Burden Sharing in Support of the United Nations
Where does this leave the analysis of assessment rules based on ability to pay, progressivity, and horizontal equity? We can make many allowances for special considerations such as debt burdens, income inequality, or other aspects of poverty. If we are given definite objectives, parameter values can be found by varying exemption levels, setting minimum or maximum levels, setting median income levels of assessment, and so on. With a definite directive, the computing problem is not formidable for reaching a preassigned total.
Although the funds must be collected in US dollars, from the point of view of economic analysis, it seems that burden sharing is better tuned to PPP pricing, on a moving-average basis, for indicating ability to pay. This remark is based on the inference that PPP valuations give a better indication of a country's overall economic strength. It follows that the fundamental ability of a country to draw upon its own reserves or to raise funds in the international capital market will be related to its economic strength more than to the short run valuations that are implied by buying and selling in the foreign exchange markets, where speculation, arbitrary price fixing, central bank or exchequer policy, and many transitory global developments have significant effects.
An argument against PPP estimates is that they are based on inadequate information in some cases and not directly available to many countries. The sample has been expanded to include indirect estimates of several countries. Some interim results could be used while the United Nations Statistical Office is making a comprehensive and detailed study of PPP valuations so that the quality of such information would become available for all countries, on a sound basis. Naturally, this requires a significant input effort, but it is extremely worthwhile. The information that would be produced by such an investigation could be used in many ways, for analysis of world economic conditions, much beyond the present focus on assessments of burden sharing.
The early studies by Kravis, Summers, Heston, and Davenport have indicated possible steps to be taken to introduce income distribution, in addition to income level, in the estimation of international assessments in burden sharing. Any such approach must rely heavily on income distribution data for all countries. This too, as an extension and enhancement of our proposed methods, calls for additional data gathering and information. As in the case of PPP valuations, such fresh data have many potential and valuable uses in international economics. The United Nations Statistical Office would be well advised to extend our knowledge in this direction as far as possible. We should be able, within a few years' time, to widen the scope of our proposed formulas for burden sharing, by considering intranational distribution as well as level of income in assessing individual countries.
Regardless of our views about price valuations across countries and the importance of using information on internal statistics of income distribution, we have demonstrated how one can use presently available data to generate, quickly, assessment values for different assumptions about ceiling values, floor values, degrees of progressivity - all the while preserving horizontal equity.
The other criteria of availability and transparency are also
taken into account. We have used published and available data
that are well understood among policy makers as well as economic
statisticians. Using the materials that are readily at hand,
we can tailor assessment programs to policy makers' tastes or
needs, not in every dimension but in several. As the underlying
economic data basis is enhanced and improved, our formula approach
is ready and available to make relevant calculations.
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