WHY STUDY THE GLOBAL DISTRIBUTION OF INCOME?
Interest in global inequality reaches far beyond academia and has increased dramatically in recent years—among activists and NGOs, the news media, and national and international institutions and policymakers.
This is in part due to the perception that the benefits of rapid economic growth in recent decades, which has coincided with a period of rapid globalization, have been distributed highly unequally. Thus, the worldwide “Occupy” movement launched in 2011, with its slogan “We are the 99%,” has focused on the sharply increasing concentration of income and wealth among the top 1% of income recipients compared to the other 99%. In the news media, The Economist has described growing inequality as “one of the biggest social, economic and political challenges of our time” (Beddoes, 2012). At the 2012 World Economic Forum meeting at Davos, “severe income disparity” was featured as the single most likely global risk, and with one of the highest potential impacts.[653] Again at Davos in 2013, Christine Lagarde, managing director of the International Monetary Fund, stated that “[e]xcessive inequality is corrosive to growth; it is corrosive to society. I believe that the economics profession and the policy community have downplayed inequality for too long” (Lagarde, 2013).There is indeed a positive case for being concerned about the consequences of inequality for economic growth and social cohesion; crime rates and population health, for instance, have been linked to income inequality within countries.[654] To the extent that such (within-) country inequality contributes to global inequality, there will be a corresponding concern about the latter. One might equally be concerned about the “corrosive” effects of global inequality itself.Davos, where Lagarde made her comments, is a meeting place of the global elite (i.e., those at the top of the global income distribution, and not just their respective national distributions).
The normative case for studying global inequality seems obvious to some, but it is contested by philosophers who believe that the distribution of income among individuals can be a matter of justice only if they share a government. Nevertheless, even these philosophers typically agree that “there is some minimal concern we owe to fellow human beings threatened with starvation or severe malnutrition and early death from easily preventable disease,” and that therefore “the urgent current issue is what can be done in the world economy to reduce extreme global poverty” (Nagel, 2005, p. 118). In itself this warrants study of at least the lower end of the global distribution of income.
An alternative understanding of justice may lead to a normative concern about global inequality. Some cosmopolitan political theorists argue that egalitarian principles apply equally at the global as at the national level simply because all human beings are entitled to equal respect and concern.[655] On this view, national borders are not relevant to an ethical concern with inequality.
It can also be argued that the institutional arrangements that exist in the global economy—the international rules and organizations that govern the flows of goods, capital, and labor between countries—are sufficient to generate a normative concern for inequality among individuals in the world, even if they fall short of a global government. These international arrangements are largely determined by rich countries and tend to benefit citizens in rich countries at the expense of citizens in poor countries. Rich countries may therefore bear some responsibility for global inequality. Sen (2009, p. 409) puts the issue as follows: “The distribution of the benefits of global relations depends not only on domestic policies, but also on a variety of international social arrangements, including trade agreements, patent laws, global health initiatives, international educational provisions, facilities for technological dissemination, ecological and environmental restraint, treatment of accumulated debts (often incurred by irresponsible military rulers of the past), and the restraining of conflicts and local wars.”
In studying the global distribution of income, we need to distinguish between the recognition of inequality and the obligation and capacity to reduce it.
Through its domestic policies, a sovereign state can have more influence on national inequality than on global inequality. This might suggest that, from a policy viewpoint, we should assess within- country inequality differently from between-country inequality (see Section 11.6)— especially if international institutions have limited powers to address between-country inequality. In any case, as we improve our understanding of global inequality, we will be in a better position to diagnose its causes and discuss ways of mitigating it.In this chapter we take the global distribution of income to be of intrinsic interest. We will analyze various aspects of this distribution, including its within- and between- country components, and also its lower end, which is needed to identify global poverty. Constructing the global distribution of income can be the first step in a broad exercise, which should ultimately permit us to examine many different aspects of global inequality—such as the extent to which gender, ethnicity, education and other socioeconomic variables contribute to global inequality, the characteristics of the global poor, and the composition of the global top 1%.
11.3.