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.
(Score: 3, Insightful) by MichaelDavidCrawford on Friday June 19 2015, @12:26PM
for over twenty years I've been asking why we need growth to have prosperity.
I regard the 1970s as having been more prosperous than current times.
Yes I Have No Bananas. [gofundme.com]
(Score: 0) by Anonymous Coward on Friday June 19 2015, @08:21PM
The stock market was more or less flat during the 1970s. I recall that the unemployment rate was very high too; these, among others, were some of the reasons that Jimmy Carter lost to Reagan in 1980. What you regard matters little to me.
(Score: 0) by Anonymous Coward on Friday June 19 2015, @10:13PM
Because without growth, the only people who benefit under capitalism are the ones already entrenched and holding all the capital. Without new capital for others to obtain (growth) and without new markets (growth), there will be no new prosperity, just more and growing inequality.