"Paul Krugman: What can be done about income inequality?" [View all]

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Paul Krugman: What can be done about income inequality?

by Paul Krugman at the New York Times/India Times

http://economictimes.indiatimes.com/opinion/comments-analysis/paul-krugman-what-can-be-done-about-income-inequality/articleshow/31774880.cms?utm_source=hootsuite&utm_campaign=hootsuite

"SNIP................................


So does reducing inequality through redistribution hurt economic growth? Not according to two landmark studies by economists at the International Monetary Fund, which is hardly a leftist organization. The first study looked at the historical relationship between inequality and growth, and found that nations with relatively low income inequality do better at achieving sustained economic growth as opposed to occasional "spurts." The second, released last month, looked directly at the effect of income redistribution, and found that "redistribution appears generally benign in terms of its impact on growth."

In short, Okun's big trade-off doesn't seem to be a trade-off at all. Nobody is proposing that we try to be Cuba, but moving U.S. policies part of the way toward European norms would probably increase, not reduce, economic efficiency.


................................SNIP"