Abstract

In December 1999 two papers were published on the theme of inequality in journals of the American Economic Association. The first article (Welch, American Economic Review) celebrates inequality's recent advances in conventional neoliberal fashion, as an essentially progressive force that spawns innovation and stimulates growth. The second article (Aghion et al, Journal of Economic Literature) presents contrary evidence that inequality has retarded growth and impeded socioeconomic progress. This paper argues that Welch's defense of the status quo might be of greater value to those who object to it than Aghion et aUs well-intentioned article.