Today’s highly partisan and often negative news cycle ignores one important and uplifting story: the precipitous decline in global inequality. It is a topic that deserves our attention because it reveals the power of markets, trade and human ingenuity to uplift societies.
For decades, critics of globalization have complained about the divide that trade and growing economic interdependence between countries would seemingly create between rich and poor. However, in recent decades we have witnessed a marked reduction in global inequality, which completely contradicts the old predictions of the doomsayers. Emerging economies – many of which were once considered backwaters destined to wither away – have made giant leaps forward in joining the global economy. Millions of people have been lifted out of abject poverty and wealth gaps have narrowed.
Think of India and even communist-led China. Despite some recent problems mainly due to renewed authoritarianism, these economies have shifted in recent decades from isolated and stagnant to relatively open and dynamic participants in global trade. By embracing markets and cutting red tape, they have catalyzed an economic renaissance. World Bank data underline this transformation, highlighting that more than 800 million people in China have been lifted out of poverty since 1980. In India, that number has risen to 415 million since 2005.
Focusing solely on income trends can sometimes blur stories of resilience and progress. Cato Institute scientist Chelsea Follett and George Mason University economist Vincent Geloso developed the Inequality of Human Progress Index (HPI) to better highlight examples of how people are flourishing. The index measures relative differences in international inequality across a wider range of dimensions than those that focus on simple material well-being.
These dimensions include longevity, infant mortality, adequate nutrition, environmental quality, access to opportunity (measured by education), access to information (measured by Internet access), and political freedom. These are all critically important standards of living that may not fully reflect measures of monetary income. Finally, the index gives more weight to things that are more difficult to achieve – such as the achievement of increasing life expectancy from 70 to 80 compared to the first step of increasing life expectancy from 20 to 30.
By measuring the extent to which people share in these improvements in prosperity, Geloso and Follett’s new index captures in much broader terms what most of us have in mind when we talk about human progress.
What does the index find? First, significant progress has indeed been made in improving overall well-being. These improvements appear greater than those reported by other measures, such as the United Nations Human Development Index, in part because of the other components of human progress measured. This difference shows how a simple index, no matter how useful or how often it is cited by other experts, can fail to capture many elements of human well-being.
As Follett and Geloso report:
The HPI including internet access suggests that inequality initially increased in the early 1990s and then began to decline rapidly. Inequality appears to be increasing as initially only some countries saw an increase in internet access. However, as internet access spread to other countries, inequality began to decline rapidly. In 2018, inequality was between 35.3 and 49.4 percent lower than in 1990.
In other words, this progress has been widely shared, to the great benefit of those at the bottom of the distribution.
Looking at each indicator separately, the authors find a dramatic reduction in inequality in all but two indicators: infant mortality and access to clean air. They suggest that the increase in mortality from pollution could be the result of the ‘Environmental Kuznets Curve’. This curve shows that pollution initially increases as economic growth increases. This happens until a critical point is reached, at which point the pollution begins to decrease. As Follett and Geloso note, “the increase could reflect that some countries are undergoing a transition.” As for the increase in inequality in infant mortality, this result could be a sign that infant mortality has fallen, but not as rapidly in low-income countries as in high-income countries since 1990.
Challenges remain, of course, but the significant reduction in global inequality cannot be ignored. These improvements are not just statistics; each testifies to real stories of human improvement and potential and underlines the immense possibilities that arise when individuals are empowered by freedom, barriers are minimized and nations work together. As we navigate the complexities of the 21st century, this story of triumph should serve as both a beacon and a guide.
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