Inequality is Necessary for Growth, Right?

May 13th, 2010

I’m going to start this post with a proleptic response:

No, nobody is suggesting a Maoist cultural revolution, forcing executives and professors to muck shit on collective farms.

But I feel compelled to share the results from my latest, comparing income inequality to prosperity and prosperity growth in the fifty states.

Contrary to the supply-sider narrative, income inequality appears to have almost no correlation with prosperity growth (.05). What correlation it does show is the opposite of what the supply-siders would have you believe.

This suggests — also contrary to all-too-commonly received wisdom — that there is not in fact an inevitable trade-off between equity and efficiency. That it’s a false choice. That we can in fact have more of both.

  1. joel hanes
    May 19th, 2010 at 21:07 | #1

    What, you mean Reagan’s economic policies do not in fact lead to prosperity?

    Alert the media.

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