Inequality and instability: why more equal societies have more stable economies

Issue 142 (Summer 2012)

According to the economic orthodoxy of the last thirty years, a stiff dose of inequality is a necessary condition for economic progress. Higher rewards and lower taxes at the top, it is claimed, boost enterprise and deliver a larger economic pie. The income gap might get wider, but eventually everybody, including those on the lowest incomes, will become better off. Here, Stewart Lansley puts the theory to the test.