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A new study (abstract and free PDF available) authored by several economists at the IMF (International Monetary Fund) reveal an inverse relation between increases in inequality and GDP growth. In what could also be considered a heavy blow to trickle-down economic theory, data analyses show (page 7) that increases of income share on the fifth quintile actually hurt growth, while increases in any other quintile favours growth with the lowest quintile showing the strongest push.
From the abstract:
We find that increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class.
Original Submission
(Score: 0) by Anonymous Coward on Friday June 19 2015, @12:09PM
Thank you. Anyone who knows anything about physical reality can tell you that infinite growth is impossible. If only more people realised this we might be able to design an economy that's updated to 21st century knowledge.
(Score: 0) by Anonymous Coward on Friday June 19 2015, @10:09PM
Capitalism and debt-based economies are only sustainable so long as there is growth. Admitting that infinite growth is impossible is an admission that capitalism is dying and should be retired.