The Political Economy of Distributional Equity

Growing income inequality within a country is caused by socioeconomic factors and inadequate government policies and ultimately leads to social and political instabilities. The ideology of supply-side economics in the United States and the United Kingdom during the 1980s, for instance, induced policies of inequality which were then perceived as a way to stimulate economic growth. The demise of East European socialism since the late 1980s also led many developing countries to pursue market reforms as a way to resuscitate their moribund economies. There is evidence, however, to indicate that the distribution of income in these countries is becoming more unequal with attendant and frequently grave social and political consequences.