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NRT: Inequality is bad for growth

Written By: - Date published: 2:44 pm, March 4th, 2014 - 7 comments
Categories: Economy, poverty - Tags: , , , , ,


No Right Turn succinctly points out the impact of the International Monetary Fund changing its mind on the adverse effects of inequality in the economic sphere. A case of an accumulation of facts overriding dumb ideology.  

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.

7 comments on “NRT: Inequality is bad for growth ”

  1. One Anonymous Bloke 1

    Reality’s liberal bias strikes again.

    Watch the wingnuts deflect and deny.

    • miravox 1.1

      “Watch the wingnuts deflect and deny.”

      The ones on this site are too busy playing games over the election of a the leader of a party they are not a member of and are not entitled to vote in.

      Substantive issues like whether their own parties are producing benefits for the country, rather than accruing wealth for themselves, don’t concern them at all. It’s all a game.

  2. Tracey 2

    i am sure the imf has been hijacked by socialists or loonie greenies.

  3. hoom 3

    Its great that the IMF may have woken up to economic reality.

    Looking forward to seeing IMF demanding increased taxes on the rich, increased benefits for poor etc as conditions for loans/bail-outs in future!

  4. Naturesong 4

    Also, the World Economic Forum Annual Meeting in Davos, Switzerland gathered at the end of January this year.

    Davos Group Sees Income Inequality as Top Global Risk

    It’s pure self interest, not human rights, or economic growth.
    They realise that if they push it too far, a lot of them will end up losing their heads.

    Coincidence. Maybe.

  5. hoom 5

    Self interest was always the point.
    Through history the rich & powerful have to not be too rapacious or they lose their heads so it is most certainly in their self interest to give back to the poor.

    Thing I don’t get here is this should be massive big political & business news but even here on The Standard its attracting barely a mention.

    • Draco T Bastard 5.1

      People read it but there’s really not much to say. Even us lefties only really get to say We told you so.

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