Global Inequality A lecture by Dr Christopher Kollmeyer

Lecture Outline Lecture Addresses Three Questions: What’s the extent of global inequality today? (answer: massive) What’s the trend in global inequality? Within countries (answer: becoming more unequal) Between countries (answer: debatable) What are the dominant explanations? Modernization (neoliberal) theory Dependency (world-systems) theory Question 3: Modernization and neoliberal Theories Emphasize the short-comngs of poor countries Inefficiency Disincentives toward investment and growth Corruption 2. World-System and Dependency Theories Emphasize interconnections with global economy and the use of political power by rich countries Legacy of colonialism and inherent inequalities in capitalism North and South Elites vs. South Workers Lack of Democracy

The Champagne Glass of Inequality: Share of Global Income by Quintiles Bottom 60 percentile have less than 6% of the world’s income.

World’s Top-Ten Billionaires, 2007 Note: Scotland’s GDP equals about £80 billion per year.

Global Poverty The World Bank estimates that 1.3 billion people live on less than 50p per day ($1)

Living standard of the global poor

Life Expectancy and Income

Between-Country Inequality: The Global Distribution of Income and Population 78 16 6 60 25 15 3 Categories of Countries High Income: USA, EU, Japan Middle Income: Argentina, Brazil, Turkey, Russia Low Income: Sub-saharan Africa, SouthEast Asia, Afghanistan, Pakistan N = number of countries Blue = Population Red = Wealth No inequality = blue and red same size

Geography of Global Inequality Key Dark Blue = Wealthy Countries Light Blue = Middle Income Countries Pink and Red = Poor Countries Show the rich Areas Show the Poor Areas Wealthiest: Western European countries, British Off-Shoots, and Japan Poorest: Sub-Saharan African and South Asian countries

The North-South Divide This picture of the Earth at night shows the wealthy Global North, illuminating its communities at night, and the much poorer Global South, which can’t afford to do so.

Within-Country Inequality: Income share of richest 20th percentile to poorest 20th percentile.

What are the recent trends in global income inequality? Question 2: What are the recent trends in global income inequality? Within countries: Becoming more unequal in most countries Between countries: Becoming more unequal, except for China and other countries in East Asia, which are catch up with the West. Within Countries: Going Up (but varies)

Example of Within-Country Income Inequality: The United States, 1913-2002 Source:Thomas Piketty and Emmuanuel Saez. 2003. “Income Inequality in the United States, 1913 2002.” Quarterly Journal of Economics.

Inequality rising in most Anglo-Celtic countries, but remaining steady in most Continental European countries Emmanuel Saez. 2004. Income and Wealth Concentration in a Historical and International Perspective. National Bureau of Economic Research, USA.

Changes in Between-Country Income Inequality, 1950-2000 Begin of decline Begin of China’s economic rise Source: Sutcliffe, B. 2004 “World Inequality and Globalization.” Oxford Review of Economic Policy, Vol 20, No. 1

Absolute vs Relative Inequality A Hypothetical Example 1970 2000 Country A £1,000 £2,000 Country B £15,000 £30,000 Absolute Income Gap £14,000 £28,000 Relative Inequality 15:1 15:1

Global Poverty Declines: World population living off less than US$1 per day by region. 1981-2004 S-S Africa South Asia East Asia Source: World Bank 2007 Note: Measured in constant 1993 US$ adjusted for PPP. Equals approx: 73p in today’s GBP