malcolm fairbrother lecturer in global policy and politics school of geographical sciences

The Ambiguous Crisis ofGlobal Economic Inequality:

Contradictory National and International Trends?

WUN Horizons in Human Geography Seminar SeriesNovember 11, 2008

Malcolm FairbrotherLecturer in Global Policy and Politics

School of Geographical SciencesUniversity of Bristol

Inequality: A Classic Concernin the Social Sciences

• Marxism• sociology• economics• geography?

Inequality:The Left-Leaning Social Science View• pessimistic about reality, optimistic about

theory the rich get richer, the poor get poorer

• even worse: globalisation and neoliberalism a growing/impending crisis of global inequality??

Growing Inequality:Conservative Responses

1. don’t talk about it2. deny it’s a problem (esp. if poverty declining)3. deny it’s occurring4. attribute inequality to laziness/inferiority of the

poor5. deny the possibility of controlling it6. deny the advisability of controlling it7. deny that conservative/neoliberal policies are

causing it

Two Types of Types of Inequality

• First types: desirable things that can be distributed unevenly health, longevity, education, mobility, political

rights, status, wealth, income…

• Second types: axes of social difference ethnicity, gender, religion, citizenship status…

Global Income Inequality

• key decomposition (Firebaugh):• within nation inequality

one-third of global income inequality

• between nation inequality two-thirds of global income inequality

Source: NBER, based on tax data

Source: Nielson, Alderson, and Beckfield 2005 (from Luxembourg Income Study data)

Trends in Within-Nation Income Inequality, Mid-1990s to Mid-2000s

(Source: OECD 2008)large increase: Canada, Finland, Germany

small increase: Austria, Denmark, Japan, Norway, Sweden, USA

no change: Australia, Belgium, Czech Republic, France, Hungary, Italy, Luxembourg, New

Zealand, Portugal, Spain, Switzerland small decrease: Greece, Ireland, Netherlands, UK

large decrease: Mexico, Turkey

Trends in Within-Nation Income Inequality, Mid-1980s to Mid-2000s

(Source: OECD 2008)large increase: Finland, New Zealand

small increase: Canada, Germany, Italy, Japan, Norway, Portugal, Sweden, USA

no change: Austria, Belgium, Czech Republic, Denmark, France, Greece, Hungary, Ireland, Luxembourg,

Mexico, Netherlands, Spain, Turkey, UKsmall decrease: France, Ireland, Spain

large decrease: [none]

Trends in Between-Nation Inequality

• unweighted by population? growing (definitely)

many small, poor countries not growing

• weighted by population? shrinking (probably, a little)

heavily influenced by China and India worldwide rate of absolute poverty declining

Global Income Inequality

• between nations, weighted by population: declining (probably, a little)

• within nations: increasing (definitely, in many but not all)

• overall: hard to tell, but possibly decreasing

Causes of GrowingWithin-Nation Inequality

1. globalisation?2. skill-biased technological change?3. conservative/neoliberal/other policies?

Causes of (Probably) DecreasingBetween-Nation Inequality

• in other words, what’s causing growth in China and India (and some other Asian economies)? globalisation and/or neoliberalism?

Consequences of GrowingWithin-Nation Inequality?

1. more nationalism? (Solt 2008)2. more corruption? (You & Khagram 2005)3. lost biodiversity? (Mikkelson et al. 2007)4. worse health? (Wilkinson & Pickett 2006)5. less political engagement? (Solt 2008)6. less economic development? (Sokoloff &

Engerman; Acemoglu and Robinson; Easterly)

Consequences of Changing Between-Nation Inequality?

• ???• what if present trends continue?• do effects of global inequality parallel those

of within-nation inequality?• should we be concerned about weighted or

unweighted global inequality?• growing influence of international media?

Final Thoughts• inequality is worsening… in some ways

probably not a crisis… yet• inequality appears to have a number of

negative effects, but its full consequences are unclear

• its causes are also unclear (though we have some ideas)

• politics matters (even the OECD agrees)