"Inequality is hindering economic growth"

[applegrove]

Inequality is hindering economic growth

by Jacob Hacker and Nate Loewentheil at the Baltimore Sun

http://articles.baltimoresun.com/2013-08-12/news/bs-ed-austerity-and-prosperity-20130812_1_inequality-growth-economy

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Okun was right on one front: Cutting taxes and deregulating finance do increase inequality. During the expansion of the 2000s, for example, more than half of all household income gains after taxes and benefits accrued to the richest 1 percent of Americans. Today, the U.S. has greater levels of inequality than any peer nation.

What we have not seen, however, is faster growth. Our economy has grown at roughly the same rate as other advanced industrial economies. But unlike other countries in the Organization for Economic Co-operation and Development, our growth has overwhelmingly benefited the well off. Deregulation in the financial sector, meanwhile, contributed to the multiple economic crises that have unfolded since the 1980s, including the financial crisis from which we are still recovering.

Although moderate inequality is inevitable and even desirable in a capitalist economy, there is good reason to believe that today's extreme inequality is at odds with dynamic growth. Even if we discount the moral case for greater equality, the economic case is increasingly compelling.

First, poverty excludes tens of millions of Americans from the mainstream economy. More than 100 million Americans — one third of us — live in or near poverty, struggling every day. Far too many of them never have the opportunities (because of limited assets, a poor education or both) to achieve their potential. According to a report by McKinsey & Co., the gaps in access to education based on income impose the cost of a "permanent national recession." At a time of increasing global competition, this economic marginalization squanders our greatest asset: individual creativity and industriousness.

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[PDJane]

1. No kidding. It's also going to destroy the entire economy,

And mean that the end of our world is going to speed up. It's stupid. We know what has to be done, and it's time to do it.

Let's fix the infrastructure, move away from fossil fuels, up the minimum wage to $15 to $20 dollars, increase taxes on the investor class and corporations, reign in the banks, and get on with it.