Always looking for excuses to expand the power of the government, leftists have been arguing that research now proves how income inequality hampers economic growth. Cato Institute’s Alan Reynolds thrashes that research and the entire concept in this post.
The redistributionists want higher taxes on those who earn the most and then they assume that having the government spend the money raised will magically boost economic growth. That doesn’t pass the laugh test, since governments so often indulge in utterly wasteful spending (called “investments”) such as high speed trains, “green” companies, and hiring more bureaucrats to enforce laws that get in the way of economic efficiency (like Obamacare).
Throughout history, the state has always been a drag on economic growth and the bigger it gets, the heavier the burden.
