Many moons ago, I wrote a paper (with Alberto Alesina) called “Distributive Politics and Economic Growth,” which remains one of my most heavily cited publications. The paper has a simple idea: in highly unequal societies, the median voter is more likely to demand high taxes on capital, which in turn can be adverse for growth. So high inequality leads to redistributive politics, which is bad for growth. We also supplied some cross-country empirical evidence that is consistent with the theory.
This idea has been resuscitated in recent discussions on the consequences of the rise in American inequality. In a speech that has received much attention, for example, Alan Krueger highlighted this line of thought (referring to a paper by Torsten Persson and Guido Tabellini contemporaneous with ours as well as more recent supportive empirical research at the IMF).
So it was particularly timely when Jose Tavares from Universidade Nova de Lisboa in Portugal sent me a report on the paper prepared by two of his students, Luís Fonseca and Miguel Aguiar. Ingeniously, the students explicate the paper using the Simpsons as a backdrop. It’s very well done, and worth a look. Here it is.