Growth and Inequality

The economic recovery is barely worthy of the name, and there is evidence that inequality in America is increasing. Ignoring the first rule of statistics—correlation is not causation—progressives see this as a new reason to expand government. Reduce inequality and the growth rate will increase.

But there is more assertion than fact in the claim that increased inequality results in slower growth. Some studies suggest that to be the case, others point out that so many factors determine an economy’s growth rate that heeding the call of the redistributionists will not add much to the flagging growth of our economy.