The Atlas of Global Inequalities. Ben Crow
less so in the developing world. This uneven pattern of industrialization is the main reason why income inequality between countries rose from about 3:1 in 1800 to 72:1 in 1992. Capitalism also generates inequalities within countries, giving some great wealth, others meager wages, and still others unemployment. Although some parts of Europe have less income inequality than the USA or Brazil, the extent to which capitalism is compatible with economic equality is debatable. Capitalism operates through the accumulation of wealth in the hands of a few – a process that is speeded by low wages and unemployment. Currently, 2 percent of the world’s population owns half the world’s wealth. Huge armies of the poor face insecurity and low returns in the informal sector in Asia, Africa and Latin America. The processes of accumulation and exploitation interact with many other causes of inequality, including exclusions such as racism, to create diverse patterns of wealth, consumption, work, and unemployment. In turn, these inequalities constrain many individual freedoms and capabilities. The rich, to give an obvious example, have command over magnificent homes, art, culture, beauty, and much else besides, while most of the poor cannot keep their food cold. Economic inequality can be reduced through labor migration, although barriers to mobility are especially high for poor people, and people with low skills, despite the demand for their labor in many rich countries. Sadly, forces of exclusion, such as racism and nationalism, stand in the way of the equalizing potential of migration. All rich countries have erected barriers against people crossing borders to seek work.
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R Most debates about global inequality focus on income inequality. National incomes can be measured using Gross Domestic Product – the total of goods and services produced in that economy – or Gross National Income (GNI), which includes income earned outside the country. These are measures of output or the value of production, not wages, but when divided by the number of people in the country they roughly equate to the average individual’s ability to buy goods, to their standard of living. Combining this with data on income distribution within a country creates a powerful picture of economic inequalities. Income inequality between countries grew in the last 200 years as some countries industrialized. Industry produces cheaper goods and pays better wages than farming. Until the beginning of the 19th century, income (GDP
Income
The Gini index measures the degree to which the distribution of wealth within a country is different from a perfectly equal distribution. The higher the index, the greater the inequality.
The most populous countries in the world, China and India, have huge populations of extremely poor people. Even the income of the richest decile in these poorer countries is dwarfed by the income of more than half of people in the USA.
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per capita) differences between countries were relatively small, but the industrializing countries pulled ahead of societies that depended primarily on agriculture, and a large income gap opened up. Income inequality within a country can be measured by the Gini coefficient. South America is notable for its high level of inequality, while the countries of Scandinavia and Eastern Europe, albeit with very different economic histories, have the most equal income distribution. The industrialization of China and India is beginning to raise average incomes in those countries, although inequalities within both countries are growing. Many economies in Africa and Asia are building industrial capabilities only slowly, however, and the gap between average incomes in those countries and the industrialized west continues to rise.
Income inequality both between and within countries has risen dramatically, as the process of industrialization over the past 300 years has benefited some but not others.
22–23 Work & Unemployment; 68–69 Life Expectancy R
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R Household wealth – the total value of physical and financial assets, including dwellings, livestock and land, less any debt – is highly concentrated. In 2000, around 10 percent of the world’s population possessed over 85 percent of world wealth. Research on economic inequality predominantly focuses on disparities of income or consumption, yet the distribution of household wealth is even more unequal than that of income. Wealth is accumulated over time, so income differences tend to be amplified. An assessment of household wealth provides different insights from those gained from measurements of income. Wealth enables poor households, for example, to survive unexpected events such as a natural disaster or prolonged illness, which might adversely affect their ability
Household Wealth
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to provide for family members. While some assets, like livestock, may be vulnerable in a natural disaster, others, like land, may enable households to generate money for their survival. Most households in the world own very little. A household with more than $2,100 is in the top half of the global distribution. China dominates the fourth to eighth deciles in the global wealth distribution because the ownership of land, housing and other goods is more equal, partly as a result of socialist land reforms, than in other areas such as South Asia. Improvements in the quality and collection of wealth-related data is badly needed for further studies, especially in those countries in Africa, Asia, and South America where household balance sheets were not available for the 2000 survey.
Household wealth is unevenly distributed across the world. A huge proportion is concentrated in the hands of a very few.
The bar chart below displays the distribution of wealth across the world. Each group of bars represents a tenth (a decile) of the world’s adult population (370 million), from the poorest decile on the left, to the wealthiest decile on the right. The colors indicate in which regions of the world people in different wealth deciles live. Latin America has a fairly equal number of adults in each wealth decile, indicating that wealth is quite evenly distributed. The bars for Africa vary more in height, indicating unequally distributed wealth, with the majority of people in the poorest deciles. The bars for North America also range widely in height, but the majority of people are in the richest deciles. The single bar on the right, represents the wealthiest 370 million adults in the world, and is divided up to indicate which countries they inhabit.
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R Inequalities in global spending are stark. The richest fifth of the world’s population are responsible for 77 percent of all spending by households on goods and services, and the poorest fifth a miniscule 1.5 percent – a distribution that has barely changed since the mid-1990s. For a household to have an adequate standard of living, it needs to spend money on food, clothing, housing, medical care, and education. However, many poor households are forced to spend a large share – an average of over 50 percent in many low-income countries – of their income on food alone. By contrast, in high-income, industrialized countries, expenditure on food might represent only 10 percent of household income, although the actual amount spent may be more than 10 times