“Life’s not fair,” my parents always used to say. Bill Gates and the Mexican business magnate Carlos Slim each have fortunes of about $60bn, according to the rich-list boffins at Forbes. A 10 per cent return on that lot would produce a $6bn income, or about $200 a second. That is, very roughly, about what an American makes in a day or an Ethiopian makes in nine months. Small wonder that income inequality is a hot topic.
But reliable numbers on inequality are hard to find. Even in the US, there is no agreement over what is going on. Look across the globe, and the data problems are far more acute. The most commonly reported scare statistic compares the richest country with the poorest. But this method overlooks the fact that about 2.5 billion poor people live in rapidly growing India and China. A better, but more demanding approach summarises inequality both across countries and within countries. Such efforts suggest no strong recent trends in global income inequality, either up or down.
Those efforts have been led by Branko Milanovic of the World Bank. But now – with fellow economists Peter Lindert and Jeffrey Williamson – he has produced a more surprising result. He has found that income distribution within a modern society is much the same as income distribution in imperial Rome, or England and Wales at the time of the glorious revolution. It’s not that there is no variation at all, but that modern societies are as different from each other as from ancient societies.
The remainder of this column can be read here.