Social Sciences
4 years ago

Income inequality stifles economic freedom, creating political capitalism in democracies.

SSRN Electronic Journal
Political Capitalism: The Interaction between Income Inequality, Economic Freedom and Democracy
Tim Krieger, Daniel Meierrieks

Paper Summary

Income inequality negatively impacts economic freedom by giving the elite more power to control resources, leading to less innovation and competition. This effect is stronger in democracies with high inequality, creating a system of political capitalism where the elite works with politicians for their own gain.

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