In his recent speech (pdf), Boris Johnson demonstrates a first-class mind - such a mind being one that tell its audience what it wants to hear. He says:

Some measure of inequality is essential for the spirit of envy and keeping up with the Joneses that is, like greed, a valuable spur to economic activity.

In part, this is a straw man; nobody is arguing for complete equality. It poses - but does not answer - the question: is the inequality we now have conducive to growth or not?

Two big things suggest not. First, GDP growth recently - and for that matter before the crisis - has been poor even as inequality, as measured by the share of incomes going to the top 1%, has risen. Secondly, we enjoyed decent growth in the 50s and 60s when inequality was lower than it is now.

Of course, these two facts prove nothing. There are countless possible influences upon trend GDP other than inequality, and it's probably impossible to control for them all. But they do hint at something - that perhaps there are some mechanisms offsetting the ones Mr Johnson mentions. And these might cause inequality - beyond some point - to depress growth (pdf). These are:

- The urge to keep up with the Joneses doesn't just spur useful work. It might also encourage people to get into debt to spend as much as the rich, and this can (perhaps) lead to over-gearing and a financial crisis. The experience of the 00s might not be the only data-point here. Rising inequality in the 1920s also ended in depression.

- Inequality can reduce trust, and distrust can reduce growth.

- Inequality might be a symptom of a dysfunctional economic and political system. If we have monopoly or other market failure and/or crony capitalism, we'll see some mega-rich people, but not a thriving economy.

- Inequality might itself create dysfunctional politics. If the poor push for redistributive policies which weaken investment incentives, or if the rich use their wealth to buy political favours, growth will suffer.

Now, I don't say this to claim that inequality is always and everywhere bad for growth. I do so merely to suggest that Mr J was expressing a very partial point of view, and was simplifying horribly. It's a good job he is merely a minor local politician who isn't in charge of anywhere important.