Some recent analyses dispute Mulligan’s findings, perhaps most important an International Monetary Fund study, “Redistribution, Inequality, and Growth,” published in February.

Written by three I.M.F. economists — Jonathan D. Ostry, Andrew Berg and Charalambos G. Tsangarides — the study found that “lower net inequality is robustly correlated with faster and more durable growth, for a given level of redistribution.”

And, most significantly from a policy perspective, the three I.M.F. economists argue that “redistribution appears generally benign in terms of its impact on growth; only in extreme cases is there some evidence that it may have direct negative effects on growth. Thus the combined direct and indirect effects of redistribution — including the growth effects of the resulting lower inequality — are on average pro-growth.”

This is here in case anyone wants to talk about it.

What fascinates me above all about economics is that you can take an idea like the equity-efficiency tradeoff (or top marginal tax rates, etc.) and find studies that are literally all over the map on it. Maybe someday we'll have enough experiential data to come down conclusively about inequality, but right now we're all just tossing around opinions.

High tax rates and large subsidies to the nonworking poor can “dampen incentives to work and invest,” they write. But other steps can be highly beneficial: “Redistribution need not be inherently detrimental to growth, to the degree that it involves reducing tax expenditures or loopholes that benefit the rich or as part of broader tax reforms (such as higher inheritance taxes offset by lower taxes on labor income). More broadly, redistribution can also occur when progressive taxes finance public investment, when social insurance spending enhances the welfare of the poor and risk taking, or when higher health and education spending benefits the poor, helping to offset labor and capital market imperfections. In such cases, redistributive policies could increase both equality and growth.”

Inre: the above, this is worth a read.

EDIT: starting to see Thomas Piketty popping up everywhere. Really need to look into his ideas.