On Income Inequality

"Barack Obama once referred to income inequality as 'the defining challenge of our time.' And, to be fair to the former U.S. President, income inequality within countries has been increasing in recent decades."

These are the opening sentences of an article on HumanProgress.org with the title Global Income Inequality Is Declining. The article paints a rather positive picture about the effects of opening up the markets for international trade, globalization in other words, on global income inequality. The article is largely based on a book by Branko Milanovic from City University of New York, and continues:

As can be seen, the decline in global income inequality started in the 1980s and is coterminous with a period of greater economic freedom and interconnectedness known as "globalization."

And the article concludes:

As such, Milanovic concludes, "We are witnessing the first decline in global inequality between world citizens since the Industrial Revolution."

This is misleading at best. More fake news to reassure us that we're really on the right track towards a better world. Even the name of the project, "HumanProgress," is meant to indicate we're talking good news here. When we look at their "About" page much becomes clear as we can see a definite agenda:

Evidence from individual scholars, academic institutions, and international organizations shows dramatic improvements in human well-being throughout much of the world. In recent decades, these improvements have been especially striking in developing countries. Unfortunately, there is often a wide gap between the reality of human experience, which is characterized by incremental improvements, and public perception, which tends to be quite negative about the current state of the world and skeptical about humanity’s future prospects.

So their mission is to rectify the public perception about globalization; we are all being too negative about it and we don't see the truth of the progress it really brings. Yeah right. Also on the same page we can see HumanProgress is a project of the Cato Institute, which is founded by the Koch family. Let's see, what's their raison d'être:

The Cato Institute is a public policy research organization - a think tank - dedicated to the principles of individual liberty, limited government, free markets, and peace.

These foundations, institutions, think-tanks and projects are there for one thing only: spread propaganda about the wholesome features of liberal free market principles. They will twist every story about the economy in favor of their preferred ideology. The true reading of the book by Milanovic is that income inequality between countries, with an average income per country, has declined, mainly because middle-class income in China and India has risen slightly.

What HumanProgress omits in their jubilant article, is that the same book shows that inequality within nations is rising, and that in the west this is due to heavy hits to the middle class. The middle class in relatively rich western countries have not benefited from globalization, nor has income inequality been positively affected by globalization. And even in poor countries the top 1% benefit exponentially more from the free international trade than the rest, so they'll eventually be in the same boat as us.

A much more realistic description of the effect of globalization and free markets on income inequality can be read in the Business Insider article There's a morsel of good news about inequality that's buried in all the scary headlines:

That is, inequality has been rising sharply in rich nations, with the middle-class taking a big hit, even as millions of poor residents in the developing world have edged their way into their own country's middle-income strata. [...] During the same period, the larger (and still far richer) middle class in the West has declined in size, and the prevailing mood among many of its members is one of anxiety and pessimism about their future prospects including those of their children. [...] between 1991 and 2010, "the size of the middle class, defined in these studies as those households with income between two-thirds and double each country's median household income, fell in the United States, Germany, Italy, Norway, Denmark and Spain (though not in the United Kingdom and France).
_{source: Business Insider - Aug. 5, 2017}

If that's not convincing enough, how about this article on Bruegel titled Global income inequality is declining - largely thanks to China and India which concludes:

Therefore, the bulk of decline in income inequality among 146 countries is the consequence of income convergence of China and India, but if we exclude the impacts of these two populous countries, global income inequality increased up to 2000 and the decline since then is relatively slow.

“A dangerous and growing inequality and lack of upward mobility... has jeopardized middle-class America’s basic bargain ? that if you work hard, you have a chance to get ahead,” Obama said. “I believe this is the defining challenge of our time: making sure our economy works for every working American.”

Obama had the right analysis, and subsequently chose to do nothing about it. Now there's a president that's all about "you're fired" and building useless walls and does nothing about it, instead is making it worse. And we're still being fed lies by their rulers. Here's the video that made me investigate this further:

Income inequality is rising. It is also falling. It all depends on your search parameters.
_{source: Business Insider - Aug. 5, 2017}

It is easy to let statistics say exactly what you want them to say. Remember, there's lies, damned lies and statistics. And then these statistics can be presented in a way, so that they seem to say something completely different than what the numbers actually say. So don't believe the hype ;-)

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