2040 News: Rising Economic Inequality Undermines Long-Term Growth

The credit rating agency Standard & Poor’s has issued a report warning that increasing economic inequality in the U.S. may weaken long-term growth.

inequality, Gini coefficients, long-term growth, Paul Krugman, Standard & Poor's report, economic inequality

Economic inequality has been rising steadily in the U.S. since 1979 (represented in the graph below by rising Gini coefficients, which measure income inequality).

inequality, Gini coefficients, long-term growth, Paul Krugman, Standard & Poor's report, economic inequality

The S&P report concludes:

“The challenge now is to find a path toward more sustainable growth, an essential part of which, in our view, is pulling more Americans out of poverty and bolstering the purchasing power of the middle class. A rising tide lifts all boats…but a lifeboat carrying a few, surrounded by many treading water, risks capsizing.”

Paul Krugman, recipient of the Nobel Memorial Prize in Economics, is even more direct:

“[M]aking our economy fairer would also make it richer. Goodbye, trickle-down; hello, trickle-up.”

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