Beware the dangers of the rising inequality
Govts need to act as it can cause social tensions, which can disrupt production, investment and economic growth. By Shane Oliver
THE issue of rising inequality has seen increasing interest over the last year or so, particularly following the Brexit and Trump votes for which rising inequality was seen as a key driver. This is an issue we have looked at before in terms of driving a swing to the left among median voters in Anglo countries and contributing to a backlash against economic rationalist policies, but this note takes a more detailed look at the economic and investment implications.
Is inequality rising?
Because inequality is a politically charged issue, all sorts of numbers are thrown around. A favourite seems to be that the share of gross income is going to a particular income group, say the top one or 10 per cent. But this may not be the best guide because of the impact of progressive income taxes and welfare transfers.
