IMF: Income Inequality Bad for Economic Growth

Well duh! In an economy driven 70% by consumption DEMAND is the ONLY "Job Creator" and income inequality means consumers cannot create demand. That's intuitively obvious, but here is a scholarly study based imperical evidence from the international monetary fund: http://www.huffingtonpost.com/2011/09/20/income-inequality-economic-growth_n_969933.html

EXCERPT: The widening gap between the wealthy and everyone else in the United States may be hindering a broader economic recovery, according to a new study. http://www.imf.org/external/pubs/ft/fandd/2011/09/Berg.htm

The study out of the International Monetary Fund found that greater income equality positively correlates with stronger economic growth. Released in September, the study more specifically concluded that a 10 percent decrease in inequality increased the expected duration of economic growth by 50 percent.

The IMF paper, which studied a sample of countries around the world between 1950 and 2006, found that in countries with more income inequality, such as Jordan and Cameroon, the economy more frequently plunged into deeper recessions, while economic growth lasted much longer in more equal societies.

Indeed, greater levels of income equality corresponded more strongly to sustained economic growth than other economic factors, including lower debt levels, according to the report. "Sustainable economic reform," the authors write, "is possible only when its benefits are widely shared." The United States

Income inequality has grown in the United States over the past four decades and now more closely compares to the income distributions of Russia and Iran than many other developed economies.