[quote] The idea that increased income inequality makes economies more dynamic has been rejected by an International Monetary Fund study, which shows the widening income gap between rich and poor is bad for growth.
A report by five IMF economists dismissed “trickle-down” economics, and said that if governments wanted to increase the pace of growth they should concentrate on helping the poorest 20% of citizens.
The study – covering advanced, emerging and developing countries – said technological progress, weaker trade unions, globalisation and tax policies that favoured the wealthy had all played their part in making widening inequality “the defining challenge of our time”.
The IMF report said the way income is distributed matters for growth. “If the income share of the top 20% increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20% is associated with higher GDP growth,” said the report. [/quote]
Thoughts?
Edit: That feel when you can tell everyone is just liking the bobcast comment and moving on instead of commenting.
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4 RepliesJust paying the poor will not work. Even if you account for the fact that "poor people make poor choices" factor, I.E. a certain segment of the population will waste any increase of pay on trivial things. We are still faced with the fact that, at least in the US, inflation and degradation of the value of the dollar is killing us. If we want to truly help the poor we need a combination of mild pay increases and a restoration of the value of our currency. We can give people as many dollars as we can print, but the power behind those dollars is what really matters.