Inequality, the Crash and the Ongoing Crisis

Authors

  • STEWART LANSLEY

    1. Visiting fellow in the Townsend Centre for International Poverty Research, Bristol University, and the author of The Cost of Inequality: Why Economic Equality is Essential for Recover (Gibson Square, 2012).
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Abstract

The rise in inequality across many rich nations, but especially in the United Kingdom and the United States, was meant to lead to a bigger economic pie from which all would benefit. In fact, the increased concentration of income over the last three decades has led to more fragile and unstable economies making it a key cause of the 2008 Crash and today's lack of recovery. The evidence of the last 100 years is that models of capitalism that fail to share the proceeds of growth more evenly will eventually self-destruct. More equal societies have softer business cycles. In contrast, more unequal economies are associated with more extreme cycles—they have exaggerated booms, deeper falls and extended troughs. The scale of inequality is not just an issue about fairness and proportionality, it is therefore integral to economic health.

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