Global Issues. Kristen A. Hite

Chapter 2 Wealth and Poverty¹

      The mere fact that opposing visions of economic development have grown to shape the international agenda is in one sense merely an indication that development concerns are receiving attention on a global scale for the first time in history.

      Lynn Miller, Global Order (1985)

      For most of history, human beings have lacked material wealth. A few individuals in many societies had a higher standard of living than their fellow humans, but the vast majority of people on Earth have shared a common condition focused on meeting their daily needs. The Industrial Revolution brought a fundamental change. Through a fundamentally faster rate of production and consumption, new wealth was created in the industrializing nations in Europe and eventually larger numbers of people prospered. And the differences between the rich and the poor countries and people amplified. A few industrialized countries achieved higher living standards and pulled away from the rest of the world.

Before the Industrial Revolution, the difference between the per capita incomes of the richest and poorest countries was 3 to 1 in 1820.¹ In the twentieth century, the disparity between the richest and poorest countries intensified: the gap grew to 11 to 1 1913; it reached 35 to 1 in 1950, 44 to 1 in 1973, then 72 to 1 in 1992.

The trend continued into the twenty‐first century. In 2009, the richest countries had a 76 to 1 margin of wealth advantage in terms of gross domestic product (GDP).² In 2017, the difference raised to over 90 times the wealth of low income countries.³

Another way to show this trend is through differences in real (i.e. controlling for inflation) per capita incomes. From 1970 to 1995, the richest one‐third of countries increased real per capita incomes nearly 2 percent annually. The middle third of countries increased only about 0.5 percent annually. The poorest third had no increase in incomes.⁴ After that period, a more positive trend emerged for the poorer countries. Gross national incomes (GNI) more than doubled in low and middle income countries from 1998 to 2008 – a significant increase from the previous decade – and increased again by approximately 30 percent from 2009 to 2015.⁵

Despite notable periods of income growth for low to middle income countries, the gaps between rich and poor within countries also continued to increase. A 2018 study of the United States economy following 2008–2009 economic crisis found that “the U.S. experienced a widely‐shared recession followed by a deeply fractured recovery.”⁶ The study states, “it took under five years for prosperous communities to replace lost jobs while distressed ones are unlikely to ever recover on current trend lines.”⁷ One more way to demonstrate that the gap between the richest and poorest is increasing is the following: in 1960, the richest 20 percent of the world’s population had 30 times more income than the lowest 20 percent of the world’s people. By 2009, the richest 20 percent had now more than 75 times the income of the poorest.⁸ And less than a decade later – in 2016 – the richest 62 people on the planet people claimed as much wealth as half of the world’s population.⁹

Not only is the gap between the richer and poorer nations growing, but the gap between the rich and the poor within countries is also growing. For example, a 2015 United Nations International Labor Organization report found the gap between the rich and poor had increased markedly in Spain and the United States.¹⁰ According to one 2017 study, in 2016 the top 1 percent wealthiest people in the United States accounted for 40 percent of the national wealth, higher than at any time since 1962.¹¹ While these figures are notable, this trend of concentrating wealth in the hands of the wealthy is not uncommon: in 2017, just over 2000 of China’s wealthiest people claimed a total wealth of $2.6 trillion, roughly equivalent to the GPD of the United