Making the rich richer is not good for growth, says International Monetary Fund in inequality report

Responding to the IMF’s latest report on inequality, Nicolas Mombrial, Head of Oxfam International’s office in Washington DC, said:

“Fighting inequality is not just an issue of fairness but an economic necessity. That’s not Oxfam speaking, but the International Monetary Fund today. Their latest report, ‘Causes and Consequences of Income Inequality’, shows how it’s not just inequality that has a negative impact on growth, but the currently limited distribution of income.

“The IMF proves that making the rich richer does not work for growth, while focusing on the poor and the middle class does. This reinforces Oxfam’s call on how we need to reduce the income gap between the haves and have nots, and scrutinize why the richest 10% and top 1% have so much wealth.

“By releasing this report, the IMF has shown that ‘trickle down’ economics is dead; you cannot rely on the spoils of the extremely wealthy to benefit the rest of us. Governments must urgently refocus their policies to close the gap between the richest and the rest if economies and societies are to grow.

“The IMF has set off the alarm for governments to wake up and start actively closing the inequality gap, not just between the rich and poor, but for the middle class too. Their message to them is pretty clear: if you want growth, you'd better invest in the poor, invest in essential services and promote redistributive tax policies.

“Governments can do this in line with the IMF’s own report recommendations, which Oxfam backs, namely a package of progressive taxation measures, including clamping down on tax evasion and tax avoidance, investment in essential public services, like health and education, and labor market policies such as minimum wages. But the IMF should also walk the talk and apply its own recommendations to its future lending and advice.

In the same vein as Oxfam’s inequality campaign, the IMF does appear to be telling governments that it is time to Even It Up.”