Even though some politicians and social commentators simply want to punish the better off for being, well, better off, most abhor growing income inequality on moral grounds, based on fairness, equality of sacrifice in hard economic times and so on. Important though this moral case is for social policy, the plague of rising income inequality merits a much more thorough economic examination. The reason is that income inequality is endogenous to our capitalist system. It is a function of how we incentivise businesses, entrepreneurs and innovation. But taken to extremes it can become pernicious to the pace and durability of economic growth. It does this by undermining progress in health standards, educational attainment levels, economic stability, and the social cohesion needed to keep our system adaptable and responsive to shocks….“more:”
George Magnus is an independent economist and commentator, an Associate at the China Centre, Oxford University, and an adviser to some asset management companies.
He is a regular contributor to the Financial Times, Prospect Magazine and other written media, and appears regularly on BBC TV and radio, Bloomberg TV and other outlets.
- Josephine Moulds, The Daily Telegraph
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