
Income Inequality Is Falling Globally - dean
http://www.nytimes.com/2014/07/20/upshot/income-inequality-is-not-rising-globally-its-falling-.html
======
jvm
To all the doubters, real manufacturing wages in China have actually been
soaring over the past decades, this is corroborated across non-correlated
sources:

PRC Government numbers: [http://www.tradingeconomics.com/china/wages-in-
manufacturing](http://www.tradingeconomics.com/china/wages-in-manufacturing)
[http://www.marketwatch.com/story/china-wages-jump-
in-2012-de...](http://www.marketwatch.com/story/china-wages-jump-
in-2012-despite-slowing-economy-2013-05-17)

WSJ:
[http://online.wsj.com/news/articles/SB1000142405274870384920...](http://online.wsj.com/news/articles/SB10001424052748703849204576302972415758878)

Journal of Economic Perspectives: [http://leedsonfinance.com/2013/02/24/the-
end-of-cheap-chines...](http://leedsonfinance.com/2013/02/24/the-end-of-cheap-
chinese-labor/)

No one source is believable but there appears to be wide consensus here. Also
note these are real, inflation-corrected wages. You can tell especially by the
WSJ's concern over prices, if inflation explained the changes it wouldn't
impact export costs which are priced in USD not Yuan.

~~~
jokoon
well china has a huge growth, but after the 2008 crisis I can still raise my
eyebrows.

why would americans really care inequality in china ? if american politics
want to reduce inequality, they want to do it in their country, not in
developing countries.

~~~
seanflyon
Some people care about people in general, even if they are far away.

~~~
digikata
If you live in America and are struggling to make enough to feed and house
your family, it's a moot point that the numerical income level puts them in
the 1% around the world.(or whatever the percentage is) Local inequality
matters.

~~~
seanflyon
Local purchasing power is quite different from local inequality

------
enoch_r
It's remarkable how many people in the NYT comments dismiss this as a
distraction from the more important issue of within-country inequality. I
guess it's more important to help out someone earning $15,000 a year who looks
like us, than someone who earns $400 a year who doesn't. Global poverty is
truly horrific, on a level that most people in the first world can't even
comprehend, and its continued reduction is one of the really great
(incomplete) triumphs of human history.

I suppose I'm being uncharitable here. I'd guess the more likely explanation
is mood affiliation--people want a political revolution in response to real
problems (inequality, global warming, poverty, war, surveillance) and are
resistant to _any_ news that does not fit into this narrative of decline.

~~~
rbehrends
> It's remarkable how many people in the NYT comments dismiss this as a
> distraction from the more important issue of within-country inequality. I
> guess it's more important to help out someone earning $15,000 a year who
> looks like us, than someone who earns $400 a year who doesn't. Global
> poverty is truly horrific, on a level that most people in the first world
> can't even comprehend, and its continued reduction is one of the really
> great (incomplete) triumphs of human history.

I'm pretty familiar with the issue of global poverty, but the critics are
right: the policies that reduce poverty and inequality at the national level
are not mutually exclusive with those that reduce poverty at the global level.

More importantly, nation states CAN reduce poverty/inequality within their own
borders (and many policies that do so are simply good economic common sense
[1]), while there's a limit to what any particular country can do on a global
scale.

In short, decreasing inequality at the global level is no excuse not to combat
rising inequality at the national level.

[1] Such as universal healthcare and accessible education.

------
jokoon
Seen that thing already on /r/economics a while ago, went in a long discussion
with a libertarian sounding guy. Was really disappointed.

I don't like this, because the current argument of inequality talks about
developed countries, inside borders. The "global inequality" somewhat argues
that inequality per country is irrelevant because what counts is global
inequality, which to me is a little fallacious: you don't replace a debate
with the same debate at a bigger scope.

If markets are being globalized, nations lose bargaining power, and it's not
really a good thing.

It's also a little inadequate/irrelevant to talk about income inequality in
developing countries I think. Those countries are developing, so it's not
surprising to see their economies improve. If it's done at the expense of
other more developed countries, it's natural for those latter countries to
complain.

------
api
The situation globally and the situation in first world countries,
particularly the USA, is quite different. Income inequality is falling in
places like Brazil, India, and China but is rising in the developed world.

~~~
wavefunction
It's almost as if the "first world" elites are transferring the wealth of
their developed nations and their poor and middle classes to themselves and
sending a bit of it overseas to their outsourced interests...

~~~
wavefunction
If you disagree, give me some proof otherwise. The situation I've described
allows for a "global rise in income equality" while enforcing the status quo.
But you won't because you can't.

Anyways...

------
tokenadult
I just posted this to my Facebook wall with the tagline I use for a headline
conclusion that states a fact that everyone should know: "But of course."
Globalization (increasing international trade on increasingly free terms of
trade across more goods and services) would have to act as a worldwide
phenomenon to reduce income inequality. Moreover, a country's greater rather
than lesser involvement in international trade generally reduces income
inequality within the country. Many of the countries in Europe that have
especially low Gini coefficients (in other words, have especially equal
distributions of income) are long-time members of the European Free Trade
Association, and many of the countries in Central and South America that have
high Gini coefficients (that is the region on the world to look in for the
worst income inequality, among regions of the world) have long had
protectionist trade policies and remarkably little involvement in the world
economy.[1] Free trade improves income equality.[2] If reducing income
inequality is your policy goal, improving provision of primary and secondary
education is a good idea,[3] and other policy responses may be useful in one
country or another,[4] but the world trend should continue to be toward more
and more trade, the better to reduce income inequality and raise real wealth
for everyone.

[1]
[https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...](https://en.wikipedia.org/wiki/List_of_countries_by_income_equality)

[2] [http://www.efta.int/statistics/news/efta-countries-show-
decr...](http://www.efta.int/statistics/news/efta-countries-show-decrease-
income-inequality-2931)

[http://www.imf.org/external/np/seminars/eng/2014/lic/pdf/Lim...](http://www.imf.org/external/np/seminars/eng/2014/lic/pdf/Lim.pdf)

[3]
[http://www.oecd.org/eco/labour/49421421.pdf](http://www.oecd.org/eco/labour/49421421.pdf)

[4] [http://www.project-syndicate.org/commentary/laura-tyson-
desc...](http://www.project-syndicate.org/commentary/laura-tyson-describes-
what-the-us-should-do-to-enhance-economic-growth-and-distributional-equity)

AFTER EDIT: I would be glad to hear from multiple participants here from all
over the world how your income (as a hacker?) compares to the median income in
the country you live, and I have opened an Ask HN thread specifically to focus
discussion on that topic, which may help me learn a lot about other people's
perspectives here.

[https://news.ycombinator.com/item?id=8058579](https://news.ycombinator.com/item?id=8058579)

~~~
PythonicAlpha
This is just propaganda without any real facts.

~~~
nostrademons
He just footnoted 4 sites with real facts.

It is amazing the extent people will go to contradict data when that data
disagrees with their personal experience or worldview.

~~~
PythonicAlpha
That he posted four links does not mean, that all what he says (as much I see,
he draws conclusions, that need not necessarily be proved inside his links) is
true.

I also can post several links, some with truth, some with lies or
speculations. Who will decide. Numbers mean nothing.

~~~
dalke
To give a concrete example, confounding variables in the analysis can lead to
things like Simpson's paradox. In the famous Berkeley gender bias case, the
evidence based on facts was that men were accepted into graduate school at a
higher rate than women. People concluded that there was institutional gender
bias.

Further analysis shows that most departments had no strong bias against women,
and some evidence that it was actually the other way around. The confounding
factor is that women tended to apply to more selective programs.

The post by tokenadult, for a more concrete backing of PythonicAlpha's reply,
observed 'Central and South America that have high Gini coefficients (that is
the region on the world to look in for the worst income inequality, among
regions of the world) have long had protectionist trade policies and
remarkably little involvement in the world economy'. However, that is only one
possible correlation.

Consider that US government and businesses have a long history of political
and economic intervention in those countries, with Cuba being a prime example
but see also
[http://en.wikipedia.org/wiki/CIA_activities_in_the_Americas](http://en.wikipedia.org/wiki/CIA_activities_in_the_Americas)
, the private army of the Cuyamel Fruit Company taking over Honduras, and US
military support to Colombia in the so-called 'War on Drugs'. The US has a
weaker influence in Europe.

Consider that most Central and South American countries are Catholic, while
the European countries include more faith traditions. In the same vein,
religion tends to be less important in the European countries than the
countries in the Americas.

So there are several other differences which might affect the economical
differences besides 'protectionist trade policies' and international economy
involvement. Yet the provided link [1] is only a list, and does not have any
sort of analysis to judge if there are confounding affects other than free
trade. It is insufficient justification for the point made.

The provided link [2], as evidence for "Free trade improves income equality"
doesn't actually make that statement. It does indeed say that "EFTA countries
show decrease in income inequality" but "One explanation for this is income
losses in the upper part of the income distribution that happened during the
financial and economic crisis." That's quite a different point, don't you
think?

Then if you read the actual study it says "Social transfers (excluding
pensions) played an important role in reducing inequality in 2012"

There's _nothing_ in that document which mentions free trade as improving
income equality.

The provided link [3] looks like a nice document. Tokenadult suggests that it
primarily suggests "improving provision of primary and secondary education".
To point out though, that same document categorizes "Liberalising product
markets" under the section "Growth-enhancing policy reforms that have an
ambiguous effect on income inequality"

Finally, link [4]'s biggest suggestion is that "The US needs a more
progressive and redistributive tax and transfer system to combat rising
inequality in market incomes." I didn't see anything about globalization and
free trade.

Hence why PythonicAlpha is fully justified in saying "This is just propaganda
without any real facts."

Moreover, you might have noticed that tokenadult's "globalization" is limited
to "free trade", and not "free movement of labor" or "freedom of workers to
bargain collectively." By focusing only on capital and ignoring labor, this is
propaganda favoring those who own capital over those who work. As a classic
example, a law which forbids the purchase of goods made by child labor or
slave labor is also a law which is anti-free trade.

The question I have for nostrademons and those who down voted PythonicAlpha
is: did you actually follow and read those four footnotes, or was their
presence enough for you? If you read them, then how did they persuade you that
they strengthened tokenadult's comments?

------
julie1
Ho! He is right.

Just the problem of redistribution is like a problem of multiple bath tubs
pouring water in a bigger common bathtub (the wealth) and how it is recycled
(the water flowing back to the top in no respect of any scientific analogy).

you could globally be happy that for all the bathtubs of the world to observe
a ratio of wealth repartition that is less extreme.

but where does this wealth/water comes from?

the rich who are already experiencing a favorable bias toward tax paying or
the active workers who are paying relatively more taxs comparing to their
income?

Tax does not transform into wealth maybe?

No, but education does: a worker with an easier access to the education worths
more for the economy. Health insurance makes a worker available in good
conditions for more productive years. (No wonders that health insurance are
almost forced for highly paid workers; the company should ensure its working
forces are productive).

So if the richer don't pay as much taxes, taxes being more profitable for the
richer it is de facto (just by the sheer disappearance of the resources
indirectly provided by the states) a logical decrease of the «second order»
resources.

Yes in the world globally situation increases positively in terms of
repartition, but locally because mostly we have the same incentive all around
the world, the situation decreases.

The inequality are globally more balanced, but locally tending towards more
non linear repartition. With a nice sigmoid.

this will go on as long as there is no fiscal equity amongst all citizens,
whatever the country, whatever the religion, or social/political/economical
belief.

It all boils down to how retro action works. And the shape of the curves of
taxes. Every single steps, every non linear progression you make, you
introduce distinct clusters of citizens which interests will diverge with the
rest.

Put a sigmoid in the way people pay taxes/get credit refound, and your society
will have a sigmoid in its structure, thus creating the probability of some
divergence of opinions on what is equity or egality.

Are the 2 extremum wishable? All persons living at the average, or a cast
system with n distincts layers, or can their exists «harmonious» level of
wealth in a society that could results in less frictions?

Mathematically I am pretty sure we could agree that when a curve have 2
extremum that are not optimums (casts system or uniform normative systems) we
should find the rules for an optimum in the middle.

Now in real life, maybe it is time to see the inequality not as a
philosophical problem, but rather as process that can be engineered for the
greater good of every one: slackers, billionnaires, hobos, politicians all
alike.

The first step at my opinion would be to forbid any rules in the form IF
DISCRETE cond A then apply X else apply Y in laws and tax formulation.

------
eth1
yea okaaaay... i was born at night, but not last night.

------
PythonicAlpha
I don't see any evidence in the article, just links to some dubious papers,
partially paid by the world bank.

It might be, that some money goes to third world countries (specially China
and India) but I just doubt, that many people are really rising out of
poverty. The "wandring labourers" of China are not. They work just to survive.
Also those that are sewing our jeans in Malaysia and other countries ... at
the verge of living wage. When the big corporations move along, to even
cheaper countries, nothing is left to them.

I know by own experience, that with statistics, you can prove just anything,
even lies.

I think, reading also the comments posted to the article is helpful. Some
insights are also there.

~~~
seanflyon
The Chinese poor, don't have to rise out of poverty to be vastly richer than
they were a few decades ago. They had to get bigger desks in their school
because all the kids are bigger because they can afford to feed them now.

~~~
PythonicAlpha
Might be, but they will run in tremendous health problems, given the current
rate of environmental pollution.

Also (again): Compared to western standards, the Chinese median earnings are
still laughable.

~~~
seanflyon
Yet their life expectancy is still rising because they are so much better off
than they were before. Chinese median earnings are still laughable compared to
western standards but rising from unimaginable poverty to still quite bad
poverty is a big improvement.

