In February 2017, the US National Bureau of Economic Research (NBER) shared new insights on global inequality as part of its working paper series. These new findings present fresh observations on global inequality dynamics from the World Wealth and Income Database (WID.world), with particular emphasis on the contrast between trends observed in the United States, China, France, and the United Kingdom.
Economic inequality has become a hot topic for the global community in recent years. For example, in 2011, economic inequality provided the foundation of the “The Occupy” movement, with its “We are the 99%” motto. Further, in 2014, Capital in the Twenty-First Century, by French economist Thomas Piketty, became a New York Times #1 bestseller for hardcover nonfiction. The book covers the history and causes of economic inequality in the United States and Europe, and turned economic and social inequality into one of the most discussed issues in the academic community. In 2015, the United Nations specified that narrowing the gap between rich and poor was one of the 17 Sustainable Development Goals of the 2030 Agenda. The recent NBER paper presents new findings about global inequality dynamics from the World Wealth and Income Database (WID.world), which aims to measure income and wealth inequality in a consistent manner over time and across countries.
One of the most interesting findings of the new report is that generally, the share of top income and wealth has increased in nearly all countries in recent decades, while the distribution of primary assets is far from equal, even in developed countries. In particular, the report shows a complete collapse of the percentage of income for the bottom 50% of the US population between 1978 and 2015, i.e., from 20% to 12% of total income. During the same period, the total income share of the top 1% rose from 11% to 20%. Similar trends can be observed in China and Europe, though the share of total income of the bottom 50% of these respective populations remains higher than the share of the top 1%. More data on global inequality, as well as the employed methodology, can be found on the WID.world official website.
Generally, the NBER paper shows that despite all the efforts of the global community, a sense of equality is systematically deteriorating; the rich get richer and the poor get poorer, making global sustainability unattainable in both the short and the long run. The majority of top economists agree that neoliberalism is dead. Further, the neoliberal approach has proven to be inefficient and may no longer be the correct way forward for the world. It is therefore clear that the academic community should focus its efforts on developing a new, more solidarity-based model to replace neoliberalism and offer a surer path to sustainable development worldwide.
As a think tank that provides a discussion platform for experts from around the globe, the DOC Research Institute contributes to this topic with its research cluster “The Economics of Post-Modernity: When Conventional Models Fail“. Possible foundations for new economic models and the issue of global inequality will be further discussed during the 15th Rhodes Forum, which will be held October 6 and 7 2017, in Rhodes, Greece.