INEQUALITY RESEARCH = LATEST IMF RESEARCH SHOWS REDUCING INEQUALITY = INCREASES LONG-TERM GROWTH

FED and IMF since 1970s lectures unions and other social justice advocates that economic inequality is either inevitable, or good for growth, or both. 

NEW CONSENSUS = Inequality MASSIVE = LITTLE or NO Growth = TRICKLE DOWN IS BULL CHIOT + JOB CREATORS IS BULL CHIOT + LAFFER IS BULL CHIOT…….U of CHICAGO IS BULL CHIOT = 

NEW IMF REPORT = http://www.imf.org/external/pubs/ft/sdn/2014/sdn1402.pdf

NEW IMF REPORT = Redistribution, Inequality, and Growth = Redistribution EXPANDS GROWH = Ideological sea change to ADDRESSING redistribution, inequality, and economic growth?

http://www.youtube.com/watch?v=J0TTtnnbphw

LIES = Dangerous economic myths about the world in which we live:

# 1  The Rich-Drive-The-Economy Myth: TRICKLE DOWN JOB CREATOR BULL = DON’T TAX THE RICH = HURTS ECONOMY AND JOBS

# 2  Austerity Return-Growth Myth: GOP TRANSFER WEALTH TO TOP = CUT GOV SPENDING ON PEOPLE (education, healthcare, and other social services) BUT FEED THE RICH = DON’T CUT SUBSIDIES OR MESS WITH 14,OOO LOOPHOLES FOR MULTINATIONAL $BILLIONAIRES

# 3  Inequality-Is-Benign Myth: BILLIONAIRES ARE JOB CREATORS LIE!

OLD WORLD VIEW: Raising taxes on poor and middle class people; giving tax breaks and subsidies to the wealthy; and slashing social spending to reduce deficits – all in an attempt to get growth moving.

IMF DEBUNKS ITS OWN MYTHS and makes the economic case for combating extreme inequality. The report draws two conclusions that buck mainstream economics dogma:

# 1 Lower economic inequality drives faster and more durable growth = SOUND POLICY FOR LONG-TERM GROWTH 

# 2 Redistribution TO BALANCE INEQUALITY = PRO-growth = Redistributing wealth through taxation = Good for growth = Reduces inequality

Virtuous circle among wealth redistribution, lower inequality, and longer economic growth episodes.

8% of GDP = to TOP 1% in late 1970s 

23% of GDP = to TOP 1% TODAY = LAST SEEN IN GREAT DEPRESSION

USA #1 in WEALTH AND INCOME INEQUALITY

OLD WORLD = Economic growth of TOP = Silver bullet for poverty reduction

FACT: TOP GROWTH = Typically run dry after only a couple of years.

FACT:  Investments that reduce inequality = Payoff of stronger and longer growth.

IMF Article IV pushes OLD WORLD IDEAS = INEQUALITY VIRTUALLY IGNORED!

RESEARCH:  SOLVE INEQUALITY = Foster education, health, and infrastructure and INNOVATIONS for low income People! = “Inequality is thus a more robust predictor of growth duration than many variables widely understood to be central to growth.”

FINDING:  AUSTERITY = increased inequality in both the short and medium term.

FACT: OXFAM PROVED WEALTH OF RICHEST 85 PEOPLE IN THE WORLD = WEALTH OF BOTTOM 50%.

IMF = Need to address rising gaps between the rich and poor + encouraging HIGHER public spending ON education, healthcare, and other social services + INNOVATIONS

IMF’s board of Executive Directors are likely to focus on fiscal policies privatization, FREEDOM TO ROB THE POOR, and ATTACK labor and collective bargaining = IGNORE Underlying causes of income and wealth inequality + ENHANCE collective bargaining = “The only way out of this crisis is inclusive, sustainable economic growth with a living wage for all. That means a stronger labor movement and a seat at the table for working people.”

IMF calls: “the tentative consensus in the literature that inequality can undermine progress in health and education, cause investment-reducing political and economic instability, and undercut the social consensus required to adjust in the face of shocks, and thus that it tends to reduce the pace and durability of growth.”

“…there is surprisingly little evidence for the growth-destroying effects of fiscal redistribution at a macroeconomic level. We do find some mixed evidence that very large redistributions may have direct negative effects on growth duration… [but] On average, across countries and over time, the things that governments have typically done to redistribute do not seem to have led to bad growth outcomes, unless they were extreme. And the resulting narrowing of inequality helped support faster and more durable growth, apart from ethical, political, or broader social considerations.”