The latest International Monetary Fund (IMF) report on inequality states that trickle down economics is not viable and instead governments must focus on the world’s poor and middle class to make real change.
Responding to the IMF’s latest report on inequality “Causes and Consequences of Income Inequality”, Oxfam Australia’s inequality policy advisor Joy Kyriacou said governments must urgently refocus their policies to close the gap between the richest and the rest if economies are to grow.
“The report proves that making the rich richer does not work for growth, while focusing on the poor and the middle class does,” Ms Kyriacou said.
“This reinforces Oxfam’s call on how we need to reduce the income gap between the haves and have nots, and scrutinise why the richest 10% and top 1% have so much wealth. By publishing 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.”
In its report summary the IMF said it finds that “increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20% results in lower growth—that is, when the rich get richer, benefits do not trickle down. This suggests that policies need to be country specific but should focus on raising the income share of the poor, and ensuring there is no hollowing out of the middle class”.
Ms Kyriacou said the report 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 governments is pretty clear: if you want growth, you’d better invest in the poor, invest in essential services and promote redistributive tax policies,” she said.
“Governments can do this in line with the IMF’s own report recommendations, which Oxfam backs, 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.”
The IMF report, “Causes and Consequences of Income Inequality: A Global Perspective”, can be found here: http://www.imf.org/external/pubs/cat/longres.aspx?sk=42986.
For interviews or more information, please contact Laurelle Keough on 0425 701 801 or laurellek@oxfam.org.au or Bianca Wordley on 0407799365 or biancaw@oxfam.org.au
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