01.12.2014 - 10:05 [ VOX CEPR's Policy Portal ]

Inequality is bad for income growth of the poor (but not for that of the rich)

If the current economic processes generating high inequality also help increase the future income growth of the rich, the question may be asked: why would the rich accept a policy that would slow their future income growth and thereby reduce their share of the pie? Is there a ‘public interest’ or a democratic (majoritarian) pressure that might convince the rich to accept such a policy change? Or are we just back to the observation made by Plato 24 centuries ago that communities with large inequalities “are not so much a single state as a collection of states”?