The unequal state of the world

The state of the world is not just one thing.

On the one hand, each of the five big issues I have been highlighting in my recent blogs (wealth and poverty, war and peace, human rights and democracy, health of people and health of the planet) and in the The State of the World Atlas is complex, prospects for progress on them are not the same for each, and the interactions between them add further layers of uncertain outcome. On the other hand, people and their circumstances are highly diverse and a world system that gives a perfectly satisfactory state of affairs to one group of people is torturing another.

So I thought that in the next few weeks I would highlight a few of the facts and sometimes paradoxes about our condition today, that struck me as I prepard the atlas.

Readers of the atlas will know I am a qualified optimist. On three of the five big issues (peace, democracy and people’s health) progress has been made but there remains much to do. On the other two – wealth and poverty and the health of the planet – we are currently heading in the wrong direction. And among the biggest obstacles to making further progress is inequality.

Some inequality is all right, necessary, arguably even positive. It provides incentives for personal improvement. But when 0.000016% of the world’s population holds 16% of its economic output, something grotesque has happened. The relationship between those two figures is 1 million to one. So if you thought (as I do not) that everybody should own exactly the same amount, that 0.000016% of the world’s population owns a million times more than they ought to.

Increasing life expectancy is a good indicator of social progress and because it’s an average, it’s a reasonable indicator about the spread of the benefits of progress. But averages also mask a great deal. The average life expectancy in the UK these days is over 80. But for the homeless in England (and probably the rest of the UK but the England statistics are all I saw), the average life expectancy is reduced by 30 years to a level that’s about the same as in war-torn, impoverished Afghanistan and Central African Republic.

Billionaires by the way were hard hit by the financial crash of 2008 (as you would expect since so much of their wealth is paper assets). Before the crash, a world total of 1,125 dollar billionaires owned $4.4 trillion worth of everything. In 2008-9 the numbers sank: there were only 793 billionaires in the whole world and they owned by $2.4 trillion. But just 2011, billionaires were on the up once more, their numbers growing to 1,210 individuals owning $4.5 trillion.

This does, by the way, imply that there is a little more equality between billionaires these days than there was before the crash, which may or may not mean something.

The recovery of the billionaires is doubtless cheering news to the 400,000 residents of Athens who were receiving free food daily during 2012.

Many of the ways in which we have understood our divided world over the past 40 or 50 years have been becoming steadily less cogent in the last decade or so. In particular, a division of the world into poor countries and rich countries, in which we imagine that poor countries are where poor people live, is becoming actively misleading. There are more poor people in India than in any other country, India with a space programme, an overseas aid programme and 450% economic growth over the last 20 years (compared to the EU’s 130%, the USA’s 155% and China’s 1000%).

This looks likely to be a pattern for the coming period, with most poor people living in middle-income countries, not the poorest ones.

However, don’t run away with the notion that the distinctions between rich and poor countries have wholly collapsed. GNI per head is 200 times higher in the richest countries than the poorest.

The lead Millennium Development Goal was to reduce extreme poverty by a half by 2015, and the world is on track for that mainly due to what has happened in China. So that seems like – if not reducing inequality because the ri chest few might be rising faster than the multitudinous poor – nonetheless like progress. And indeed it is. But this the extreme poverty of living on less than 1 dollar a day (or 1.20 these days – inflation?). Meanwhile, the number of people living on less than 2 dollars a day is 2.6 billion – more than one-third of the world’s population.

3 thoughts on “The unequal state of the world

  1. Not so sure that inequality is increasing ….. True if you measure ACTUAL wealth (pounds in the bank account) there is an increasing in inequality between money earned by those at the top and the bottom of the pile. BUT if you measure the UTILITY of wealth then you could argue that things are not so bad.

    Let’s do two things:

    Firstly let’s ignore the bottom 15% of the bell curve. There are usually special reasons why people end up there, such as drugs, alcoholism, depression, or the fact your status prohibits you from gaining state benefits. These are particular problems that have to be tackled in specifically targeted ways, but there are usually better solutions to these specific problems than hoping that if you increase wealth generally then the trickle down effect will lift these people out of their difficulties.

    Secondly, let’s just look at the UK.

    Two hundred years ago, if you measured the difference in lifestyle between someone 1% of the way down the bell curve and somebody 85% of the way down the bell curve the difference would be immense. The rich man would probably have several servants, not have to work or worry about much other than social climbing. The poor person would be have a terrible job (I’m thinking of seamstress, tanner) and starve if they did not work dawn to dusk. They would have no access to books or education. They would be cold at night, and genuinely worry if they could feed their kids tomorrow.

    Now it is very different. Both people will have glass in their windows, will eat enough to survive, be warm enough not to freeze, and have (on the internet) equal free access to more entertainment, knowledge and opportunity than they could possibly consume. The rich and the poor would often put in about the same amount of hours at work (whilst both accusing one another of being lazy parasites), and the rich man may have one part time servant.

    The actual bonus in lifestyle is more meager. The rich would enjoy more opulent holidays, live in a slightly bigger house (3 to 4 times the size) and send their children to slightly better private schools, and have paid access to the FT online. But THESE are less of a big deal than the differences 200 years ago. Indeed a recent survey has shown no increase in happiness with wealth once a household earns above £40,000 per year. So what’s the real advantage of being rich these days?

    It’s a way of keeping score.

    Bankers compete for bonuses with one another, to establish a pecking order, not because they need the money or the extra benefits it will provide, but because it makes them feel good to be earning more than the next man. It’s the competition for top dog that keeps them going.

    I’m sure if we cut all bonuses by 90% then competition will still be there, and the bankers would still work furiously to make money at the expense of one other

    But by specifically rewarding people with quantifiable money, then feelings of injustice are still very much alive.

    Perhaps we need kinder way of measuring the difference in well being between the rich and the more. This would be a more difficult task requiring strange hard-to-agree on metrics. What should we use if it’s silly to just count money?

    Real inequality is less, but perceived inequality is increasing.

  2. Sorry, Michael, ignoring the bottom 15% is not something I’m up for. As for focussing on the UK, homelessness in England takes 30 years off average life expectancy. Something unequal going on there. And the inequality statistics are worsening everywhere (even though among the least well off there is improvement, the improvement for the richest goes faster).

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