Friday, April 27, 2018

Colin Gordon - A Dismal Report Card on Global Inequality

The global maldistribution of wealth and income is now so stark, we have taken to comparing the incomes or fortunes of just a few individuals to vast swaths of the world’s population. Behind those jaw-dropping ratios, there is a more complex story that plays out across time and across regions.

The World Inequality Report 2018 painstakingly documents the dimensions of income and wealth inequality, around the globe, within and across countries. Boiled down to one sentence, the conclusions of the 2018 Report echo those of Branko Milanovic and others: Wealth and income inequality are widening within countries, even as global development slowly narrows the gap betweencountries. These patterns are evident in the summary of regional trends below. The share of income going to the top 10 percent has increased moderately in Europe; it starts high and stays high in Africa, Latin America, and the Middle East; it has taken off—for different reasons—in the United States, Russia, and Asia.

This work reflects the efforts of scores of researchers, following the lead of Thomas Piketty and colleagues, in assembling long runs of comparable wealth and income data, for much of the world, and for much of the last century. That data has been maintained since 2011 in the World Inequality Database; the annual report, released late last year, offers us a snapshot of telling trends and patterns. With this, and future annual reports, the researchers hope to “fill a democratic gap and to equip various actors of society with the necessary facts to engage in informed public debates on inequality.”

Their innovative data collection (across time and across settings) relies heavily on fiscal data (that is, from tax returns)—a source that both provides much longer and complete long runs of data (since 1913 in the United States) than the Census or other survey sources, and which captures the concentration of wealth and income at the very top of the distribution in ways the survey data cannot.

The research team is determined to turn more of the conversation to wealth inequality. Not only is wealth inequality much steeper than income inequality in almost all settings (the highest-earning 1 percent in the United States take home 20.2 percent of national income; the richest 1 percent claim 41.8 percent of all wealth), but—in a world where capital income is displacing labor income—it is increasingly the root cause of income inequality as well… read more: