How income inequality is changing

By Felix Salmon
September 10, 2010
Bill Easterly thinks that inequality is fractal:

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Bill Easterly thinks that inequality is fractal:

Income inequality behaves like a fractal: income is very uneven at large scales and at small scales…

We are going to go from global to the US to the New York City metro area to the neighborhood of NYU in Manhattan. At each scale, there is a remarkably high level of inequality across space.

The rich coastal cities in the US and the poor rural South. Rich lower and midtown Manhattan and poor South Bronx. Rich West Village and Soho and poor Lower East Side.

This is true, as far as it goes, but I think it misses the fact that the degrees of inequality at various different scales are changing in important ways. Over the past few decades, the gap between China and the US, to take one obvious example, has narrowed sharply — even as the degree of inequality within both China and the US has increased markedly.

The trend, then, I think, is for inequality to increasingly ignore national borders. You can get rich clusters across borders, as in say the area between Porto Alegre, Montevideo, and Buenos Aires, or any number of megaregions in Europe. At the same time, the gaps between the richest and the poorest areas of most countries are only growing larger.

Easterly’s map of the world, where every country is a uniform color, conceals more than it reveals. Once upon a time, national borders were useful boundaries to use when measuring per-capita income across the planet. And given that statistical agencies are still national, that’s not going to change any time soon. But those numbers are going to be less and less informative as pockets of wealth spring up in poor countries, and pockets of poverty persist in middle-income nations.

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5 comments so far

I wonder how much of this (at least within America) is a function of people moving to areas to be with people similar to themselves. The Big Sort is a great book that discusses this phenomenon.

Posted by boobalah | Report as abusive

Tim Noah’s doing a great series on causes of inequality over at Slate 66026/

It’s been interesting so far.

Posted by drewbie | Report as abusive

The “Big Sort” may be part of it, but let’s get real – the tighter things get in the economy, the more greedy employers cheat on their taxes and cheat their employees. The greedy only get greedier.

Posted by sb0623 | Report as abusive

The problem with the greedy is that they take everything personally. So when the government asks them to pay their fair share of taxes, they believe that everyone is against them. They insulate themselves with others who are greedy. But it’s still an individualist centered attitude. There is no love of country, or doing things for the ‘greater’ good. It’s always about themselves. Sort of like Joseph Goebbels and his friends….

Posted by edgyinchina | Report as abusive

These are very good points. Korzeniewicz & Moran’s 2009 book, Unveiling Inequality, argues that “the key institutional arrangements underpinning low[er] inequality within high-income countries simultaneously were key to the persistence of high[er] inequality in inequality between nations” (xxiii). Those arrangements are eroding, and there’s a long way for high-income countries’ citizens to fall. Consider this quote from their book:

“The magnitude of global disparities can be illustrated by considering the life of dogs in the United States. According to a recent estimate . . . in 2007-2008 the average yearly expenses associated with owning a dog were $1425 . . . For sake of argument, let us pretend that these dogs in the US constitute their own nation, Dogland, with their average maintenance costs representing the average income of this nation of dogs.”

“By such a standard, their income would place Dogland squarely as a middle-income nation, above countries such as Paraguay and Egypt. In fact, the income of Dogland would place its canine inhabitants above more than 40 percent of the world population. . . . And if we were to focus exclusively on health care expenditures, the gap becomes monumental: the average yearly expenditures in Dogland would be higher than health care expenditures in countries that account for over 80% of the world population.” (xv)

Posted by FrankPasquale | Report as abusive
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