The wealth effect

News of an Austrian heiress giving away most of her $27mn fortune makes for a great story no doubt. Criticising the absence of taxes on wealth and inheritance in her country, Marlene Engelhorn holds that democratic values call for redistribution of wealth.

Inequality as villain | Given similar talk in India during the recently concluded poll season, it is important to bust some misconceptions in this context. There has been a growing focus on inequality of late, as if economic disparities between people is the most important problem of all. Such a discourse forgets that entrepreneurs create wealth not just for themselves but society at large by generating jobs, backing innovation. And, to borrow from Milton Friedman, it ignores the danger that redistribution could destroy the incentive to create wealth.

Tackle unemployment | Our policy planners and political parties would be expending their energies better if they got to the root of the problem: unemployment. In a country where 7-8mn young people are added to the labour force each year, youth account for 83% of the unemployed workforce. Tackling the problem requires sound economic policy that targets labour-intensive sectors, where India holds a competitive advantage. And it needs investment in education and skilling that allows young people to work those jobs.

Read the verdict in recently concluded LS polls: voters were angry at lack of opportunities, not because a few Indians are very rich.