Is global inequality rising or falling?

I detect a little confusion over global inequality at the moment. I often read, usually from those who care about equality, that the gap between rich and poor is growing and the world is getting increasingly unequal. I also hear, more often from those who don’t value equality so much, that the world is getting more equal all the time. So who is right?

First off, the question has to be more specific. By ‘global equality’, do we mean equality between countries, equality within countries, or an aggregate of both? These are all different things, and the first two have been pulling in opposite directions – equality between countries has narrowed in recent decades, while equality within countries has widened.

There is less of a gap between rich countries and poor countries than there used to be. This is good news. But, there is a growing gap between rich and poor in many of those countries. This is the bad news. If we put those together for a ‘total inequality’ metric, the two trends roughly offset each other between 1980 and 2005, and then equality has improved a little since then as between-country equality has accelerated.

There is one further complication, according to the International Development Institute at King’s College London, who have tried to get to the bottom of this recently. That complication is China, whose population is so huge that it muddles the global statistics. If you remove China from the equation, you find that between country inequality has widened fractionally, and that within-country inequality has stayed the same. So it turns out that the good news isn’t that good, but that the bad news isn’t terrible either.

In summary, it’s more or less correct to say that the world is getting more equal, and to say that it’s becoming more unequal – but because are over-simplified generalisations, it’s best to say neither.

5 Comments on “Is global inequality rising or falling?”

  1. Zoky July 8, 2013 at 3:50 pm #

    It rather begs the question as to what ‘equality’ means. I was asked this question recently in an online survey in which I took part, for The Guardian Weekly. As usual in our age, we tend to measure everything in terms of cash, and the general idea seems to be that if people have more-or-less equal amounts of it then the society can be called ‘equal’. But this fails utterly, to my mind. There are people with plenty of dosh who are none-the-less deeply in debt and miserable because their money does not buy the happiness they anticipated. Equally (whoops!) there are people of slender means who find great satisfaction in a ‘make-do-and mend’ approach to their possessions. ‘Equality’ gives us no moral direction.
    Does ‘equality’ mean that everyone should have the same resources to go out and buy anything they want? Or everything they need? Or does it mean that everyone has the opportunities required to fulfil their potential? And what would that look like? A nice house and a good salary? Then again, does it mean that you can marry someone of the same gender as yourself?
    I find ‘equality’ a very strange and slippery notion to get hold of. Justice and equity seem clearer to me: equality and equity are not the same thing. And alongside that put contentment. That is the good life!

    • Jeremy July 8, 2013 at 5:36 pm #

      In this context I’m talking about inequalities of wealth, but even that’s not straightforward (wealth inequalities are more pronounced in Britain than income inequalities, for example.) There are of course plenty of other realms where equality is more absolute that it is in economics, such as equality before the law.

      It is a slippery notion, but like many things it is about balance. There’s such a thing as too much equality, if smart or ambitious people have to be held back in order to maintain some false ideal of absolutely equal shares of everything. We’re far more likely to err the other way and have too much inequality, letting the gap between the haves and the have nots widen too far. There’s no trust, no sense of togetherness, when people don’t think they’re getting a fair crack of the whip.

      I don’t think you can identify an ideal. It’s a matter of wisdom, of what’s reasonable. And one of the key things to watch is how well our economic growth is shared. That’s something this paper from King’s explores and I was saving it for another time, but an economy can develop in ways that benefit the elite, or it can work for the poor, or indeed for the middle.

  2. DevonChap July 8, 2013 at 4:03 pm #

    The question unasked and certainly unanswered here is which is more important, global inequality or in country inequality?

    In country inequality is being linked to ‘unhappiness’, a subjective state, while global inequality is more closely linked to concrete things such as having enough to eat and shelter to live in.

    • Jeremy July 8, 2013 at 5:17 pm #

      Yes, this post addresses one specific question, so there are 101 unasked questions. Whether in-country inequality matters is a political question, and your answer would no doubt be very different to mine. It’s very easy to dismiss it as a happiness question, but there’s so much more to it than that and you ignore the issue at your peril. People will only tolerate so much inequality of wealth and power, as history shows.

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    […] this is a gross oversimplification at best, but let’s accept the premise for the sake of argument. If inequality were increasing, what […]

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