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Pressure from trade negotiators and consumer protests has measurably improved working conditions in many places, and it is a natural progression as countries get richer and more integrated into the global community
Progress consists not in accepting every change as part of an indivisible package—as if we had to make a yes-or-no decision on whether the Industrial Revolution, or globalization, is a good thing or bad thing, exactly as each has unfolded in every detail. Progress consists of unbundling the features of a social process as much as we can to maximize the human benefits while minimizing the harms.
According to one estimate, every cell phone adds $3,000 to the annual GDP of a developing country.
Development experts differ on the wisdom of foreign aid. Some argue that it does more harm than good by enriching corrupt governments and competing with local commerce.53 Others cite recent numbers which suggest that intelligently allocated aid has in fact done tremendous good.54 But while they disagree on the effects of donated food and dollars, all agree that donated technology—medicines, electronics, crop varieties, and best practices in agriculture, business, and public health—has been an unalloyed boon.
In the richest country two centuries ago (the Netherlands), life expectancy was just forty, and in no country was it above forty-five. Today, life expectancy in the poorest country in the world (the Central African Republic) is fifty-four, and in no country is it below forty-five.56
The citizens of richer countries have greater respect for “emancipative” or liberal values such as women’s equality, free speech, gay rights, participatory democracy, and protection of the environment
economic development does seem to be a major mover of human welfare.
The new conventional wisdom is that the richest one percent have skimmed off all the economic growth of recent decades, and everyone else is treading water or slowly sinking.
Economic inequality has long been a signature issue of the left, and it rose in prominence after the Great Recession began in 2007.
But in that year the revolution devoured its children and propelled the candidacy of Donald Trump, who claimed that the United States had become “a third-world country” and blamed the declining fortunes of the working class not on Wall Street and the one percent but on immigration and foreign trade.
Economic inequality is usually measured by the Gini coefficient, a number that can vary between 0, when everyone has the same as everyone else, and 1, when one person has everything and everyone else has nothing.
In the United States, the Gini index for market income (before taxes and benefits) rose from .44 in 1984 to .51 in 2012.
Frankfurt argues that inequality itself is not morally objectionable; what is objectionable is poverty. If a person lives a long, healthy, pleasurable, and stimulating life, then how much money the Joneses earn, how big their house is, and how many cars they drive are morally irrelevant. Frankfurt writes, “From the point of view of morality, it is not important everyone should have the same. What is morally important is that each should have enough.”
when the rich get richer, the poor can get richer, too.
that richer people and people in richer countries are (on average) happier than poorer people and people in poorer countries.
Wealthy but unequal countries, such as Singapore and Hong Kong, are often socially healthier than poorer but more equal countries, such as those of ex-Communist Eastern Europe.
inequality hurt the aging generation that grew up under communism, but helped or made no difference to the younger generations.)
People are content with economic inequality as long as they feel that the country is meritocratic, and they get angry when they feel it isn’t.
Economic inequality, then, is not itself a dimension of human well-being, and it should not be confused with unfairness or with poverty.
The international and global Gini curves show that despite the anxiety about rising inequality within Western countries, inequality in the world is declining. That’s a circuitous way to state the progress, though: what’s significant about the decline in inequality is that it’s a decline in poverty.
The version of inequality that has generated the recent alarm is the inequality within developed countries like the United States and the United Kingdom.
Scheidel concludes, “All of us who prize greater economic equality would do well to remember that with the rarest of exceptions it was only ever brought forth in sorrow. Be careful what you wish for.”
Those who condemn modern capitalist societies for callousness toward the poor are probably unaware of how little the pre-capitalist societies of the past spent on poor relief.
social spending is designed to help people who have less money, with the bill footed by people who have more money. This is the principle known as redistribution, the welfare state, social democracy, or socialism (misleadingly, because free-market capitalism is compatible with any amount of social spending). Whether or not the social spending is designed to reduce inequality, that is one of its effects,
Social spending, like everything, has downsides. As with all insurance, it can create a “moral hazard” in which the insured slack off or take foolish risks, counting on the insurer to bail them out if they fail.
In reality social spending is never exactly like insurance but is a combination of insurance, investment, and charity. Its success thus depends on the degree to which the citizens of a country sense they are part of one community, and that fellow feeling can be strained when the beneficiaries are disproportionately immigrants or ethnic minorities.
percentile we see globalization’s “losers”: the lower middle classes of the rich world, who gained less than 10 percent. These are the focus of the new concern about inequality: the “hollowed-out middle class,” the Trump supporters, the people globalization left behind.
globalization helped the lower and middle classes of poor countries, and the upper class of rich countries, much more than it helped the lower middle class of rich countries—but
it’s true that the world’s poor have gotten richer in part at the expense of the American lower middle class, and if I were an American politician I would not publicly say that the tradeoff was worth it. But as citizens of the world considering humanity as a whole, we have to say that the tradeoff is worth it.
What’s relevant to well-being is how much people earn, not how high they rank.
Between 1979 and 2014, the percentage of poor Americans dropped from 24 to 20, the percentage in the lower middle class dropped from 24 to 17, and the percentage in the middle class shrank from 32 to 30. Where did they go? Many ended up in the upper middle class ($100,000–$350,000), which grew from 13 to 30 percent of the population, and in the upper class, which grew from 0.1 percent to 2 percent. The middle class is being hollowed out in part because so many Americans are becoming affluent. Inequality undoubtedly increased—the rich got richer faster than the poor and middle class got
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recent study using longitudinal data showed that half of Americans will find themselves among the top tenth of income earners for at least one year of their working lives, and that one in nine will find themselves in the top one percent (though most don’t stay there for long).
a majority of Americans believe that the standard of living of the middle class has declined in recent years but that their own standard of living has improved.48
In 2013 the Gini index for American market income (before taxes and transfers) was a high .53; for disposable income (after taxes and transfers) it was a moderate .38.49
Whether or not the generous European welfare state is sustainable over the long run and transplantable to the United States, some kind of welfare state may be found in all developed countries, and it reduces inequality even when it is hidden.
And in yet another unsung accomplishment, the poorest of the poor—the unsheltered homeless—fell in number between 2007 and 2015 by almost a third, despite the Great Recession.
When poverty is defined in terms of what people consume rather than what they earn, we find that the American poverty rate has declined by ninety percent since 1960, from 30 percent of the population to just 3 percent.
The first, globalization, may produce winners and losers in income, but in consumption it makes almost everyone a winner. Asian factories, container ships, and efficient retailing bring goods to the masses that were formerly luxuries for the rich.
The second force, technology, continually revolutionizes the meaning of income
A dollar today, no matter how heroically adjusted for inflation, buys far more betterment of life than a dollar yesterday. It buys things that didn’t exist, like refrigeration, electricity, toilets, vaccinations, telephones, contraception, and air travel,
Together, technology and globalization have transformed what it means to be a poor person, at least in developed countries. The old stereotype of poverty was an emaciated pauper in rags. Today, the poor are likely to be as overweight as their employers, and dressed in the same fleece, sneakers, and jeans.
The rich have gotten richer, but their lives haven’t gotten that much better.
When the Gini index is calculated over consumption rather than income, it has remained shallow or flat.59 Inequality in self-reported happiness in the American population has actually declined.60
To acknowledge that the lives of the lower and middle classes of developed countries have improved in recent decades is not to deny the formidable problems facing 21st-century economies. Though disposable income has increased, the pace of the increase is slow, and the resulting lack of consumer demand may be dragging down the economy as a whole.
Education, a major driver of economic mobility, is not keeping up with the demands of modern economies: tertiary education has soared in cost (defying the inexpensification of almost every other good), and in poor American neighborhoods, primary and secondary education are unconscionably substandard.
Many of the jobs that robots will take over are jobs that people don’t particularly enjoy, and the dividend in productivity, safety, and leisure could be a boon to humanity as long as it is widely shared.
Inequality is not the same as poverty, and it is not a fundamental dimension of human flourishing. In comparisons of well-being across countries, it pales in importance next to overall wealth. An increase in inequality is not necessarily bad: as societies escape from universal poverty, they are bound to become more unequal, and the uneven surge may be repeated when a society discovers new sources of wealth. Nor is a decrease in inequality always good: the most effective levelers of economic disparities are epidemics, massive wars, violent revolutions, and state collapse. For all that, the
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“the people in the Iron Age and even the late Stone Age had a much greater per-capita impact on the earth’s landscape than the average modern-day person.”6
As the economist Robert Frank has put it, there is an optimal amount of pollution in the environment, just as there is an optimal amount of dirt in your house. Cleaner is better, but not at the expense of everything else in life.
shortages repeatedly fail to come true, one has to conclude either that humanity has miraculously escaped from certain death again and again like a Hollywood action hero or that there is a flaw in the thinking that predicts apocalyptic resource shortages. The flaw has been pointed out many times.16 Humanity does not suck resources from the earth like a straw in a milkshake until a gurgle tells it that the container is empty. Instead, as the most easily extracted supply of a resource becomes scarcer, its price rises, encouraging people to conserve it, get at the less accessible deposits, or
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