Widening income inequality is recognised in many countries today as a serious global and national problem. It threatens to undermine economic growth, political and social stability, physical health and psychological well-being, and is blamed for unleashing disruptive populist and anti-globalisation forces.

At the same time, economic research shows that public policies to reduce inequality through redistributive measures - such as greater social subsidies funded by tax increases, including unrestricted cash transfers to the poor and capital gains taxes on the rich - do not have negative impact on work effort, savings and investment, as I explained in an earlier article, "How inequality and low wages can stall growth" (ST, July 21, 2018).