A final observation from Davos - it seemed there was growing discussion around inequality: A subject that businesses rarely view as within their realm of concerns, and one that politicians are often scared to grapple with for fear of sounding "anti-business". The topic is left to protesters such as Occupy.
However, this reminded me of the findings of an IMF staff paper last year that suggested exactly the opposite:
Inequality should be of primary concern to businesses and policymakers interested in achieving higher and sustainable growth. There is evidence that inequality itself may be a cause of low growth, and furthermore that redistributive policies may be an effective tool to combat this.
Redistribution, Inequality, and Growth (IMF 2014) basically concluded that:
(1) Lower inequality is associated with faster and more durable growth (even controlling for redistributive policies);
(2) There is very little evidence of direct adverse effects on growth from redistribution;
(3) Therefore, the overall net effect of redistribution appears to be pro-growth on average.
The full IMF paper can be found here
However, this reminded me of the findings of an IMF staff paper last year that suggested exactly the opposite:
Inequality should be of primary concern to businesses and policymakers interested in achieving higher and sustainable growth. There is evidence that inequality itself may be a cause of low growth, and furthermore that redistributive policies may be an effective tool to combat this.
Redistribution, Inequality, and Growth (IMF 2014) basically concluded that:
(1) Lower inequality is associated with faster and more durable growth (even controlling for redistributive policies);
(2) There is very little evidence of direct adverse effects on growth from redistribution;
(3) Therefore, the overall net effect of redistribution appears to be pro-growth on average.
The full IMF paper can be found here