World Inequality Is Down

From the Nov. ’13 Review of Income and Wealth:

This paper provides a full decomposition of world [individual purchasing-power-parity income] inequality, as measured by the Gini coefficient, in the period 1970–2009. (more; ungated)

WorldInequality

The top two lines show total world inequality over time as estimated by this paper and by another previous paper. Both agree that worldwide income inequality has been falling consistently over four decades, especially in the last decade.

Of course this ignores non-financial inequality and inequality across time.

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  • Anonymous

    Income inequality gets more attention than it deserves. This focus sees the world as a zero-sum game, which encourages us-vs-them thinking over cooperation. People already intuitively err on the wrong side of this spectrum.

    • IMASBA

      Power is a zero sum game and money = power (golden rule: he who has the gold makes the rules).

      It is no coincidence that places with high inequality tend to be places where life is cheap, government is less democratic.

      • Anonymous

        Power is a zero sum game
        Dear retarded IMASBA, not even that is true.

        I recommend you keep voting people down for disagreeing with you even though they’re factually right, hopefully it makes you feel better about your own inadequacies. :)

      • arch1

        Anonymous, I would vote this comment down if I could easily do so, because of its tone. I voted your first comment up because I thought it worthwhile.

      • IMASBA

        I didn’t vote you down and power IS zero sum (because it is defined as a relative quantity).

        Anyway, if you want to believe you have as much influence over your congress(wo)man as the local millionaire does, as much influence over patient treatment choice as the Catholic Church and that you can get the same tax deals/loopholes big corporations get then go ahead, but don’t go accusing me of not being factually right.

      • Anonymous

        I didn’t vote you down

        My bad. I apologize.

        if you want to believe you have as much influence over your congress(wo)man as the local millionaire does, as much influence over patient treatment choice as the Catholic Church and that you can get the same tax deals/loopholes big corporations get then go ahead

        I don’t think anyone disputes that there are relative differences in influence and that co-opting the state can cause massive harm. But this wasn’t your original claim at all. You equated wealth with power and then defined power to be a relative quantity. Problem is, wealth is not a relative quantity. People can and do get simultaneously richer. Technological progress is a good example of how that works. TGGP is spot-on that power over nature is as much a determinant of wealth as power over others, and it is non-zero-sum, in fact it incentivizes and facilitates cooperation. Treating wealth as zero-sum is a surprisingly common, very obviously false and socially harmful bias.

      • b l

        Political Influence is zero sum.
        Money is NOT Zero sum.
        Power is work per unit time.

      • http://entitledtoanopinion.wordpress.com TGGP

        Correct. Power over others may be zero sum, but there is also power over nature (technology), which is not.

      • IMASBA

        Power over others is all that matters because that can be used to take away almost all other powers.

        I’m truly amazed to see how seemingly smart people are capable of saying “how rich other people are doesn’t affect me”, did they all flunk history class and are they blind to political corruption and “philanthropists” making decisions for poor people?

      • http://entitledtoanopinion.wordpress.com TGGP

        No, power over others is not all that matters. If an asteroid is about to wipe out our species, it doesn’t count for much if I’m the most powerful chimpanzee.

        If extremely rich people were simply able to buy the political system, I’d expect them to pay less rather than more taxes. They also could have gotten an immigration bill passed, which keeps getting stopped because lots of voters hate it and yell at their representatives. So the median voter still seems to have substantial political power and merits my attention. That is at least a theoretical reason why I should care about rich people (Will Wilkinson dubs it “the inequality road to serfdom”), but I don’t see why even in theory I should care about philanthropy.

      • IMASBA

        “No, power over others is not all that matters. If an asteroid is about to wipe out our species, it doesn’t count for much if I’m the most powerful chimpanzee.”

        That’s a bit extreme and kind of a once in a 100 million years event, don’t you think?

        “If extremely rich people were simply able to buy the political system, I’d expect them to pay less rather than more taxes.”

        They (the really rich) do in most countries, why do you think capital gains taxes are so low and there are so many ways to get deductions and subsidies that are only worthwhile when your income is very high? Sure, they make up some BS that corporate tax is entirely paid for by the shareholders, not even a little bit by the employees or the consumers, but that’s just that: BS.

        “So the median voter still seems to have substantial political power and merits my attention.”

        Sure, 120 million still hold influence that can sometimes counterbalance (really though it often only looks like counterbalancing) the richest 100.000. Yay, the really rich only have 1200 times more influence than the average American (and why only focus on America, it’s even worse in Russia, unless the really person pisses off the boss-really rich person, Putin and India is even worse than that)!

        “but I don’t see why even in theory I should care about philanthropy.”

        Most philanthropists are one of two varieties (when it comes to philanthropy in reasonably developed countries, but sometimes in developing countries as well, such as American evangelicals abusing aid to convert people in Africa): the kind that doesn’t invest in poor people directly because he thinks poor people can’t look after themselves (that they’ll just buy drugs and weapons) and the kind that doesn’t invest in poor people directly because he wants to exert political influence (give a man money to pay his medical bills and he can choose his treatment, use the money to build a hospital yourself and you can dictate which treatment the man can get, the same applies for education: the Catholic Church loves to put poor kids in Catholic schools, they don’t like giving poor kids money to go to a school of their own choice, because then those kids may grow up to be something other than Catholics).

      • http://entitledtoanopinion.wordpress.com TGGP

        Yes, I chose an extreme example to make it obvious that your statement was false. This is a website concerned with existential risk, so it was also an appropriate example.

        Capital gains tax rates are low because capital is mobile, hence its elasticity in response to taxes is greater. Doesn’t change my statement that the net effect of the tax system is to transfer from the richest to the less rich.

        Your complaint about philanthropists seems to be that they DON’T do something (invest in the poor). How does that make them any worse or deserving of my attention than NON-philanthropists?

      • IMASBA

        “Capital gains tax rates are low because capital is mobile, hence its elasticity in response to taxes is greater. Doesn’t change my statement that the net effect of the tax system is to transfer from the richest to the less rich.”

        That’s the 1000th different excuse for low capital gains tax rates I’ve heard and it basically amounts to giving in to blackmail, also why isn’t the capital gains tax 0% in all countries then?

        Tax transfers from the really rich to the poor aren’t that massive, tax transfers from the 90th percentile to the poor are massive, the top 0.1% escapes pretty much everything.

        “Your complaint about philanthropists seems to be that they DON’T do something (invest in the poor). How does that make them any worse or deserving of my attention than NON-philanthropists?”

        Non-philanthropists are neutral. The philanthropists I spoke about actually cause damage in the long run and are claiming bragging rights that drown out the efforts of real philanthropists. Of course ideally a society wouldn’t be unequal enough to require philanthropy on a large scale or for it even to be possible (isn’t it just insane how businesses make massive profits off of unpaid interns and then go donate some of those profits to poor people? How about they just prevent the problem all together by paying their employs a living wage? But no, then they’d miss out on the bragging rights and they’d have less control over the lives of their employees.)

      • http://entitledtoanopinion.wordpress.com TGGP

        “why isn’t the capital gains tax 0% in all countries then? ”
        Ask an economist to explain elasticity (more specifically, the difference between elastic and perfectly elastic) to you. And referring to it as “blackmail” is quite funny. It’s refraining from killing golden geese.

        “Tax transfers from the really rich to the poor aren’t that massive, tax
        transfers from the 90th percentile to the poor are massive, the top 0.1%
        escapes pretty much everything.”
        I think you are closer to being correct here, but still wrong. They sometimes face lower tax RATES than the 90th percentile, but I am talking about net transfers which depends on total dollar amounts rather than rates.

        How do philanthropists “cause damage”? Your objections were about them NOT doing something.

        “wouldn’t be unequal enough to require philanthropy”
        If philanthropy is harmful, then I guess it’s not “required” at all.

        “isn’t it just insane how businesses make massive profits off of unpaid
        interns and then go donate some of those profits to poor people? How
        about they just prevent the problem all together by paying their employs
        a living wage?”
        If poor people are poorer than interns, then a transfer from interns to the poor is progressive. And many of the poor are not going to be much helped by a “living wage”, these are not G. A. Cohen’s good old days, and many of the poor are not employed at all.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        basically amounts to giving in to blackmail, also why isn’t the capital gains tax 0% in all countries then?

        That’s the nature of capitalism. Capital gets to blackmail the public because their profit is the sole motive for producing useful goods.

        From the standpoint of capitalist economics, capital-gains taxes are very “inefficient.” On the other hand, excluding capital gains from taxation creates (it used to be recognized) a huge tax loophole. Capital has considerable discretion over how its profits are realized.

      • IMASBA

        “From the standpoint of capitalist economics, capital-gains taxes are very “inefficient.” ”

        Most taxes are inefficient from the standpoint of capitalist economics but I see no purely economic reason why you would want to favor capital over labor. I mean why would a dollar a business receives from an investor be more important than a dollar that same business receives as profit off of selling something to a consumer? At least in a divided (no world government) world TGGP has a point saying that capital can flee to tax havens but that can’t be the whole story since taxhavens are usually tiny and could therefore be “persuaded” by larger nations to stop being tax havens, larger nations not doing this points to political corruption, making the “capital can flee” argument circular reasoning (a bit like the mafia demanding protection money when the mafia is itself is causing the unsafety).

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        Most taxes are inefficient from the standpoint of capitalist economics but I see no purely economic reason why you would want to favor capital over labor. I mean why would a dollar a business receives from an investor be more important than a dollar that same business receives as profit off of selling something to a consumer?

        (To be clear, I assume by “you” you mean the impersonal “you” rather than to refer to me.)

        The reason taxes on capital are more inefficient than taxes on sales of consumer goods is that workers often must purchase goods regardless of their price, whereas capitalist investment declines sharply when profits decline. Workers (usually) buy goods because they need them, and will continue to buy them if the price is a little higher. Capitalists invest to make money (and only for that reason). So, if their profits on investment decline, investment decreases (more than workers’ purchases decrease).

      • IMASBA

        Equalizing capital gains and labor taxes in a closed system would at worst make stuff more expensive by the same amount consumer income would go up (in this case capitalists manage to pass the cost of higher capital gains taxes entirely to consumers), in better cases stuff would get more expensive but consumer income would increase even more and investment will partially shift from individual stock buying towards investment through sales, pension funds and bank loans (in these cases capitalists lose some of their income to everyone else).

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        Equalizing capital gains and labor taxes in a closed system would at worst make stuff more expensive by the same amount consumer income would go up (in this case capitalists manage to pass the cost of higher capital gains taxes entirely to consumers)

        Not sure how you see this as relevant. The “inefficiency” of capital gains taxes isn’t that they raise prices. (That’s not an inefficiency from the capitalist standpoint.) It’s that they decrease investment and lower growth. (As you say, the increased income of workers could partially be compensated by pension funds and such, but its only a partial compensation.)

        If I understand you, you’re interpreting “inefficiency” as “ineffectively redistributive.” I don’t know that anyone claims that. Capital gains taxes are good for redistribution but bad for growth. (Therein lies the “blackmail”: under capitalism, you’ve got to pick one or the other. Built into the system is a “capitalist strike” against effective taxation.)

      • IMASBA

        “It’s that they [capital gains taxes] decrease investment and lower growth.”

        That’s what I contend.

        “As you say, the increased income of workers could partially result in compensatory effects through pension funds and such, but its only a partial compensation.”

        Why would it only be partial? Are people going to put money in mattresses? When I talked about a partial shift I talked about direct investment, but I also talked about indirect investment (buying stuff, generating income for the business that they can choose to invest). On average businesses should have access to the same amount of capital, they’ll just get it from different sources.

        To be clear: I’m not talking about raising the total amount of taxes but about equalizing capital gains taxes with income taxes (higher capital gains tax, lower income tax, same total taxation)

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        the Catholic Church loves to put poor kids in Catholic schools, they don’t like giving poor kids money to go to a school of their own choice, because then those kids may grow up to be something other than Catholics).

        Robin’s recent posting on why churches require odd behavior and false belief (as a kind of tax on benefits received) afforded me some insight into how religious charities work. (Supported by some first-hand observations of poor people.) Churches (many very small) must be a large part of charity–poor people can get more from them these days than from government-sponsored food giveaways (although they are far less important in this regard than food stamp assistance). Of course, one must be a church member (and, at least, attend church at least every Sunday) to get free food.

        I surmise this is an important source of the grip of religious superstition in America. (This would be part of my answer to TGGP’s question about what’s bad about private philanthropy.) I’m inclined to think all philanthropy bears the controlling, manipulative stamp of its religious prototype.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        If extremely rich people were simply able to buy the political system, I’d expect them to pay less rather than more taxes.

        I wouldn’t so expect. Let’s ask what kind of system would big capital design from scratch. I think they’d design a system where huge inequalities were produced by ordinary economic transactions, inequalities that are huge enough so that, even if partly offset by progressive tax rates, the inequality would remain enormous. This would allow a facade of democracy. That’s what we have. Even during the Eisenhower years (when political competition with the Soviet Union forced the U.S. to have steeply progressive taxes), enormous inequality remained.

        On immigration, I think it’s a complicated question for our economic elite. On the one hand, free immigration drives down wages; on the other, it threatens domestic unrest and calls for additional expenditures on social services. So, immigration is a difficult subject for the ruling class and for intellectuals who like capitalism. (Thus you have Robin supporting open borders and Steve Sailer supporting stronger immigration control.)

      • IMASBA

        “I think they’d design a system where huge inequalities were produced by ordinary economic transactions, inequalities that are huge enough so that, even if partly offset by progressive tax rates, the inequality would remain enormous.”

        I expect them to try to have their cake and eat it too, with regressive taxation being harder to implement and therefore the less successful component of the two-tiered approach.

        Immigration could definitely be just a “god, guns & gays” distraction, after all, the really rich can take advantage of cheap labor abroad, most of them don’t need cheap immigrants in rich countries that much, though some do (for example agricultural and retail business shareholders) and we indeed happen to see disagreement on the subject within the really rich.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        I expect them to try to have their cake and eat it too, with regressive taxation being harder to implement and therefore the less successful component of the two-tiered approach.

        I think regressive taxation is a feudal remnant of sorts. I would agree it’s not an open-and-shut case about what the economic elite would do because there are always two factions: those looking to maintain the apparent legitimacy of the system (“liberals”) and those who can’t see beyond the point of their nose (“reactionaries”).

        But I think your analysis of immigration ignores the fact that cheapening labor in one branch of production cheapens it overall. Imagine that agricultural workers could obtain the wages that native workers would demand. Workers from other branches could seek agricultural employment if they’re otherwise unemployed, raising wages in the branch of production they’re leaving.

      • JW Ogden
      • Jason Young

        Or, he who makes the rules gets the gold. Power existed long before gold.

        While I agree that social power ultimately reduces to physical reality, dreamtime humans live most of their lives in make-believe worlds where the experience of controlling others can be had for pennies. Real power is zero-sum, but imaginary power is not.

        Income inequality is easy to stomach when you have a hyperstimulating Imaginarium in your pocket.

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      Income inequality gets more attention than it deserves… People already intuitively err on the wrong side of this spectrum.

      It dumbfounding that six readers approved this pure statement of ideology. More attention than it “deserves”? The “wrong” side? This is the purest, most unsophisticated, unadulterated statement of personal values. Yet it is taken as the most valuable contribution to the discussion (along with another purely ideological posting).

      • Anonymous

        Seeing interactions as zero-sum when they aren’t is a factual error, not just personal opinion. But sure, a preference for cooperation over conflict is a personal value.

        And you are… the personal values police? Ridiculous.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        No, Robin is. I’m merely his disciple. Fools assert values when they could be discussing facts.

      • Anonymous

        You resist seeing interactions as zero sum even when they are.

        Except I never wrote nor implied that. But hey, keep making shit up.

        No, Robin is. I’m merely his disciple.

        My advice: Seek professional help. Your behavior here suggests you really need it.

  • IMASBA

    The general trends according to the paper Robin cites here and some other sources.

    The good news:

    - income inequality between countries is strongly declining

    - total inequality (between all people in the world) is weakly declining (and hasn’t always been declining over the entire timespan of several decades)

    The bad news:

    - inequality within countries is rising

    - total inequality declining is probably mainly caused by the lower and middle classes in rich countries getting poorer, while the rich in all countries have gotten richer much faster than the poor and middle classes in poor countries (although China did see a phenomenal middle class income rise)

    Now if we knew Robin’s point in bringing us this news…

    • http://juridicalcoherence.blogspot.com/ Stephen Diamond

      Now if we knew Robin’s point in bringing us this news…

      World capitalism, don’t you see, is efficiently eliminating inequality. People who complain about inequality fail to look at the big picture–or more likely, are engaged in special pleading for privileged folk (read, ordinary workers) in rich countries.

      But (as the article itself stresses), the reduction in international inequality comes from one source: the rapidly rising standard of living in the People’s Republic of China.

      (How eager are the proponents of capitalism to take credit for the astounding successes of China’s centralized, collectivistic economy.)

  • Doug

    Gini is an inefficient way to measure income inequality. Humans instinctually dislike when others have more than them, but for most people the disutility of inequality isn’t Mark Zuckerberg having $25 billion instead of $5. It’s their brother-in-law making $3 more an hour than them.

    A world where 999 people have very little compared to one mega-rich man, but about the same as each other, is a world where the Homo Sapient egalitarian drive would be mostly happy. Yet it’s Gini coefficient would be nearly 1.

    Compare to a world where 1000 people are ranked, and each rank comes with 0.1% higher earnings. This world has a pretty low Gini (<0.2 off the back of the envelope). Yet most people would be extremely incensed by its unfairness.

    • IMASBA

      “A world where 999 people have very little compared to one mega-rich man, but about the same as each other, is a world where the Homo Sapient egalitarian drive would be mostly happy. Yet it’s Gini coefficient would be nearly 1.”

      The rich man would hire 50 goons to oppress the other 949 and then proclaim himself Eternal God Emperor Of The Land, it wouldn’t be pretty…

      “Compare to a world where 1000 people are ranked, and each rank comes with 0.1% higher earnings. This world has a pretty low Gini (<0.2 off the back of the envelope). Yet most people would be extremely incensed by its unfairness."

      The richest person would make only twice as much as the poorest person, you'd have some people complaining at the watercooler but only die-hard communists believe everyone's wages should be exactly equal. It'll be fine as long as the "richer" people can explain their higher wages through something other than nepotism, corruption or plain luck (actually luck will do most of the time because people tend to instinctively mistake luck for talent, just like we tend to see shapes in random patterns).

      • Doug

        You’re making a grave mistake by assuming that most people oppose rising inequality for political reasons related to the distribution of power. The vast majority of opposition and unhappiness related to inequality comes from interpersonal status games.

        Give everyone two options: 1) every billionaire in the world’s net worth triples or 2) everyone in their social circle gets a 20% raise, while they don’t. 95% of people will pick the former.

        Inequality is a personal issue, not a political one. Which isn’t to say that there aren’t political ideologies and coalition that form around the issue of inequality. But the vast majority of their participants are driven by a desire to raise their relative status. The political justifications are thin veneer to legitimize their activity.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        This is just crude apologetics for inequality. Despite the jaundiced language, Hanson was onto something: inequality talk concerns taking. And taking isn’t typically directed to your near equals: billionaires are an obvious (if somewhat demagogic) target.

        Human hatred of inequality is all about power. It arose primordially to enforce egalitarian norms and to maintain a kind of primitive democracy.

      • Doug

        Actually, it’s you who are ignoring the basic empirical evidence and blinded by your own ideological views of the egalitarian redistributionist.

        In reality GSS surveys reveal that those who most strongly support redistribution generally exhibit characteristics most strongly oriented with pettiness and envy:

        “Contrary to the prevailing view of political psychologists, those who support
        capitalism and oppose income redistribution do not express traditionally racist or
        intolerant attitudes. Indeed, they tend to express views that are less racist and intolerant
        than other Americans. The Von Mises thesis posits that redistributionists are driven by
        envy for the property of others and a frustration with one‘s lot in a capitalist system. If
        that were true, one would expect redistributionists to express more unhappiness, anger,
        and a desire for revenge—and they do. In General Social Surveys, both redistributionists
        and anti-capitalists express significantly lower satisfaction with their financial situations
        and with their jobs or housework. Indeed, they report that they are less happy overall and
        have less happy marriages.59″

        http://papers.ssrn.com/sol3/papers.cfm?abstract_id=945932

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        I wouldn’t turn to a law review article (in a “journal” edited by law students) to establish a truth of psychology. (And one upholding the blind ideologist, von Mises, at that.)

        There is much more reputable work, starting with “The Authoritarian Personality” that inegalitarians are (for example) racists.

        How can any observer of current American politics conclude otherwise. The Tea Party, the hotbed of anti-egalitarianism and billionaire love, are centered on the racist deep South.

      • Doug

        I provided statistical GSS data. You provided some broad generalizations based on popular opinion. Whether the author likes von Mises or not, the GSS correlations exist regardless.

        Unfortunately if you’re a blind ideologue, who has a left-wing axe to grind, nothing’s going to convince you otherwise. But the vast majority of evidence, with little to the contrary suggests that anti-inequality is overwhelmingly driven by personal status rivalries.

        Otherwise if you’re an impartial truth seeker, so far I’ve presented hard evidence for my side and you have not. Frankly at this point you don’t seem interested in constructive engagement of actual facts, but merely cheering on your side, in classic chimp tribal fashion. Normally this blog attracts a higher quality of discussion.

      • http://juridicalcoherence.blogspot.com/ Stephen Diamond

        That’s self-serving nonsense and self-congratulation. You cited to correlational data, analyzed in a law-review article drawing conclusions that would never make it to a peer-reviewed journal. You’re grandstanding (which is indeed something not often seen here.) You couldn’t possibly believe (at least I hope not) that data presented in one law-review article could resolve this matter; an important study wouldn’t have been published in a law-student edited law-review article. (Everyone knows that the more affluent tend to be more tolerant; that doesn’t mean that redistribution is powered by intolerance. The data don’t even seriously address the questions we’re discussing, which are causal. If I didn’t address your data, it was because it isn’t seriously relevant.)

        But at least I mention your arguments! (Whereas you ignore counter-argument a drone on solipsistically about your “data.”) [There was a great deal of data in Adorno et. al's "Authoritarian Personality." Have you even heard of it?]

        You’ve learned to read; now learn to think.

      • Jason Young

        It is important to differentiate between ”opposes equality” and “endorses policies that increase inequality”. Opponents of overgenerous welfare subsidies could be described as inegalitarian, but mostly they seem to simply hate handouts, not who receives them or the resultant decrease in equality.

        Inegalitarianism suggests a principled aversion to inequality, but such an aversion strikes me as rare.

      • IMASBA

        “You would identify hatred of inequality with envy, but you (for ideological reasons) onlyassume that identification.”

        Yes, that’s spot on. These types could cheat at a poker game and when someone calls them out on it they’d call that envy, jealousy.

        I may envy Usain Bolt’s running capabilities but that does not mean I want the government to cripple him until he can run no faster than I can, Usain Bolt’s running capabilities don’t threaten my rights and possibilities. I do want punishment for those who cheat or pass of plain luck as success when money is involved.

        “(Doug) In reality GSS surveys reveal that those who most strongly support redistribution generally exhibit characteristics most strongly oriented with pettiness and envy:”

        No surprises there when the people who designed the survey started with the assumption that people angry about income inequality are jealous of rich people. But hey, we all know it’s the pro-redistirbution crowd that has been harrassing gay people, Muslims and trying to make it harder for women to get birth control, right?

      • IMASBA

        “You’re making a grave mistake by assuming that most people oppose rising inequality for political reasons related to the distribution of power. The vast majority of opposition and unhappiness related to inequality comes from interpersonal status games.”

        So if people don’t know something exists then it doesn’t exist? Not everyone opposes inequality for political reasons, but they’d learn (the hard way) that it’s as valid a reason as any other.

        “Give everyone two options: 1) every billionaire in the world’s net worth triples or 2) everyone in their social circle gets a 20% raise, while they don’t. 95% of people will pick the former.”

        Then 95% chooses poorly and they’ll regret it when it’s too late.

        Also, that 95% figure may not be very accurate, what you describe is an effect in already egalitarian societies, people (judging by their demonstrations, riots and movies) in Brazil or India are very much aware of the political implications of high inequality and would definitely prefer a raise for their peers over an increase of power for the elites that they loathe and fear.

  • Alexander Gabriel

    The recent decrease in overall global inequality is for now an aberration. If better tech makes productivity growth in the advanced countries pick up again, inequality will likely increase further.

    It’s curious that during the 20th century there was an increase in global inequality but a decrease in violence. One might guess that eventually one of these trends must give way.

    But I wouldn’t, since it’s possible that the decline in violence is due to growth rates. With high growth it’s easier to innovate than take. So if productivity growth stopped *and* we entered a Malthusian scenario, inequality would drop but war would rise again. The quantity of interest between countries would be GDP/(limiting natural resources) or basically (fighting ability)/(wallet size). Maybe the best bet for avoiding war is not low global wealth inequality but low population growth in powerful high-GDP countries. Then individuals in powerful countries have no incentive to take from poor countries, since going there means losing network effects at home. Although this is kind of crude because GDP is not exactly the same as fighting ability.

    • IMASBA

      “The recent decrease in overall global inequality is for now an aberration. If better tech makes productivity growth in the advanced countries pick up again, inequality will likely increase further.”

      It think the trend of reduced inequality between countries (but increased inequality within countries) is irreversible now that many developing countries seem to have their act together above some treshold that enables them to gain on the developed countries. Whatever technologies developed countries come up with developing countries will quickly copy those technologies and/or use their low-wage advantage to draw in implementations of those technologies. Developed countries will have lower rates than developing countries for the coming decades, until purchasing power has equalized.

      • Alexander Gabriel

        Why, other than that this has happened a little recently?

      • IMASBA

        It’s just the way the world works: copying technology (and production methods) cost less than developing them, this combined with the lower wages and longer working hours allows developing countries to gain on developed countries.

        The reasons it didn’t happen in the past are simple: once, what we now call the developed developed their advantage they used military force to subdue everyone else, keeping them from developing to the same extent. After decolonization the non-developed countries were either communist or engaged in constant civil wars and coups, corporations were also smaller (and did not have access to reliable global mass communication), plus in 2013 there just has been more time since decolonization than in 1973, so more time for technology copying, low wages, long working hours and globalization to work their magic.

      • Alexander Gabriel

        Well, OK. That’s kind of the Acemoglu idea. Why Nations Fail.

        It does seem plausible to me.

      • Alexander Gabriel

        but let us not forget counterpoints like this

        http://econ.as.nyu.edu/docs/IO/16796/Michalopoulos_20101019.pdf

      • IMASBA

        It’s a two steps forward, one step backwards process, so there will always be temporary exceptions. Differences in ethical beliefs about things such as biotechnology will eventually be overruled by either the mighty dollar or the mighty armies and cultural exports of some dominant power, eventually even a world government (this doesn’t mean everything will be allowed, it could be that the dominant power simply de-facto forbids some things throughout the world, like Great Britain did with the slave trade from 1807 onwards), the same goes for other hot-button topics like AI slavery.

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