Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The Rising Tide of Global Inequality an International Report Details the Increasing Concentration of Wealth and Income. Historian Colin Gordon Finds Reason for Hope: The Stark Figures Will Provoke Policy Changes

Newspaper article Pittsburgh Post-Gazette (Pittsburgh, PA)

The Rising Tide of Global Inequality an International Report Details the Increasing Concentration of Wealth and Income. Historian Colin Gordon Finds Reason for Hope: The Stark Figures Will Provoke Policy Changes

Article excerpt

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. (See the report at wir2018.wid.world.) Boiled down to one sentence, the conclusions of the 2018 Report are: Wealth and income inequality are widening within countries, even as global development slowly narrows the gap between countries.

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 around the world, following the lead of the French economist Thomas Piketty and colleagues, based at the Paris School of Economics.It assembles 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.

For the United States, that story is now a familiar one - captured by the iconic "suspension bridge" graph of top income shares across the last century. Beyond that, I think there are two findings on U.S. income equality worth underscoring - one historical, and one comparative.

The first graphic below captures trends in income distribution across two eras, 1946-79 and 1980-2014. In the early postwar era, income growth was broadly shared. The bottom 50 percent saw their real incomes grow at nearly twice the rate of the top 10 percent of earners, and income growth for the bottom 20 percent outstripped income growth for the top 0.0001 percent.

After 1980, the pattern changed sharply as the policies and institutions that sustained shared growth (union density, labor standards, progressive taxation, social policy) crumbled. …

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