Is Equity a Superior Economic Growth Model?

by Sergio Azcona, spring intern

“Inequality is bad for economic growth,” said Manuel Pastor, a professor at the University of Southern California, at the discussion “Prosperity 2050: Is Equity a Superior Growth Model?” The event, hosted by the Center for American Progress, focused on the importance of equal opportunity and long-term investments in the nation’s future, especially its children.

Emmanuel Saez, professor of Economics at University of California Berkeley, noted that when there has been economic equity in the United States, the country as a whole has prospered most. For example, when the top 10 percent receive 45 percent of the nation’s total income financial crises have tended to follow, like the Great Depression and the Great Recession of 2008. However, during the 1950’s, 60’s and 70’s, when the top 10 percent’s share of the total income had fallen below 35 percent, the average household income started to rise.

Top 10% Income Share in U.S., 1917-2007

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One Response to Is Equity a Superior Economic Growth Model?

  1. Miki says:

    This is true. Money tends to move faster in the lower classes, contrary to the trickle-down misconception.

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