Global inequality

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nequality generally refers to a state or condition of being unequal and the term is frequently used to convey the difference in living standards between nations as well as within nations.

Poverty, at its core, is a manifestation of economic inequality. In this context, it is also useful to further consider terms such as “equity” or “inequity”.

For example, “equity” is often defined as the state, quality, or ideal of being just, impartial, and fair (global justice) while “equality” is mainly understood as the quality of being the same in quantity or measure or value or status.

Here, the distinction can be made between an ideal and a concrete result.

Inequality within nations as well as between nations has received considerable attention in recent years, especially since the 2008 global financial crisis. Very few would have predicted that a 700-page book on wealth and income inequality in Europe and the United States since the 18th century would go on to become an international bestseller.

I am of course referring to Capital in the Twenty-First Century—the 2013 book by the French economist Thomas Piketty.

Branko Milanovic, another well-known scholar on inequality, argues that the winners of globalisation in the period 1988-2008 were the so-called emerging middle classes in China, India, Thailand, Vietnam, Indonesia in addition to the very rich in Asia, Europe and the United States, i.e. the global top one percent or those that were already better-off.

Those that mainly lost out were the lower middle class in Europe and North America. Have things changed in recent years and will inequality disappear as globalisation continues? It does not appear so. Indeed, Milanovic argues that the gains from globalisation will not be evenly distributed.

The global economy, according to a recent report from the International Monetary Fund, is expected to contract 4.4 percent in 2020. This is bad news for the world’s poor, whose numbers are expected to sharply increase.

Moreover, a recent World Bank report has warned that more than 80 percent of those who will fall into the extreme poverty category live in middle-income countries. And many of the so-called “new poor” will be those living in urban areas, including those that are relatively well-educated.

But Covid-19 has also made the world’s richest even richer. According to data compiled by UBS— the Swiss multinational investment bank and financial services company—the world’s billionaires have grown wealthier in 2020 compared with 2019.

And this is not just in the United States or Europe but also in Brazil and China. While income inequality was rising in many parts of the world before Covid-19, the pandemic will most likely further deepen inequalities of various kinds.