The Unassuming Economist

From a new ProMarket article:

“[…] The reduction in global inequality was driven by high income growth in heretofore very poor countries like China, India, Vietnam, and Indonesia where almost everybody had seen their incomes increase at a fast clip—much faster than in the rich world. Thus a sort of “global middle class” has been created.”

“Figure 2 shows this phenomenon through the thickening of the distribution around the middle: There are simply more people in the world with incomes that are around the world median. These are indeed not the people that, in Western perception, would be considered a “middle class” since their incomes are much lower than typical Western middle class incomes, but from the global point of view they are indeed a (large) group sitting right in the middle of the global income distribution and, if the trends continue, likely to move upward. The slowdown of growth (and several years of negative growth) that affected the rich West in the wake of the global recession further helped the convergence of Asian incomes and reduced global income inequality.”

“Two things are remarkable in the current decline of global income inequality: For the first time in the past 200 years, inequality among world citizens has decreased; and this decrease has taken place while within-national inequalities almost everywhere have gone up. These two facts, translated in terms of winners and losers, mean that workers and the middle classes in emerging economies did well, and workers and the middle classes in the rich world did poorly.”