Friday, December 08, 2006

Income Inequality in the U.S.

The old Ricardan idea that income inequality drives growth has already been debunked, but gets repeated as economists' dogma.  From numerous studies, income inequality correlates with lower growth, although the relationship is equivocal in the developed countries.  Using basic statistics on OECD data, one finds that the correlates of the GINI coefficient (high income inequality) are lower educational attainment, imprisonment, and worse health care outcomes.

It simply reflects the grotesque abuses of an unequal and plutocratic society, where those in power have decided to reward themselves most heavily.  In other words, the powerful keep all the rewards for themselves, while using economic ideology to justify their corruption and avarice.
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