The Complications of Global Inequality

Is the world, as a whole, growing more or less unequal? Seems like this should be a fairly easy question to answer. But this simple question has no simple answer. Global inequality can be devilishly difficult to decipher.

Branko Milanovich, a senior scholar with the Luxembourg Income Survey now at the City University of New York’s Graduate Center, should know. He has spent years researching the global income inequality picture. His conclusions? Milanovich has just posted — under the title “national vices, global virtue” — his latest musings.

Milanovich’s work speaks to the great irony of global income distribution: that income inequality can be increasing at the national level, all across the world, yet decreasing for the globe as a whole.

How can that be? The one-word answer: China. Tens of millions of Chinese households have been moving out of poverty and into a new Chinese “middle class.” To a lesser extent, the same dynamic is playing out in India. Meanwhile, in the United States and other rich nations, average households are losing ground economically.

Put these dynamics together and you get slightly rising global equality at the same time as inequality within nations, from China to the United States, continues to turbocharge.

But this slight worldwide decrease in overall inequality, Milanovich cautions, may be somewhat illusory, since available national data regularly underestimate top 1 percent incomes and global tax havens conceal still more income at the economic summit.

Apologists for our top-heavy economic order will no doubt try to spin the latest Milanovich numbers to dismiss concerns about rising inequality. He’s not inviting that spinning — and we should call the spinners out.

Sam Pizzigati edits Too Much, the Institute for Policy Studies monthly on excess and inequality.