Inequality and Judith Sloan

In her column in today’s Australian, Judith Sloan (probably the smartest of Australia’s unashamed and unrepentant neo-liberal economists) takes another crack at inequality. Amongst other things she claims that,
“global income inequality has been declining for several decades, as millions of citizens in developing economies escape poverty. Estimates from the World Bank indicate that poverty rates in China, for instance, fell from 84 per cent in the early 1980s to less than 16 per cent now. These figures are worth cheering about.”
In arguing this way, she has omitted to mention other World Bank data that present a less rosy picture. These are not based on the compilation of averages within and between nations (the data Sloan refers to) but to data that include all individuals across the globe. These show only a small reduction in inequality taking place in the first part of the 2000s.
Remembering that the main reason for the small fall is the rapid improvement in living standards in China and India that managed to compensate for continuing worsening of inequality in the west, there’s not a lot here to be proud of, even from a neoliberal point of view.
You can find the full data set and a very good explanation of the data here:
http://www-wds.worldbank.org/external/default/WDSContentServer/IW3P/IB/2012/11/06/000158349_20121106085546/Rendered/PDF/wps6259.pdf
As an update, Alan Mitchell of the AFR has an interesting article today that includes data showing income inequality trends by country. The most startling figure is the extraordinary increase in inequality over the last couple of decades in China.
http://www.afr.com/p/national/economy/income_inequality_red_hot_issue_tYG6APYMRRcTbf2QJQ0rvL