How Inequality Hurts the Economy

The gap between the rich and the rest makes for short recoveries

The public discussion about the widening gap between rich and poor hasn’t been this loud since the Great Depression. Warren Buffett has condemned the disparity, Occupy Wall Street has inveighed against it, President Barack Obama cites it to justify higher taxes on the wealthy. Much of the debate, though, has focused on inequality’s moral dimension. Somehow it just doesn’t seem right that so many Americans struggle while a handful prospers. What many are missing is the actual impact rising inequality is having on the U.S. economy. Hint: It isn’t good.

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