NCPA - National Center for Policy Analysis

Inequality Is Falling across the Globe

January 9, 2015

There has a been a lot of talk about income inequality recently, but Marian Tupy, senior policy analyst at the Cato Institute, says people should look at the issue on a global scale, as worldwide inequality is falling.

According to Tupy, in the early 1800s, the income gap between the Western world and the rest of the globe became apparent: the United States was 1.9 times wealthier than the rest of the world in 1820. In 1960, the United States was 4.1 times richer than the globe and was 4.8 times richer than the rest of the world in 1999.

However, that gap between the United States and the rest of the world is narrowing. For example, while the United States was 11 times richer than Asia in 1960, it is only 4.8 times richer than Asia today. Why? Tupy says it's not because American incomes have fallen -- in fact, he says that per capita GDP in the United States today is at an all-time high.

So what has happened? Globalization. Tupy uses China as an example -- a nation which suffered extreme famine and economic devastation when Communist leader Mao Zedong tried to collectivize the economy from 1958 to 1961. But after Mao came Deng Xiaoping, who in 1978 instituted privatization reforms and liberalized trade. The results were dramatic:

  • Since 1980, per capita GDP in China increased 12.5 times, rising from $545 to $6,807 in 2013.
  • During the same period, the poverty rate in China dropped from a staggering 84 percent to just 10 percent.

Tupy says similar advances have taken place across the rest of the globe, leading to rising incomes and more. For example, life expectancy has also increased: average life expectancy across the world rose from 53 years of age in 1960 to 70 years in 2010.

For more evidence of how the world is improving, the Cato Institute's HumanProgress.org contains a host of statistics and figures on progress around the globe, from improved access to food to a decline in poverty.

Source: Marian L. Tupy, "Stop obsessing about inequality. It\'s actually decreasing around the world," Washington Post, January 8, 2015.

 

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