Culturally, the age of inequality is still churning: Over just the last six months, we’ve had the song “Rich Men North of Richmond” and Shawn Fain’s leading the United Auto Workers into a triumphant labor war with Detroit’s Big Three while wearing an “Eat the Rich” T-shirt. But at the structural level, our picture of American inequality also seems to be changing. According to some measures, U.S. income inequality hasn’t meaningfully grown over the last decade, the very period in which it has become such a potent cultural and political meme. And in the last few weeks, several high-profile critiques of Piketty’s narrative-setting work have been published, both in academic journals and in outlets like Bloomberg and The Financial Times — with mostly right-of-center commentators suggesting that the story of ballooning inequality, and of our return to the robber barons of the Gilded Age, was all methodological illusion and that inequality hadn’t actually been growing at all.
Piketty compares this to climate denial, and almost certainly the critique is oversold. It’s not just Piketty and his colleagues who have documented significant increases in inequality since 1980, but also the Government Accountability Office, the Congressional Budget Office, the Bureau of Labor Statistics, the Census Bureau and the Federal Reserve. You can quibble about which data set to use and exactly how to measure things, the economist Branko Milanovic says, and you get somewhat different estimates for the size of the effect. “But I think if you take 1980 and take 2006, I think there is no doubt that — throughout the ’80s and ’90s and early 2000s — inequality just went up.”
One of the leading scholars of global inequality, Milanovic is best known for his “elephant chart,” which measures relative gains along the world’s income spectrum. The chart shows that in recent decades, the world’s poor saw their incomes grow significantly, as did the world’s very rich, with those in between — the global upper middle class, made up of the working and middle classes of places like the United States and Europe — stagnating.
There are shortcomings to the elephant chart: In documenting only percentage improvement in annual incomes, it equates much smaller absolute gains among the world’s poor with much larger absolute gains by the world’s rich. But Milanovic believes that in focusing so obsessively on growing divides within countries, we are missing what he calls a great convergence, in which income inequality is in fact declining, and quite rapidly. The global 1 percent is still going strong, he says, but at lower rungs on the income ladder, economic status is undergoing a great rearrangement, with profound implications for the way almost everyone on the planet will live — and feel — in the decades to come.
“Poor Westerners for decades have ranked among the highest-earning people in the world,” Milanovic wrote this summer in Foreign Affairs. “That will no longer be the case as non-Westerners with rising incomes will displace poor and middle-class Westerners from their lofty perches.” As a result, a whole suite of privileges once enjoyed by working people in the richer parts of the world may soon pass out of their reach: international travel, for instance, both to exotic vacation destinations and to things like the World Cup, or the newest and most advanced electronics, like smartphones. Already, status markers like spots in prestigious Western universities are increasingly the subject of fierce international competition. Housing markets in many global capitals have been squeezed by foreign buyers as well. “Drill down to the level of a single person,” he writes, “and what becomes apparent is probably the greatest reshuffling of individual positions on the global income ladder since the Industrial Revolution.”