Economist of the day

Posted: 27 November 2013 in Uncategorized
Tags: ,

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Dominic Barton, the global managing director at McKinsey & Co, in the Wall Street Journal:

What will be the biggest challenge to capitalism in the next two decades—and what should be done about it?

DOMINIC BARTON: Rising and persistent income inequality. In 2012, the top 1% of earners in the U.S. collected 19.3% of the country’s total household income–an all-time high, according to work by Emmanuel Saez at the University of California at Berkeley. The disparity is growing rapidly as well. Incomes of the top 1% grew by 31.4% from 2009 to 2012, compared to just 0.4% for the remaining 99%. There is still considerable debate among economists on the impact of income inequality on economic growth and the short-term recovery from the recession. However, few would disagree that unchecked increases in inequality will be costly for capitalism in the long-run–due to the divisions that it creates within society and the strain that it puts on social safety nets.

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