A Conundrum

Now, at the end of 2014, inequality in the USA is higher than at any time since about 1870. Also, the US currently has the highest growth rate of any developed country, currently about 5%.

Now I and others including the OECD have said that inequality is inimical to growth.

I have also said that I am an empiricist.

The evidence of the US economy and to a lesser extend the UK economy is that I am wrong about inequality and growth.

The alternative view is that this is a blip and that in the longer term US growth will be limited by its extremes of inequality.

I suspect strongly that the alternative view is correct and I and the OECD have been right about growth and inequality. One month’s, one quarter’s, or even one year’s data does not make a trend. But we will watch this space.

When the facts change, I change my mind.


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