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: 2) by githaron on Friday June 19 2015, @01:47PM
I think it would make more sense to have a cap on how much a single individual can inherit from another individual. The problem isn't inequality in general, the problem is severe inequality. Besides if you spend your whole life saving and building up funds, why shouldn't you be allowed to impart some of that to your kids?