But excessive inequality has the perverse effect of reducing incentives for many people. What happens when people work more and yet make less money? It is discouraging, leading many people to slacken their efforts, abandon dreams of launching or expanding businesses, and perhaps to leave the workforce altogether. It also weakens overall economic activity. For businesses like mine, it means our global customers have less to spend on emerging technologies that could make them more productive. That is what’s happening today. There is a sagging line below Gini’s perfect 45-degree angle that represents growing inequality. I want to avoid the pitfalls of what Marx described as late-stage capitalism—a theoretical time when economic growth and profits collapse—and get back to the returns enjoyed in early stage capitalism. But how? That’s the question most heads of state around the world are also grappling with.
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