The Economist took on a recent Oxfam publication which predicts that the 1% will own half of the world’s wealth by 2016. (The chart on the left below shows the Oxfam forecast.) The article in The Economist admonishes the Oxfam pub for their choice of dates (2010-2014) in projecting the trend, stating that starting instead in the year 2000 would push the milestone out to 2035. (Some solace.)
Income is a better measure to worry about, says The Economist piece, and as data from Branko Milanovic shows (chart on the right below), the global middle class has made great strides in recent decades.As data from Branko Milanovic shows, the global middle class has made great strides in recent decades. Click To Tweet
It’s hard to argue against the movement of millions out of poverty, but I wonder if the gains are ephemeral.
When I first saw Mr. Milanovic’s graph, I called it the “Elephant Curve” — the large hump to the left and the upturned trunk to the right. I’ve since thought a bit about how this curve might change in the future. If current trends continue, I suspect we’ll see something akin to the backside of the Kuznet’s Curve wherein the fortunes of the global middle will slowly reverse. If that occurs, rather than an elephant, the curve might resemble a bullwhip as the global middle class watched their gains stall. This “wave” might then continue on down the income distribution.The curve might resemble a bullwhip as the global middle class watched their gains stall. Click To Tweet
I assume some event(s) would eventually break the cycle, but I can’t see how it would happen without a demand, as enlightened self-interest seems a thing which demands a swift kick in the rear to get it going.
Yet another gloomy prognostication in which I fully hope I’m wrong. (There’s a reason they call it the dismal science.)
We shall see.
Update (2015/1/24): Branko Milanovic has written a response to the pieces referenced in this post
Branko Milanovic: Repeat after me: Wealth is not income and income is not consumption
Oxfam: Richest 1% will own more than all the rest by 2016
The Economist: Oxfam Causes a Stir