Monday, March 03, 2014



Inequality is bad for growth

We've known for a while that inequality is bad for all sorts of social statistics: education, life expectency, crime rates, health levels. Now it turns out that its also bad for economic ones as well:

This week the IMF, a bastion of fiscal conservatism and pro-market policies for decades, released a paper titled "Redistribution, Inequality and Growth." It concluded after looking at a fresh set of data on pre and post tax incomes across countries large and small found that more equal countries grew faster over the long run.

The study also found that those Governments that did redistribute incomes didn't actually hurt their economies, apart from the most extreme examples such as Zimbabwe.

"Thus the combined direct and indirect effects of redistribution - including the growth effects of the resulting lower inequality - are, on average, pro-growth," the IMF said.


And note this is from the IMF, previously the biggest advocates of inequality-causing NeoLiberalism. It's good to see they've changed their mind in response to the facts. The question now is whether inequality's other right-wing advocates - including the National and ACT parties - will do likewise.