Economic Growth

Bill Gates: Global inequality is falling faster than ever

Bill Gates, Microsoft Chairman and Co-Chair and Trustee of the Bill & Melinda Gates Foundation, takes part in a panel discussion titled "Investing in African Prosperity" at the Milken Institute Global Conference in Beverly Hills, California May 1, 2013. REUTERS/Gus Ruelas

Image: REUTERS/Gus Ruelas

Paul Muggeridge
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Inclusive Growth Framework

Inequality is rising inexorably around the world. Right? Well that depends how you measure it. Although inequality within countries is indeed on the increase, overall global inequality is actually being tackled at a speed unseen before in human history.

That was the message from Bill Gates during a conversation with Reuters Editor-in-Chief Steve Adler.

“The speed of reduction in global inequality is faster than ever in history. It’s mind-blowing,” he explained. “It’s probably confusing to people that while inequality within countries is going up - and that’s true of virtually all countries - global inequality is going down dramatically.”

 The speed of reduction in global inequality is faster than ever in history. It's mind-blowing.

What exactly does Bill Gates mean?

Let’s start with inequality within countries. A common way of measuring this is to look at the share of income earned by the top 1% of a country’s population. That’s exactly what the following chart does, across seven of the world’s most developed countries:

 Share of income earned by top 1%, 1975-2014
Image: VoxEU

All countries have seen an increase – a dramatic one in some cases. This is a pattern repeated in other countries across the globe. A Morgan Stanley report last year highlighted the extent of inequality in more of the world’s developed economies, as highlighted in the following chart:

 Inequality in the developed world
Image: Morgan Stanley

Southern European nations and the US all scored poorly, as well as perhaps surprisingly, Germany.

Now let’s move on to the global picture, and look at the share of global wealth held by the richest 1% - a slightly different measure than the earlier chart, which looked at income inequality. A January 2016 Oxfam report revealed that the richest 1% held over 50% of global wealth – a situation that has become steadily worse over the last five years:

 Share of global wealth 2010-2015
Image: Oxfam

But Bill Gates’ point – which he has made before – is that while incomes at the top of the scale may be rising, overall global inequality is being reduced by the reduction of poverty.

While he is specifically referring to the last 20 years or so, the wider point can be illustrated by taking a longer view. This graphic from Our World in Data shows the progress made in improving the distribution of world income over the last 200 years.

While the rich may be richer – the green line on the right is higher than the red and blue lines – the average level of income has also increased significantly between 1820 and 2000, and indeed between 1970 and 2000.

 The World Income Distribution in 1820, 1970 and 2000
Image: Our World in Data
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