Transcript The Ambiguous Crisis of Global Economic Inequality

The Ambiguous Crisis of
Global Economic Inequality:
Contradictory National and International Trends?
WUN Horizons in Human Geography Seminar Series
November 11, 2008
Malcolm Fairbrother
Lecturer in Global Policy and Politics
School of Geographical Sciences
University of Bristol
Inequality: A Classic Concern
in the Social Sciences
•
•
•
•
Marxism
sociology
economics
geography?
Inequality:
The Left-Leaning Social Science View
• pessimistic about reality, optimistic about
theory
 the rich get richer, the poor get poorer
• even worse: globalisation and neoliberalism
 a growing/impending crisis of global inequality??
Growing Inequality:
Conservative Responses
1.
2.
3.
4.
don’t talk about it
deny it’s a problem (esp. if poverty declining)
deny it’s occurring
attribute inequality to laziness/inferiority of the
poor
5. deny the possibility of controlling it
6. deny the advisability of controlling it
7. deny that conservative/neoliberal policies are
causing it
Two Types of Types of Inequality
• First types: desirable things that can be
distributed unevenly
 health, longevity, education, mobility, political
rights, status, wealth, income…
• Second types: axes of social difference
 ethnicity, gender, religion, citizenship status…
Global Wealth Inequality: Shares by Decile (PPP)
(Source: Davies, Sandstrom, Shorrocks, and Wolff 2006)
0.6
0.3
1.1
0.1
2.4 1.6
3.7
6.2
12.9
71.1
Global Income Inequality
• key decomposition (Firebaugh):
•
within nation inequality
 one-third of global income inequality
•
between nation inequality
 two-thirds of global income inequality
Within-Nation Income Inequality
(Source: UNDP Human Development Report)
70
90
60
80
Gini Index
50
60
40
50
30
40
30
20
20
10
10
0
0
Gini Index
Ratio of Richest 20% to Poorest 20%
Ratio of Richest 10% to Poorest 10%
Ratio of Incomes
70
Income/Human Development
(Sources: World Bank WDI and UNDP)
50000
1.000
45000
0.900
40000
0.800
35000
0.700
30000
0.600
25000
0.500
20000
0.400
15000
0.300
10000
0.200
5000
0.100
0
0.000
Congo
DR
India
China
Brazil
South
Africa
Russia
South United Ireland United
Korea Kingdom
States
GDP per capita (PPP current international $)
HDI (2005)
GDP/capita, 1-2001AD
(Source: Maddison 2003: 262)
30000
Western Europe
International 1990 USD
25000
Eastern Europe
Western Offshoots
20000
Latin America
Japan
15000
Asia (excl Japan)
10000
Africa
World
5000
0
1
1000
1500
1600
1700
1820
1870
1913
1950
1973
2001
Source: NBER, based on tax data
Source: Nielson, Alderson, and Beckfield 2005
(from Luxembourg Income Study data)
Trends in Within-Nation Income
Inequality, Mid-1990s to Mid-2000s
(Source: OECD 2008)
large increase: Canada, Finland, Germany
small increase: Austria, Denmark, Japan, Norway,
Sweden, USA
no change: Australia, Belgium, Czech Republic,
France, Hungary, Italy, Luxembourg, New
Zealand, Portugal, Spain, Switzerland
small decrease: Greece, Ireland, Netherlands, UK
large decrease: Mexico, Turkey
Trends in Within-Nation Income
Inequality, Mid-1980s to Mid-2000s
(Source: OECD 2008)
large increase: Finland, New Zealand
small increase: Canada, Germany, Italy, Japan, Norway,
Portugal, Sweden, USA
no change: Austria, Belgium, Czech Republic, Denmark,
France, Greece, Hungary, Ireland, Luxembourg,
Mexico, Netherlands, Spain, Turkey, UK
small decrease: France, Ireland, Spain
large decrease: [none]
Trends in Between-Nation Inequality
• unweighted by population?
 growing (definitely)
 many small, poor countries not growing
• weighted by population?
 shrinking (probably, a little)
 heavily influenced by China and India
 worldwide rate of absolute poverty declining
Global Income Inequality
• between nations, weighted by population:
 declining (probably, a little)
• within nations:
 increasing (definitely, in many but not all)
• overall:
 hard to tell, but possibly decreasing
Causes of Growing
Within-Nation Inequality
1. globalisation?
2. skill-biased technological change?
3. conservative/neoliberal/other policies?
Causes of (Probably) Decreasing
Between-Nation Inequality
• in other words, what’s causing growth in
China and India (and some other Asian
economies)?
 globalisation and/or neoliberalism?
Consequences of Growing
Within-Nation Inequality?
1.
2.
3.
4.
5.
6.
more nationalism? (Solt 2008)
more corruption? (You & Khagram 2005)
lost biodiversity? (Mikkelson et al. 2007)
worse health? (Wilkinson & Pickett 2006)
less political engagement? (Solt 2008)
less economic development? (Sokoloff &
Engerman; Acemoglu and Robinson; Easterly)
Inequality versus Development
Gini Index
(most recent year available)
(Source: World Bank WDI)
65
Bolivia
60
113 countries
South Africa
55
Chile
Argentina
50
45
Singapore
40
USA
UK
35
Ireland
30
25
Norway
Ukraine
Slovakia
Czech Rep.
Sweden
Denmark
20
0
10000
20000
30000
40000
GDP/capita (PPP, 2005, current I$)
50000
Consequences of Changing BetweenNation Inequality?
• ???
• what if present trends continue?
• do effects of global inequality parallel those
of within-nation inequality?
• should we be concerned about weighted or
unweighted global inequality?
• growing influence of international media?
Final Thoughts
• inequality is worsening… in some ways
 probably not a crisis… yet
• inequality appears to have a number of
negative effects, but its full consequences are
unclear
• its causes are also unclear (though we have
some ideas)
• politics matters (even the OECD agrees)