Wealthier World, Poorer Nation

The Problem With the Rise of the Rest

Foreclosure signs by Occupy Cincinnati hang from doors in the East Price Hill neighborhood during a protest march in Cincinnati, Ohio, March 24, 2012. John Sommers II / Reuters

Occupy Wall Street, “We Are the 99 Percent,” and the Spanish anti-austerity movement 15-M may lie at the opposite end of the political spectrum from populist movements such as the Tea Party, the National Front in France, and Pegida in Germany, but they share a root origin: an anger at others whom they feel profit at their expense. On the left, this anger is directed at the ultrarich who have gotten richer—living in a world of $50 million homes, $10 million weddings, and $10,000-per-night vacations—as the rest of the country stagnates or gets poorer. According to the U.S. Census, median family incomes have barely risen over the last 20 years. On the right, the anger is aimed at immigrants who seem to be outcompeting or undermining native workers and threatening their culture and way of life.

And yet the world as a whole is better off than ever before: people everywhere are, on average, living longer lives, staying in school longer, becoming more productive, and, thanks to the Internet, enjoying inexpensive and nearly unlimited access to information and entertainment. Why, then, is there so much populist rage when things have, in many measurable ways, never been better?

Part of the answer lies in the way in which global patterns of inequality have changed in the last 30 years. In the 1980s, the world was to a large degree divided into “developed” or rich countries and “undeveloped” or poor ones. The rich countries included Japan and those in Europe and North America. In comparison, the rest of the world was mostly quite poor. In fact, the World Bank economists Christoph Lakner and Branko Milanovic found that in 1988, average incomes in developed countries were 20 to 30 times higher than the average in poorer countries.

At the same time, inequality within the wealthier countries had undergone a sharp decline, creating remarkably egalitarian societies. From the end of World War II in 1945 to the end of the Vietnam War in 1975, vigorous industrial growth in the developed world generated

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