Sustainable recovery from the financial crisis will require restoring the share of wages in national income to post-war levels, and the breaking-up of concentrations of income and wealth, according to a report by a new think tank.
The report points out that historical evidence suggests a strong link between inequality and economic instability. The two most damaging recessions of the last century – the Great Depression of the 1930s and the Great Crash of 2008 – were both preceded by sharp rises in inequality.
The proceeds of growth, when it returns, are likely to continue to be very unequally shared. If the risk of near-permanent stagnation is to be avoided, it is argued, this fundamental imbalance needs to be rectified.
Source: Stewart Lansley, Rising Inequality and Financial Crises: Why Greater Equality is Essential for Recovery, Centre for Labour and Social Studies