An Essay on the Significance of Economic Growth and Inequality on Human Welfare

Abstract

When the twenty-first century began there had over several decades been developed a dominant political discourse where economic growth was the overarching objective of public policy and with the terms of that discourse reflecting a significantly changed acceptance for the market mechanism as the primary way to achieve that end. Moreover, a significant degree of inequality was not only seen as an inevitable consequence of freer markets but it was also considered acceptable because it would ensure incentives for productivity growth and innovation and thereby fuel economic growth and thus increased well-fare. But these assumptions are now challenged by facts, by empirical evidence, and by a more thoughtful reflection on theory. This discussion paper presents some of these insights and argues that inequality can be detrimental to human welfare in ways that cannot be overcome by simply attaining higher growth rates.