Much is being made of a new paper from the IMF about the redistribution of income and whether this affects the growth rate or not. The general conclusion being drawn is that it does not. Indeed, there are even findings that redistribution increases the general growth rate. You don't have to wonder what that sort of finding is going to do to our domestic left. I've actually seen one, already, insisting that this means that any level of redistribution, all the way to total equality, will thus increase growth. However, that's not what the paper is actually stating.

John Cassidy has a good over view of it here but even he's not picking up on what I regard as the important phrase:

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.

The question here is, well, what's "extreme"? I guess we would argue that killing all the bright people, shipping the more industrious peasants to the Gulag and eliminating the bourgeoisie as a class would count as extreme. But don't forget that there are still significant numbers of peope in British politics who sign up to the analysis behind this program, even if not the specific actions. So it might not be all that extreme.

We might also argue that 98% tax rates on investment income are extreme, 83% on incomes, but that's an extreme that happened within my own adult lifetime. And there are very definitely people who would like to bring that back.

The point I'm making is that even in the terms of this paper there are people here in the UK who still advocate "extreme" policies that would indeed have injurious effects upon the growth rate. And we should not allow them to use this paper as an excuse to argue for those policies: for it's very careful indeed to point out that "reasonable" levels of redistribution might be beneficial. We've still the argument to come over what is reasonable and what is extreme.