Bottom Quote by Joseph Stiglitz
“People at the top spend less money than those at the bottom so when you have redistribution toward the top, aggregate demand goes down. Unless you intervene, you're going to have a weak economy unless something else happens. That something else could be a bubble. The United States tried a tech bubble and a housing bubble, but those were not sustainable answers. So I view inequality as a fundamental part of our macroeconomic weakness.”
About This Quote
Source Book: Economics of Inequality, Joseph Stiglitz, 2012
High inequality reduces overall spending because wealth concentrates with lower marginal propensity to consume, weakening demand unless offset by policy or bubbles.
In simple terms: Inequality hurts demand.
Address inequality to sustain economy.
Themes
Mood
Type
When to use this quote
- Fiscal policy
- progressive taxation
- social safety nets
- stimulus measures
- economic forecasting
Key Concepts
Questions to Reflect On
- How can policy balance growth and equity?
- What alternatives exist to bubbles for stimulating demand?
Redistribution alone may not fix structural issues; bubbles can cause crises.