Let’s stop to consider what Milanovic and Lakner are really saying. It is possible that even as India and China have pulled hundreds of millions of people out of poverty, the incomes of the global rich have risen enough that overall inequality hasn’t budged. If true, that’s astonishing.
In a way, the entire issue of whether inequality is falling the world over is a bit of a red herring. Most of the reasons that liberals worry about the income gap have to do with its effects inside individual countries: the way income inequality can tilt the political system in further favor of the rich; the way it might breed tense, unhappy societies; etc.* And while the rise of living standards in Asia may be a major moral point in favor of free trade, it’s not much of an argument against redistributing income in the U.S. or Europe. (Some, like Cowen, warn that higher taxes and a bigger safety net could lead to lower global growth, but recent evidence suggests just the opposite.)
At the same time, most can agree that the progress against poverty in China and India has been one of the great developments of the past 30 years. The real question, as Matt Yglesias wrote here in January, is whether there needs to be “a zero-sum trade-off between the interests of the American middle class and Asian peasants.” But the idea that global inequality is on the wane may just be a bogus factoid—an artifact of incomplete data, and nothing more.
