Global inequality is falling fast

[Axulus]

Tomas Hellbrandt of the Bank of England and Paolo Mauro of the International Monetary Fund show in a new working paper that global inequality is falling, as poor countries power ahead. The global Gini coefficient -- a standard measure of income inequality -- is falling fast. In 2003 the coefficient was 69 (with 0 being perfect equality and 100 being perfect inequality). In 2013 it was down to 65. If current trends continue, it is on course to reach 61 by 2035.

In this case, a picture may be worth a thousand words. Hellbrandt and Mauro show how the global income distribution has evolved during the past decade:

What we see here is that the whole distribution is both flattening out and shifting to the right. The flattening means that the world is getting more equal, fast. That green peak on the left represents the huge number of people who were desperately poor in 2003. That peak of absolute poverty has collapsed. Meanwhile, the shift to the right means that the whole world is getting richer -- the rich countries have grown their economies too, just not as fast as the poor countries.

So around the world, a rising tide is lifting all boats, and it’s lifting the boats at the bottom faster than the boats at the top. This is really an extremely good, successful outcome (though it would have been nice to see this happen without the increase in inequality within some countries).

It’s important to realize is that this is a recent phenomenon. For a long time, the opposite was happening. In 1988, for example, economic historian Brad DeLong showed that the poor countries of the world had mostly failed to catch up to the rich countries since 1870. The former colonial powers of Western Europe, the U.S. and Japan were zooming ahead, with the former colonies either being left in the dust or struggling just to keep pace.

So we may be seeing something like a global Kuznets Curve. In the early stages of global growth, rich countries -- and the rich people in them -- zoom ahead of the pack, but eventually the masses catch up. If the forces that move inequality really are global in nature, then it means that capitalism and trade really are a force for good. It means that we don’t really face a tradeoff between wealth and inequality in the long run. And it implies that once the poor countries have done some more catching up, inequality will begin to fall within countries, too.

The new data, and the global Kuznets narrative, also destroy the idea that the wealth of rich countries is based on the exploitation of poor countries. Capitalism is not colonialism after all. Most of our global wealth is created by trade and industriousness, not plundered or extracted by force. The world isn't a zero-sum game.

http://www.bloombergview.com/articl...lobal-inequality-defies-piketty-s-dark-vision

 

[TV and credit cards]

It looks like a move from abject poverty (the kind you die early from) toward plain old poverty (the kind you can live with). Stated another way: Our workers live well into their seventies instead of dropping dead in their forties. They make enough, but no so much they can ever stop working.

 

[Togo]

It doesn't show a 'rising tide lifting all boats' - it shows the proportion of people in extreme poverty falling.

Shame there's only two data points though.

 

[jonatha]

It doesn't show a 'rising tide lifting all boats' - it shows the proportion of people in extreme poverty falling.

Shame there's only two data points though.

Yes. It would be instructive to see the curve from a few prior decades.

The projected curve also looks remarkably spiky to me. I wonder why they're projecting so many people making $6200 or thereabouts in 2035. (Maybe they expect TPP to go through by then )

 

[whichphilosophy]

It doesn't show a 'rising tide lifting all boats' - it shows the proportion of people in extreme poverty falling.

Shame there's only two data points though.

Yes. It would be instructive to see the curve from a few prior decades.

The projected curve also looks remarkably spiky to me. I wonder why they're projecting so many people making $6200 or thereabouts in 2035. (Maybe they expect TPP to go through by then )

I would like to know how these figures are compiled. Countries in Africa and India have large amounts of people in severe poverty. Then various recent wars are reducing many to poverty or to lower levels of the same thing.. I would have expected the figures to show poverty even getting worse.

 

[Axulus]

Here is the paper where the data came from:

http://poseidon01.ssrn.com/delivery...087094113095001027088007021007&EXT=pdf&TYPE=2

 

[laughing dog]

If my memory serves me correctly, a very large portion of the reduction in recent World Inequality has to do with rising incomes in China.

 

[Axulus]

It doesn't show a 'rising tide lifting all boats' - it shows the proportion of people in extreme poverty falling.

Shame there's only two data points though.

The curve has shifted to the right as well. The median global income doubled in just 10 years!

 

[Axulus]

It looks like a move from abject poverty (the kind you die early from) toward plain old poverty (the kind you can live with). Stated another way: Our workers live well into their seventies instead of dropping dead in their forties. They make enough, but no so much they can ever stop working.

It means their kids don't have to enter the labor force at age 12 for the family to survive and can instead remain in school

It means their home can access basic things such as indoor plumbing

It means they can afford a variety of different foods

It means their kids have a much higher chance of surviving past age 5

It means women can get access to family planning services and education

These last two are responsible for dropping birth rate and expected world population stabilization around 2050.

 

[Axulus]

It doesn't show a 'rising tide lifting all boats' - it shows the proportion of people in extreme poverty falling.

Shame there's only two data points though.

A few more gini coefficient data points are available in the paper I linked a few posts above, see fig 8.

 

[fast]

Okay

 

[Loren Pechtel]

Yes. It would be instructive to see the curve from a few prior decades.

The projected curve also looks remarkably spiky to me. I wonder why they're projecting so many people making $6200 or thereabouts in 2035. (Maybe they expect TPP to go through by then )

I would like to know how these figures are compiled. Countries in Africa and India have large amounts of people in severe poverty. Then various recent wars are reducing many to poverty or to lower levels of the same thing.. I would have expected the figures to show poverty even getting worse.

The number who are rising in China alone (a place that used to have some pretty bad conditions) exceeds the entire population of Africa.

 

[bilby]

Yes. It would be instructive to see the curve from a few prior decades.

The projected curve also looks remarkably spiky to me. I wonder why they're projecting so many people making $6200 or thereabouts in 2035. (Maybe they expect TPP to go through by then )

I would like to know how these figures are compiled. Countries in Africa and India have large amounts of people in severe poverty. Then various recent wars are reducing many to poverty or to lower levels of the same thing.. I would have expected the figures to show poverty even getting worse.

Your expectations are, as we might expect of any completely unsupported opinion, wrong.

Per capita real GDP is rising pretty much everywhere, as can readily be seen from Google data.

For example, in Sub Saharan Africa and in India (both regions where poverty has been a problem for a long time) the economies as a whole are getting much larger on a real dollar per capita basis - and while it is possible to maintain high levels of poverty while real GDP per Capita grows, it is not at all easy to do.

War and poverty are both increasingly reported; and are both decreasingly actually occurring, worldwide. The appearance of things getting worse owes a lot more to the increasing influence of 24 hour cable news networks and click-bait internet sites, where shocking images translate into dollars, than it does to any real increase in shocking or emotionally charged events.

 

[Loren Pechtel]

War and poverty are both increasingly reported; and are both decreasingly actually occurring, worldwide. The appearance of things getting worse owes a lot more to the increasing influence of 24 hour cable news networks and click-bait internet sites, where shocking images translate into dollars, than it does to any real increase in shocking or emotionally charged events.

With war I think it matters how you measure war. We are increasingly shifting from a conventional clash of armies to funding insurgents and terrorists. The latter conflicts are much lower intensity but last longer.

 

[NobleSavage]

I would like to know how these figures are compiled. Countries in Africa and India have large amounts of people in severe poverty. Then various recent wars are reducing many to poverty or to lower levels of the same thing.. I would have expected the figures to show poverty even getting worse.

Your expectations are, as we might expect of any completely unsupported opinion, wrong.

Per capita real GDP is rising pretty much everywhere, as can readily be seen from Google data.

For example, in Sub Saharan Africa and in India (both regions where poverty has been a problem for a long time) the economies as a whole are getting much larger on a real dollar per capita basis - and while it is possible to maintain high levels of poverty while real GDP per Capita grows, it is not at all easy to do.

War and poverty are both increasingly reported; and are both decreasingly actually occurring, worldwide. The appearance of things getting worse owes a lot more to the increasing influence of 24 hour cable news networks and click-bait internet sites, where shocking images translate into dollars, than it does to any real increase in shocking or emotionally charged events.

I'd like to make a blog on this topic, but no one would read it.

 

[Axulus]

Here is another interesting graph:

 

[Axulus]

If my memory serves me correctly, a very large portion of the reduction in recent World Inequality has to do with rising incomes in China.

Also in Latin America:

 

[Loren Pechtel]

If my memory serves me correctly, a very large portion of the reduction in recent World Inequality has to do with rising incomes in China.

Also in Latin America:

Basically, it's dropping anywhere the government isn't too fucked up.