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 monster on Friday June 19 2015, @04:39PM
Zombie ideas need repeated killing.
(Score: 1) by MadTinfoilHatter on Friday June 19 2015, @04:57PM
Zombie ideas need repeated killing.
..and this particular idea just refuses to stay dead, despite having been known to be flawed for almost three millennia.
He who is cruel to the poor for the purpose of increasing his profit, and he who gives to the man of wealth, will only come to be in need.
-King Solomon, Proverbs 22:16 (~950 B.C.)