The Language of Inequality

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Andrea Brandolini:

What I really find conspicuous in the comparison of top income shares across rich nations is the similarity of the patterns observed in English-speaking countries as opposed to those found in continental European countries. It is striking that, after a prolonged period of moderate decline, the income share of the richest 1 percent suddenly began to rise in the mid-1980s in the United Kingdom, Canada, Ireland, Australia, and New Zealand as well as in the United States, while it exhibited no upward trend in France, Germany, the Netherlands, Spain, and Switzerland.

The difference between these two groups of countries confirms that market and technological forces cannot be the whole story, but the similarity of trajectories, including the time of the turning point, in the English-speaking countries defies an explanation based only on the national characteristics of the U.S. political process. Hacker and Pierson recognize the potential problem, but play it down by positing that the close interdependence of the markets for top executives can largely account for the common trends in English-speaking economies. Perhaps, but why should interdependence be so much stronger between London and New York than between London and Frankfurt in today’s highly integrated financial markets? Can common language be the only critical factor, or are there more fundamental reasons?

Like Brad DeLong, I don’t really know why we’d be so casually dismissive of the idea that master class labor mobility inside the Anglosophere is in fact much greater than mobility across the linguistic divide. Now it’s true that this lack of mobility seems somewhat irrational. Firms interested in reducing labor costs could realize substantial gains by importing low-paid Asian CEOs but in practice corporate nationality makes a big difference when it comes to staffing the board of directors and the executive suite.

At any rate, you could probably try to test this. In some European countries they subtitle the American TV shows and in others they dub them. The quality of the English spoken in the dubbed countries is noticeably lower than that spoken in the subtitle countries. Are people form subtitle countries more likely to relocate to Anglosphere countries than people from dub countries? When Carl-Henrik Svanberg was CEO of Ericsson in Sweden, he earned 15.75 million SEK. Wikipedia says his compensation as BP’s chairman is much higher than that. And like most Swedes, he speaks English very well. Nonetheless, he did manage to create a PR fiasco by talking about “small people” instead of “the little guy.”