Wealth redistribution is good for growth | Letters

A fairer spread of wealth and income would lead to demand for goods and services, writes Roger Brown. Plus, Alan Craw says England should follow Wales in considering a land value taxThe reasons that Andy Beckett adduces for Labour foregrounding the redistribution of wealth are all valid and appropriate (Why is Labour so afraid to admit that we must tax the rich? 11 July). But there is one that is even more compelling and even more central to government priorities.Far from wealth redistribution being inimical to economic growth, there is overwhelming evidence – not least from international organisations like the International Monetary Fund and the Organisation for Economic Co-operation and Development – that redistribution to ensure a fairer distribution of income and wealth is extremely positive for economic growth, the main reason being that the less well off spend a higher proportion of their more limited incomes, whereas the better off tend to save or invest in their assets; there is no or very little “trickling down”. In fact, as a result of increased economic inequality, and even though interest rates remain historically low, the major anglophone economies continue to suffer a classic case of what Keynes called “underconsumption” due to the inability of the poorer members of society to keep up previous levels of demand for goods and services.Roger BrownAuthor of The Inequality Crisis Continue reading...

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