Global inequality has become as prominent as it was at the beginning of the 20th century, when Western imperialism reached its peak, after the superrich grabbed an increasing share of world income, a new scientific report has found.
The study by a group of economists, including Thomas Piketty and Emmanuel Saez, says that 30 years of the globalization of trade and finance have widened the gap between rich and poor.
Although the World Inequality Report says that inequality between countries has declined since the end of the Cold War, inequality in most countries has increased and become more pronounced as a result of the global pandemic of the past two years.
The wealth gap between rich and poor is even larger than the income gap, the report says, and last year’s asset price boom led to the sharpest increase in the wealth of billionaires in recorded history.
The study found that the top 10 percent of the world’s richest people now earn 52 percent of the world’s income, while the poorest half of the population makes 8 percent. The average person in the top 10% of the global income distribution earns $122,100 (£92,150) a year, while a person in the poorest half of the global income distribution earns $3,920 a year.
“Global inequality seems about as large today as it was at the peak of Western imperialism in the early 20th century,” the report said. “Indeed, the share of income that the poorest half of the world’s population now receives is about half what it was in 1820, before the huge disparity between Western countries and their colonies.”
The report, a work by more than 100 researchers from around the world, notes that income inequality varies between regions, with the greatest inequality in the Middle East and North Africa (MENA) and the lowest in Europe. In Europe, the income share of the top 10% is about 36%, while in MENA countries it is as high as 58%.
While some countries, including the United States, Russia, and India, have seen “spectacular increases” in inequality, other regions of the world, such as European countries and China, have reported relatively modest increases.
Gender income inequality remains high, despite a slight narrowing of the gap between men and women over the past 30 years. Women’s share of income was 30% in 1990 and has risen to nearly 35% by 2020. A report by the World Inequality Lab, run jointly by the Paris School of Economics and the University of Berkeley, California, says that progress in addressing gender inequality at the global level has been “very slow.
Between 1995 and 2001, the wealth of the world’s 50 richest people increased 9% a year, and that of the 500 richest people increased 7% a year. The average wealth grew by 3.2% over the same period. Since 1995, the top 1% has taken 38% of all additional wealth, while the bottom 50% have taken only 2%.
Lucas Chancell, lead author of the report, said: “The Covid crisis exacerbated inequality between the very rich and the rest of the population. Nevertheless, in rich countries, government intervention has prevented a massive increase in poverty, which cannot be said for poor countries.
“If there is any lesson to be learned from the global inquiry in this report, it is that inequality is always a political choice.”