leader of the Opposition.  Formerly: Head of the Capabilities Programme, Demos; Research Fellow, Institute for Public Policy Research.

USA
Mrs Sarah Bloom Raskin
Governor, Federal Reserve Board (2010-).  Formerly: Commissioner of Financial Regulation for the State of Maryland; Managing Director, Promontory Financial Group; Banking Counsel for the US Senate Committee on Banking, Housing, and Urban Affairs.

Dr John Hoffmire
Director, Saïd Global Entrepreneur Network, Saïd Business School, University of Oxford; Director, Center on Business and Poverty, Wisconsin Business School, University of Wisconsin-Madison.  Formerly: Consultant, Bain & Company; Senior Investment Officer, American Capital.

Mr David Riemer
Senior Fellow, Public Policy Institute, Community Advocates, Wisconsin.  Formerly: Director, Wisconsin Health Project (2004-07); Budget Director, State of Wisconsin (2002-03); Director of Administration, City of Milwaukee (1996-2002) (1988-93); Chief of Staff to Mayor John Norquist (1993-96).   A Member of the Advisory Council, The American Ditchley Foundation.

WORLD BANK/BRAZIL
Dr Francisco Ferreira
Lead Economist, Research Department, World Bank; Research Fellow, Institute for the Study of Labor, Bonn; Editor in Chief, Journal of Economic Inequality.  Formerly: Deputy Chief Economist for Latin America and the Caribbean, World Bank (2009-11); Co-Director, World Development Report (2006), World Bank.