Local Futures

  • Home
  • Blog
  • Store
  • Contact
  • Sign up
  • Donate

The Economics of Happiness

Menu
  • About us
    • Local Futures
    • Our team
    • Founder, Helena Norberg-Hodge
    • Get involved
    • Media room
    • Our history
    • Close
  • Projects
    • Connect globally and locally
      • World Localization Day
      • Voices from the Field
      • Localization Action Guide
      • International Alliance for Localization
        • Join the IAL
        • IAL members
          • IAL member organizations
          • IAL Listserv
      • Ladakh Project
      • Planet Local
        • Culture
        • Eco Communities
        • Ecology
        • Health
        • Local Business & Finance
        • Local Energy
        • Local Food, Farming & Fisheries
        • Local Policy & Community Rights
        • Place-based Education
        • Sharing & Repairing
    • Gain a big picture perspective
      • Blog
      • Local Futures Podcast
        • Iain McGilchrist – Rediscovering Wisdom in a World Gone Mad
        • Charles Eisenstein – Towards a New and Ancient Culture
        • Vandana Shiva – The Power of People
        • Mental Health in the Global Economy with Gabor Maté
        • Jeremy Lent: Shifting Paradigms
        • COP, carbon and high-tech: who is setting the agenda?
        • Beyond Conspiracy: Framing Meaningful Activism
        • Unpacking Global Empire from an Indigenous Perspective
        • More than Just the Vegetables
        • Food Sovereignty in the Global Economy
        • Transition, Tradition, and Trade
        • Not-for-Profit Businesses
        • Love, Values, and Wellbeing Economies
        • Growing a Farmers Market from the Ground Up
        • Beautiful Places: A Conversation with Wendell Berry
        • Creating the Framework for a New Economy
        • From GDP to GNH
        • Rebuilding Healthy Communities: The Growing Ecovillage Movement
        • Seeds of Resilience, Seeds of Sovereignty
        • Why Local Ownership Matters
        • Local Alternatives to Globalized Development: A View from India
        • How to Feed the World? A Political Agroecological Approach
        • Helena Norberg-Hodge on how corporate ‘free trade’ deals threaten local communities and economies worldwide
      • Webinars
        • Sacred Activism in a Post-Trump World Webinar
        • Talking Climate Webinar
        • People Power: Democracy and the Economy Webinar
        • Beyond Trump: The Path to Real Change Webinar
        • Bringing the Food Economy Home Webinar
        • A World Without ‘Free’ Trade: What it would look like and how to get there
        • Beyond ‘Free Trade’ – Alternatives to Corporate Rule
        • Education: Promises, Myths & Realities Webinar
        • Debt and Speculation in the Global Economy Webinar
        • A New Activism Webinar
        • Climate Change or System Change Webinar
        • Going Local Webinar
      • Powerful talks
      • Films and short videos
      • Books and reports
    • Close
  • Events
    • Upcoming events
    • Planet Local Summit Bristol 2023
    • World Localization Day
    • Economics of Happiness conferences
    • Other past events
    • Close
  • Action resources
    • Getting the facts
      • Globalization – drivers and impacts
      • Localization – a solution-multiplier
      • Big Picture Activism – rethinking basic assumptions
    • Action tools
      • Localization Action Guide
      • Covid-19 response: let’s localize like never before
      • Maps of alternatives
      • Organizations for change
      • Independent media sources
      • Films for change
      • Recommended readings
    • Close
  • Books, reports & videos
    • Books and reports
      • Life After Progress
      • Local is Our Future
      • Ancient Futures
      • Free reads
      • Translated resources
      • Annual report
    • Films and short videos
      • PLANET LOCAL : A Quiet Revolution
      • LOCAL: A Story of Hope
      • Local Food Can Save The World
      • Going Local: the solution-multiplier
      • Insane Trade!
      • The Economics of Happiness
      • Ancient Futures
    • Close
You are here: Home / Inequality / How bad is global inequality, really?

How bad is global inequality, really?

March 16, 2019 by Jason Hickel 1 Comment

Most everyone who’s interested in global inequality has come across the famous elephant graph, originally developed by Branko Milanovic and Christoph Lakner using World Bank data (see below). The graph charts the change in income that the world’s population have experienced over time, from the very poorest to the richest 1%.

We can update the elephant graph using the latest data from the World Inequality Database, which covers the whole period from 1980 to 2016 using a method called “distributive national accounts”. Here’s what it looks like in real dollars (MER), developed in collaboration with Huzaifa Zoomkawala:

 

elephant.png

The elephant graph has been used by some to argue that neoliberal globalization has caused inequality to decline since 1980. After all, it would appear that the biggest gains have gone to the poorest 60% of the world’s population, whose incomes have grown two or three times more than those of the richest 40%.

But this impression can be misleading. It’s important to recognize that the elephant graph shows relative gains, with respect to each group’s baseline in 1980. So the poorest 10-20th percentile gained 82% over this period. That sounds like a lot, on the face of it. But remember that they started from a very low base. For people earning $2.40 per day in 1980, their incomes grew to no more than $4.36 per day… over a period of 36 years. So, about 5 cents per year.

That’s not much to celebrate, particularly when these gains don’t come anywhere close to lifting people out of poverty. Remember, the poorest 60% – the ones depicted as the “winners” in the elephant graph – continue to live under the poverty line of $7.40 per day (2011 PPP).

Meanwhile, the global rich may have seen their incomes increase by a smaller proportion, but because they started from a much higher base their absolute gains have been far greater.

What we need, then, is to render the elephant graph in absolute terms, to see who’s benefited most from the distribution of new income around the world. Here’s what it looks like:

 

elephant.png

 

Suddenly the story changes. It becomes clear that it’s the richest 1% who have gained the most – by far. The incomes of the world’s poor have barely budged by comparison.

It’s not an elephant graph anymore. It’s a boomerang. This seems a fitting image, given how income has an uncanny way of circling back to those who already have it. Or we could call it a scythe, which nicely captures how the rich are harvesting the world’s abundance for themselves.

Things get even more extreme once we start separating out top incomes, which is what the World Inequality Database allows us to do. Click here to see how the “elephant” shape disintegrates and the scythe becomes even sharper. Here’s a table showing how each group has fared from 1980 to 2016:

 

Screen Shot 2019-03-02 at 9.48.15 PM.png

 

The results are staggering, really. For the poorest 60% of humanity, the average person saw their annual income increase by only about $1,200… over 36 years.

Meanwhile, those in the 70-80th percentile, the “losers” according to the elephant graph, are revealed to have gained more than twice that amount. Those in the 80-90th percentile (also represented as losers in the elephant graph) gained four times more. And the richest 1% got one hundred times more.

As for the top incomes… well, they have grown by what can only be described as an obscene amount, with millionaires doubling or tripling their annual incomes, gaining some 14,000 times more than the average person in the poorest 60% of the world’s population.

All of this makes it clear who the real beneficiaries of globalization have been. And suddenly it seems a bit absurd to be touting as “progress” the pennies that have trickled down to the poorest when the overwhelming majority of new income since 1980 has been captured at the top.

 

This essay originally appeared on Jason Hickel’s blog.

Photo credit: Tuca Vieira.  The Paraisópolis favela borders the affluent district of Morumbi in São Paulo, Brazil

Share this:

  • Email
  • Facebook
  • Twitter
  • LinkedIn

Related

Saving Japan’s Seed Heritage from “Free Trade”
Growthism: its ecological, economic and ethical limits

Filed Under: Economic Growth and Degrowth, Free Trade and Globalization, Inequality Tagged With: economic growth, economics, globalization, livelihoods

Author: Jason Hickel

Jason Hickel is an anthropologist at the London School of Economics. He specializes in globalization, finance, democracy, violence, and ritual, and is the author of "Democracy as Death: The Moral Order of Anti-Liberal Politics in South Africa".

Comments

  1. Susmita Barua says

    March 16, 2019 at 2:42 pm

    This is why we as global citizens must understand the tyranny and exploitation perpetuated by debt-based currency, which can only be lend into circulation and not spend into circulation, principal is always less than interest compounded and owed, creating perpetual scarcity. Only 3% of total money in circulation is going in real economy and trade and rest 97% invested in speculation.
    https://www.tikkun.org/a-buddhist-and-interfaith-response-to-debt-capitalism

    Reply

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

I accept the Privacy Policy

Subscribe to the Economics of Happiness Blog

Sign up for our email updates

Latest Blogs

  • Why we must abolish the Energy Charter Treaty

    January 27, 20231 Comment
  • Humility and the myth of limitlessness

    January 12, 20231 Comment
  • Hin Lad Nai: A Successful Model of Indigenous Resistance

    January 4, 20234 Comments
  • Ecological Economics

    December 21, 20221 Comment
  • Chak Chok: a campaign against junk food

    December 14, 20222 Comments
  • Low-tech solutions

    November 30, 20223 Comments

Blog posts by Category

  • Capitalism (10)
  • Cities (4)
  • Climate Change (60)
  • Community (34)
  • Consumerism (6)
  • Coronavirus (19)
  • Corporate power (3)
  • Democracy (4)
  • Development (24)
  • Economic Growth and Degrowth (35)
  • Economics (1)
  • Economics of Happiness Conferences (4)
  • Education (9)
  • Energy (6)
  • Environment (47)
  • Food and Farming (80)
  • Free Trade and Globalization (47)
  • Happiness (6)
  • Health (30)
  • Indigenous worldview (19)
  • Inequality (8)
  • Inner transformation (17)
  • Livelihoods and jobs (39)
  • Local energy (9)
  • Local finance (6)
  • Local food (21)
  • Localization (57)
  • Nature (6)
  • New economy (20)
  • Resistance and Renewal (20)
  • Technology (42)
  • The Economics of Happiness (17)
  • Transportation (2)
  • Uncategorized (4)
  • War (2)

Local Futures logo

About us
Contact
Blog
Store
Annual report
Privacy policy

Sign up to our newsletter

Donate

Local Futures © Copyright 2023 | site by digiflip
 

Loading Comments...