More People With Money to Spend Is Good for Economy (No Shit Sherlock department)

The two charts below help illustrate the relationship between inequality and GDP growth (on the left), and redistribution and GDP growth (on the right). The authors note a “strong negative relationship” between inequality and growth – as inequality increases, growth numbers decline. Turning to the redistribution chart, the nearly-flat line indicates a weak (and if anything, positive) relationship between redistributive policies and GDP.

via Obama was right: To boost the economy, spread the wealth.

Anyone who runs a business would prefer to have 10,000 customers with $100,000 each than 1 with a $1,000,000,000.

What these studies do is formalize that notion, and illustrate the degree to which it helps growth to avoid the latter situation.

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