Market-induced Global Inequalities

The World Inequality Report 2022 throws up both good and bad news. The bad news first—global income inequality remains high and is stuck close to the levels at the peak period of Western imperialism in the early 20th century. Trends indicate that the global share of income of the top 10% had surged from 50% in 1820 to 60% in 1910 and then marginally declined to 56% in 1980. After this, it once again picked up to 60% by 2000 and then again slipped marginally to 55% by 2020. In contrast, the share of income of the lowest 50% shrunk from 14% to 5% between 1820 and 1980 and then marginally improved to 7% by 2020. But now the pandemic will have further skewed the distribution.

Second, the wealth inequalities, for which data is available mainly for rich countries, are even more skewed. The share of the public wealth, defined as the sum of all financial and non-financial assets, held by government net of debt, has now dropped from above 50% in the 1970s to close to zero or is even negative. It will have only deteriorated further with the government debt bloating in the last two years. In contrast, the growth of private wealth in rich economies has zoomed from between 200% and 400% of their national income in the 1970s to above 600% by 2020. And more than a third of the private wealth accumulated since the mid-1990s has been grabbed by the top 1% of the population. However, the bottom half of the population secured just 2% of the gains. The recent stock market boom has certainly accelerated these trends.