Inequality, Innovation, and the Future: A 3-Part Policy Essay

Part 1 — The Economists’s Proposal: A Global Panel on Inequality

On 14 November 2025, more than 500 economists, sociologists, and activists endorsed an open letter calling for the creation of an International Panel on Inequality (IPI) — a body modeled on the Intergovernmental Panel on Climate Change (IPCC), but dedicated to systematically tracking and advising governments on inequality. The signatories urged G20 leaders, meeting today in Johannesburg, South Africa, to place this proposal on the agenda and adopt it as a global governance mechanism.

The letter makes several key claims:

Inequality is not natural but a political choice, shaped by tax policy, labour institutions, land regimes, global capital flows, and regulatory failures.

Inequality at extreme levels threatens democratic institutions, erodes trust, polarizes societies, and destabilizes economies.

Proven solutions exist — progressive taxation, universal public services, strong labour protections, and coordinated global action against tax havens.

And finally, that the world requires a “climate-panel equivalent” for inequality: an institution that continuously updates the evidence base, sets global norms, and provides scientific clarity for policymakers.

This call directly supports a major document released ten days earlier: the G20 Extraordinary Committee of Independent Experts on Inequality, chaired by Nobel laureate Joseph Stiglitz, under South Africa’s G20 presidency. The Stiglitz report endorses the IPI as a centrepiece recommendation. It aligns closely with the long-running work of the World Inequality Lab, led by Thomas Piketty, Emmanuel Saez, and Gabriel Zucman, whose World Inequality Database has become the global standard for measuring disparities.

Piketty’s intellectual legacy is unmistakable here. In his seminal book "Capital in the Twenty-First Century", he argued that when r > g — the rate of return on capital exceeding the rate of economic growth — wealth concentrates at the top faster than labour incomes can catch up. Without deliberate correction through progressive taxes on wealth and inheritance, inequality grows structurally.

The Stiglitz report builds on this line of reasoning. It asserts that wherever highly progressive taxes, strong labour protections, universal public goods, and anti-haven rules have been seriously applied, inequality has fallen “often dramatically and sustainably.” It does not ignore growth; in fact, it acknowledges that growth is necessary for prosperity. But it insists that growth alone is insufficient unless paired with redistributive institutions that make it inclusive.

This argument is not without historical grounding.

The great equalization episodes of the 20th century — postwar Europe, Japan (1950–1985), South Korea and Taiwan (1960–1990), and much of the West in the 1950s–70s — combined:

rapid growth,

expanding wages,

land reform,

universal education,

directed credit,

and extremely high marginal tax rates (70–90%).

Even technological breakthroughs of that era — Sony, Toyota, Bell Labs, Intel — emerged within high-tax, state-steered environments.

According to the inequality economists, it is the retreat of this institutional framework since the 1980s that explains why inequality has risen even as economies have grown. India is not exempt from this diagnosis; many economists argue that post-1991 growth has been less inclusive than the earlier decades.

Their conclusion is straightforward:

If the 20th century reduced inequality through policy, then the 21st can do so again — if policy is restored to the centre of the economic debate.

This is the intellectual foundation of the IPI proposal.

Part 2 — Where the Report Falls Short: The Missing Story of Technological Epochs

The Stiglitz–Piketty framework is powerful, but it underestimates how radically the post-1995 technological epoch changed the mechanics of value creation.

The digital revolution — Microsoft, Apple, Google, Amazon, Meta, Tesla, Nvidia, and today’s frontier AI labs — did not follow the developmental logic of mid-20th century growth. These firms:

scaled to trillion-dollar valuations in one or two decades,

required almost no direct state patronage,

relied on venture capital, stock options, and low capital-gains taxes,

harnessed network effects rather than protected domestic markets,

and produced globally accessible goods with near-zero marginal cost.

This is a fundamentally different economic environment.

To re-impose 1950–1970s-style tax structures and industrial-policy steering — the very tools inequality economists point to — would not recreate the mid-century equalization. It would more likely choke the incentive and financing structures that produced the internet, cloud computing, and generative AI.

The second conceptual gap lies in the measurement of global inequality itself.

Inequality metrics track shares, not lived mobility.

In India, for instance:

the bottom 50% in 2025 is not the same group as the bottom 50% in 1991,

because hundreds of millions have moved upward,

and been replaced by others through demographic churn.

When the bottom half’s average income grows 4–5% per year for three decades, the composition of inequality indices changes, even if the share ratio does not. This is mobility — real, material, upward movement — but it is statistically invisible in share-based inequality graphs.

Thus, a paradox emerges:

inequality measures say the relative share of the bottom has stagnated or fallen,

but poverty rates have collapsed and mass affluence has expanded.

This is a conceptual blind spot in the inequality literature.

And yet, there remains a real dilemma.

On one side:

Those who argue that the digital epoch is structurally different,

that entrepreneurial risk requires large potential upside,

and that extreme taxation would kill the world’s greatest engines of innovation.

On the other:

Economists who insist that effective tax rates on extreme global wealth have fallen to historic lows,

that platform monopolies now extract rents unimaginable in earlier eras,

and that countries like Sweden still produce unicorns despite imposing high taxes on top wealth.

The emerging reconciliation is a nuanced, hybrid consensus:

> Let founders innovate freely and capture substantial upside while building.

But once a company achieves scale, dominance, and network-driven rents,

society can impose higher taxes and structural constraints without killing innovation incentives.

This hybrid view protects ex-ante incentives while regulating ex-post dominance.

Yet even this hybrid view misses something deeper — something that cannot be captured by taxation models alone.

Part 3 — Innovation at Population Scale: The Real Equaliser of the 21st Century

The missing variable is mass technological diffusion.

Redistribution alleviates deprivation;

innovation uplifts capability.

Two contemporary examples illustrate this better than any theory:

Reliance Jio in India and OpenAI in the world.

1. Reliance Jio: India’s Domestic Equaliser

When Jio entered the telecom market in 2016, it did not merely “compete” — it changed the underlying economics of the sector:

data costs collapsed,

internet usage exploded in rural and low-income areas,

digital payments became ubiquitous,

small businesses went online,

and the digital economy became genuinely mass-based.

Reliance’s broader strategy — telecom, retail, FMCG, OTT, cloud, financial services, and now enterprise AI — follows a consistent pattern:

Build for ubiquity, not exclusivity.

Mukesh Ambani’s wealth accumulation is not driven by gated luxury; it is the natural byproduct of population-scale provisioning of infrastructure. His model resembles a foundational societal stack, not an elite marketplace.

In classical inequality theory, “big business” is part of the problem.

In India’s reality, certain big businesses become engines of equalisation because they expand the productive potential of the average citizen.

Innovation here is not a complement to redistribution — it is its precursor.

2. OpenAI: Global Cognitive Infrastructure for Anyone with a Phone

Globally, the closest parallel is OpenAI's ChatGPT.

For the first time in human history:

a frontier technology built with tens of billions of dollars in patient capital,

designed by the world’s top scientists and engineers,

running on huge clusters of cutting-edge compute,

….was offered for free to anyone with a smartphone.

This is not merely access to a tool — it is access to cognitive capacity.

Nearly a billion people use ChatGPT.

It's most advanced model is priced at ₹399/month (about $4.47/month) — a price point unimaginable for any previous frontier technology.

This is cognitive equalisation at a planetary scale. For example:

A student at a tier-3 college can write at a global standard.

A small business owner can run business analytics like a large corporation.

A job-seeker can learn new skills instantly.

A researcher in a developing country can access world-class reasoning and modelling tools.

AI does not redistribute income — it increases productivity potential.

Economists measure inequality in static shares;

innovation transforms the dynamic horizon of possibility.

CGPT is the world’s first mass cognitive infrastructure, comparable to:

roads in the 19th century,

electricity in the 20th,

mobile phones in the 2000s.

This is what traditional inequality economics underestimates:

expanding capabilities reduces inequality more durably than redistributing income.

3. A New Paradigm: Innovation-First Equality (IFE)

A society reduces inequality fastest when it expands the productive capacities of its median citizen through frontier technologies, rather than relying solely on redistributive transfers.

This framework has three pillars:

Frontier Value Creation

— Let innovators, scientists, engineers, and entrepreneurs push the productivity frontier.

High-Speed Diffusion

— Ensure that new technologies are made accessible at population scale (like Jio, like GPT).

Capability Expansion

— Enable citizens to produce more value on their own, not merely receive more transfers.

Redistribution remains necessary — but as shock absorbers, not as engines of equality.

4. The Necessary Policy Question of Our Time

Rather than asking:

“How do we tax the rich more?”

Governments should ask:

How do we increase the number of people who can create frontier-level value?

How do we convert citizens into entrepreneurs, creators, and AI-enhanced workers?

How do we accelerate the diffusion of life-changing technologies?

This, to conclude, is the intellectual pivot the global inequality debate urgently needs.