Until recently, conventional economic wisdom held that sustained economic growth in any society could only be achieved at the expense of income equality. Today, even free market disciples like The Economistrecognize that these goals are not contradictory—and that growing inequality, in fact, is an impediment to economic prosperity.
Recent data on economic growth and inequality for the United States and Bolivia reveal two starkly contrasting portraits.
The United States, after four decades of widening inequality, is experiencing the greatest economic downturn since the Depression. In 2011, while the economy grew by only 1.7% (down from 3% in 2010), income inequality increased by almost as much—the biggest single year increase in two decades. Over the past 30 years, the share of income held by the top 1% has more than doubled, increasing from 8% to 17%, while the share held…
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