Progress is evident: over the past 30 years, 5 billion people have emerged from poverty and misery

Progress is evident: over the past 30 years, 5 billion people have emerged from poverty and misery
Progress is evident: over the past 30 years, 5 billion people have emerged from poverty and misery
15 October, 19:21Photo: Рис. Васи Ложкина
Leftist propagandists who talk about global inequality prefer not to notice its significant decline on a global scale.

Political analyst Dmitry Nekrasov continued in his blog to study the phenomenon of property inequality, the fight against which is the main point in the programs of all left-wing politicians. This time, Nekrasov made a short historical and economic overview of how the level of poverty in the world has changed over the past several centuries, and came to surprising conclusions:

“250 years ago, the living conditions of the majority of the world population (peasants in agrarian societies) were practically the same. Peasants in Europe, China or Egypt were at plus or minus the same level of poverty. The standard of living of the privileged estates and cities of different countries differed to a slightly greater extent, however, in general, if we were to measure global inequality 250 years ago, then the primary for assessing the well-being of an individual was his belonging to a particular social stratum, and not to a particular country...

Then, due to the industrial revolution and technological progress, the economic development of different countries began to occur extremely unevenly. Between the beginning of the XIX century. and in the 1980s, a small group of rich countries grew their economic wealth much faster than most of the poor. This has led to a situation where the incomes of, for example, Swedes have become, on average, 72 times higher than the incomes of Congolese residents. And when comparing the income of a Swede with a Congolese, the primary information was their country of origin, and not what social group they belong to within the country.

At the beginning of the XIX century. the expected average income during the life of most people, no matter if they lived in England, Russia or China, most of all depended on which family (rich or poor) they were born into. And leftist propaganda branded this state of affairs as extremely unfair.

By the end of the twentieth century, the expected average lifetime income depended almost exclusively on which country you were born in. At the same time, if the incomes of 10% of the richest Swedes exceeded the incomes of 10% of the richest Congolese by 47 times, then the incomes of 10% of the poorest Swedes exceeded the incomes of 10% of the poorest Congolese by 105 times.

It should be understood that most (about 7/10) of the 10% of the richest Swedes got into the top decile in terms of income by their labor, and not because they were born into a family of wealthy Swedes, while almost all 10% of the richest the poor Swedes are dependents living on various social benefits paid from the taxes of working Swedes. They did nothing themselves to live 105 times better than Congolese and 5 times better than the median income for planet earth.

Intracountry inequality largely depends on the personal efforts of individuals (in developed countries, most of the rich are from the poor, 85% of American millionaires made their fortune from scratch, and even in backward countries, a significant part of the rich and upper middle class come from the poor). Intercountry inequality is determined at birth and almost does not depend on personal efforts (with the exception of emigration to a rich country).

Thus, let's start with two basic points:

  1. Most of today's global inequality is due to inequality across countries, not within countries
  2. Intercountry inequality is much more unfair than intracountry inequality, because it does not depend on the personal efforts of individuals.

Within individual countries, inequality has changed in different directions over the past few decades. In developed countries, it mainly grew since the late 1970s, in Latin America, on the contrary, it decreased during the same period, in Russia it grew in the 90s and early 2000s, and then stagnated, etc.

But with the world as a whole, everything is much more straightforward. In the 1980s, the growth rate of the economies of the poor countries for the first time in 200 years significantly exceeded the growth rates of the economies of the rich countries, which led to a sharp decline in inequality. If from the beginning of the XIX century. until the mid-1980s, the Gini coefficient for monetary income for all mankind as a whole was increasing, then from 1988 to the present day it has been steadily decreasing.

Back in 1988, 80% of global inequality depended on the country of birth, then in 2013 - only 65%, while the level of inequality itself has decreased. (see photo below)

The share of the world's population living in extreme poverty fell from 35% of the world's population in 1990 to 10.7% in 2013. During the same period, the second (after the countries of the so-called "golden billion") billion of people per a planet whose living standards and incomes roughly correspond to those of the middle class in developed countries - this is the upper middle class of China, India, and a number of Southeast Asian countries.

Before our eyes, over the past 20-30 years, there has been the largest decline in global poverty in the history of mankind, while at the same time the largest reduction in global inequality in history. (At least a decline in conditions of well-being. Perhaps during global epidemics or world wars, inequality fell even more sharply, but until the 1980s, with the growth of the economy, world inequality always grew).

At the same time, it was precisely the most unfair intercountry inequality that decreased against the background of individual examples of the growth of much fairer intracountry inequality.

The main reason for these trends is obvious - globalization: the reduction of customs barriers, a sharp increase in the volume of international trade, facilitation of the international flow of capital and labor, etc.

The openness of the markets of developed countries contributed to the rapid growth of export-oriented industries in some developing countries, and the arrival of multinational companies and international investors in developing countries contributed to a rapid flow of innovation, progressive changes in the institutional environment, and, as a consequence, an increase in labor productivity and GDP per capita.

The only relative losers in this process are the lower middle class of developed countries. Many industries and low-skilled jobs have been moved from developed to developing countries. Even when production was not moved, wage growth for low-skilled workers in developed countries was constrained by competition with similar industries in developing countries with cheap labor. In practice, such industries in developed countries had very limited opportunities to raise wages to their workers who were already receiving several times more than absolutely similar workers in developing countries.

In addition to the transfer of production, the labor force from developing countries massively moved to developed countries, directly competing in wages and restraining their growth, primarily among low-skilled employees.

Branko Milanovic in his book "Global Inequality" provides data on the real incomes of various income groups of the world population for 1988-2008. As can be seen from the table, 80% of the world population has noticeably increased their own incomes over these years, and only 5% have not grown completely. Most of this group belongs to the lower middle class of developed countries.

Those. that we see that over the past 20-30 years, at least 1.2 billion earthlings came out of extreme poverty, another 3.5 billion earthlings increased their incomes in the range of 40-70%, and only about 350 million earthlings already belong to the upper 20% of the population of the wealthiest world, incomes have not increased.

However, the MAD LEFT PROPAGANDA constantly focuses on the suffering of these 350 million and so by world standards of wealthy people, whose incomes have not even decreased, completely ignoring the colossal gain of 5 billion really poor earthlings.

The rise in inequality in developed countries was in many ways the reverse side of the global decline in inequality in the world as a whole.

Among highly skilled workers in developed countries, income growth continued, as City of London financiers, Harvard professors or NASA engineers have far less competition from workers in India and China than steel workers or call center operators.

Highly skilled workers emigrated from developing countries to developed ones, along with them, complex functions and highly skilled jobs migrated there. The headquarters of transnational companies are located mainly in developed countries, this can be viewed as the export of management services from developed countries to developing countries. It creates additional highly skilled jobs in developed countries. R&D centers of large corporations are also located mainly in developed countries. The flow of students from developing countries to developed countries creates additional highly qualified jobs in education, etc.

In addition, more than 100,000 millionaires change their country of residence every year. Most of this flow is millionaires moving from poor developing countries to rich developed ones. The steady influx of millionaires into developed countries is likely to increase inequality there.

When millionaires from all over the world come to the Cote d'Azur in summer, inequality grows there, and decreases in winter. Permanent residents do not lose anything from this (they only acquire the opportunity to earn money), world inequality does not change from this either. But it's just amazing to me how leftists still haven't thought of writing about the dramatic rise in inequality on Lazurko every spring.

Let us now illustrate this trend with a less abstract example.

There is a long-term study of salaries in various cities of the world conducted by UBS for several decades. There, for one nomenclature of specialties for each year, the current salaries by city in current dollars are given.

If we single out a group of poor cities (Mumbai, Manila, Cairo, Jakarta, Mexico City) and a group of rich cities (Zurich, London, Paris, Tokyo, New York) and compare these two groups by the average income of representatives of the same specialties with the same functions, you can see the following. In 1988, the head of a department in poor cities received 13 times less than a head of a department in rich cities, and in 2018 - 5.5 times less; the cook - in 1988 he received 12 times less, and in 2018 - 8 times less; bus driver - in 1988 received 18 times less, and in 2018 - 12.5 times; auto mechanic - in 1988, 20 times less, and in 2018 - 14 times less.

Low-skilled low-income strata of the population in developed countries have not become impoverished in objective terms, but have not improved their position for a long time. In perceived reality, their relative position relative to the upper middle class in developed countries has deteriorated. However, this process was offset by a noticeable reduction in the gap between the incomes of low-skilled workers in developed and developing countries.

Is it fair that in 1988 the salary of a bus driver in cities from rich countries was 18 times higher than the salary of the exact same (and usually working more hours per week) driver from poor countries? If by 2018 this difference had decreased to 12.5 times, then perhaps the world has become more just? During the same time, the difference between the wages of a bus driver in a wealthy city and a banker in a wealthy city has grown. However, why should we worry more about the wage gap and so by the world standards of a rich bus driver from a rich city with a banker, rather than rejoice in the progress of income of a really poor bus driver from a poor city?

The global imbalance described earlier is likely to narrow further. And mainly at the expense of those who receive a huge undeserved premium - the lower income groups in rich countries.

But ironically, it is the ongoing change in these proportions on a global scale to a more "fair" side, which is called by the left authors the growth of injustice and inequality. The relative losses of 5% of the world population are highlighted by leftist propaganda, while both the relative and absolute gains of 50-60% of the world population are directly ignored. Whatever the relative losses of the lower middle class of rich countries, the general direction of the ongoing processes is absolutely "fair" on a global scale.

The above facts are not new, they have long been known to specialists. Both the rise in inequality in developed countries and the decline in inequality around the world as a whole have been fairly well studied and described. These processes do not contradict each other.

However, the narrative about growing inequality, dispersed by leftist propaganda, completely displaces from the consciousness of the majority of the population the facts and studies that tell about the reduction of inequality and injustice in general on a global scale.

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