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Political Capitalism

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Political Capitalism

The Interaction between Income Inequality, Economic Freedom and Democracy

CESifo Group Munich,

5 min read
5 take-aways
Audio & text

What's inside?

Research shows that widely disparate levels of income within a country affect its “economic freedom.”

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Editorial Rating

8

Qualities

  • Innovative

Recommendation

Income inequality as a factor in national development has come increasingly under scrutiny. This academic but accessible report from professors Tim Krieger and Daniel Meierrieks offers new empirical evidence on the impacts of income gaps on “economic freedom” and on the hazards of “political capitalism.” getAbstract recommends this timely study to economists, policy makers and others concerned about growing income inequality.

Summary

According to a number of studies, “economic freedom” – characterized by market-friendly policies such as stable property rights and low regulation – has a positive influence on a nation’s economic growth. Levels of economic freedom vary widely across the world and appear to be higher in advanced economies than in developing countries. Research suggests this is because more-industrialized nations tend to be democracies and are therefore apt to foster promarket policies. State ideology and varying cultural attitudes toward risk also underlie national differences in economic freedom.

When a country has a huge gap between its...

About the Authors

Tim Krieger and Daniel Meierrieks are professors at the University of Freiburg in Germany.


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