"Inequality Is a Drag" by Paul Krugman at the NY Times
Inequality Is a Drag
by Paul Krugman at the NY Times
http://www.nytimes.com/2014/08/08/opinion/paul-krugman-inequality-is-a-drag.html?hp&action=click&pgtype=Homepage&module=c-column-top-span-region®ion=c-column-top-span-region&WT.nav=c-column-top-span-region&_r=1
"SNIP...................
But how is that possible? Doesnt taxing the rich and helping the poor reduce the incentive to make money? Well, yes, but incentives arent the only thing that matters for economic growth. Opportunity is also crucial. And extreme inequality deprives many people of the opportunity to fulfill their potential.
Think about it. Do talented children in low-income American families have the same chance to make use of their talent to get the right education, to pursue the right career path as those born higher up the ladder? Of course not. Moreover, this isnt just unfair, its expensive. Extreme inequality means a waste of human resources.
And government programs that reduce inequality can make the nation as a whole richer, by reducing that waste.
Consider, for example, what we know about food stamps, perennially targeted by conservatives who claim that they reduce the incentive to work. The historical evidence does indeed suggest that making food stamps available somewhat reduces work effort, especially by single mothers. But it also suggests that Americans who had access to food stamps when they were children grew up to be healthier and more productive than those who didnt, which means that they made a bigger economic contribution. The purpose of the food stamp program was to reduce misery, but its a good guess that the program was also good for American economic growth.
.....................SNIP"