WASHINGTON – Is inequality decreasing or increasing? The answer depends on our point of reference.
In America, the income gap between the top 1 percent and the rest has grown.
But if we look not at America, but the world, inequality is shrinking.
We are witnessing, in the words of the World Bank’s Branko Milanovic, “the first decline in global inequality between world citizens since the Industrial Revolution.”
For most of human history, incomes were more equal but terribly low. Two thousand years ago, GDP per person in the most advanced parts of the world hovered around $3.50 per day. That was the global average 1,800 years later.
But by the early 19th century, a pronounced income gap emerged between the West and the rest. Take the United States. In 1820, the U.S. was 1.9 times richer than the global average. The income gap grew to 4.1 in 1960 and reached its maximum level of 4.8 in 1999. By 2010, it had shrunk by 19 percent to 3.9.
Many Americans point to globalization as a bogeyman, robbing our country of good jobs and resources. But really, the phenomenon has ushered a period of unprecedented prosperity in many poor countries. Even as we struggle with economic problems at home, let us remember the global – and largely positive – perspective on the state of the world.
Tupy is a senior policy analyst at the Cato Institute’s Center for Global Liberty and Prosperity and editor of www.humanprogress.org.
