The tide is turning against the long decades of neoliberalism that have plagued both the developed and the developing world. Here's another data point:
A new paper by researchers at the International Monetary Fund appears to debunk a tenet of conservative economic ideology — that taxing the rich to give to the poor is bad for the economy....
Labelled as the first study to incorporate recently compiled figures comparing pre- and post-tax data from a large number of countries, the authors say there is convincing evidence that lower net inequality is good economics, boosting growth and leading to longer-lasting periods of expansion.
In the most controversial finding, the study concludes that redistributing wealth, largely through taxation, does not significantly impact growth unless the intervention is extreme.
In fact, because redistributing wealth through taxation has the positive impact of reducing inequality, the overall affect on the economy is to boost growth, the researchers conclude.
"We find that higher inequality seems to lower growth. Redistribution, in contrast, has a tiny and statistically insignificant (slightly negative) effect," the paper states.
"This implies that, rather than a trade-off, the average result across the sample is a win-win situation, in which redistribution has an overall pro-growth affect."
Will the US and the EU continue to pursue austerity
even when it hurts their economies?
The paper, written by Jonathan Ostry, the deputy head of the IMF's research department, and the economists Andrew Berg and Charalambos Tsangarides, comes after several years of heated debate over the path that developed and developing countries' economies have taken since the financial crash and whether their recoveries are sustainable.
Anti-poverty charity Oxfam welcomed the report, saying it shows "extreme inequality is damaging not only because it is morally unacceptable, but it's bad economics".
It added: "The IMF has debunked the old myth that redistribution is bad for growth and demolished the case for austerity. That redistribution efforts -essential to fight inequality- are good for growth is a welcome finding. Low tax and low public spending are clearly not the route to prosperity."
i suppose the answer to that question will come down to how much the political regime in a country has been captured by its wealthy elites, who are the only beneficiaries of tax-cutting and the old trickle-down lie, and how much it is still responsive to improving the welfare of the vast majority of its citizens.