Like most developed countries, Canada is immersed in a potentially explosive political debate about the widening gap between the very rich and everyone else. While the discussion is warranted, much gets overlooked in the narrow focus on domestic income statistics.
For starters, incomes are hardly the only measure of our quality of life. First-rate public education and health care mean that Canadians, regardless of income, are relatively more equal than almost any people in the world. Most of the goods and services we buy are relatively cheaper and more reliable than ever. In general, our lives are richer, even when our pay stubs seem smaller.
What most often gets omitted in discussions about growing income inequality within rich countries, however, is the extraordinary and corresponding increase in global living standards. In only a few decades, hundreds of millions of people have joined the middle class, poverty has receded and the gap in health outcomes between rich and poor nations has contracted.
This is the opposite of what was predicted 50 years ago, when most economists warned that a global population explosion would produce unprecedented poverty and suffering. Instead, as Princeton University development economist Angus Deaton argues in The Great Escape: Health, Wealth and the Origins of Inequality, our planet “is a better place than at any time in history.”
“Not only has the world added four billion people over the past half-century,” Prof. Deaton writes in his new book, “but the seven billion who are alive today also have, on average, much better lives than their parents and grandparents.”
The “great escape” from disease and deprivation is largely a story of globalization, which has expanded opportunities for more lucrative livelihoods and increased access to the knowledge and technology needed to “dig the tunnel” out of poverty. But of late, it must be noted, it has also contributed to the slower middle-class wage growth driving income inequality in rich countries.
Prof. Deaton is no capitalist cheerleader. In The Great Escape, he dons the hat of an economic historian to provide a fresh perspective on the march of human progress (and its pitfalls) that should inform our current debate about income inequality.
The first observation is that inequality is an inevitable byproduct of progress. “The move to agriculture,” Prof. Deaton writes, “made it possible to grow more food, but it also brought new diseases and new inequalities as hierarchic states replaced egalitarian bands of hunter gatherers.” No one would argue, however, that mankind was better off living in caves.
Similarly, only the aristocracy of 18th-century England could afford new medicines, creating a massive gap in life expectancy between rich and poor. But no one would have thought of banning the new drugs just because their benefits were at first unequally distributed. Eventually, as they became available to all, life expectancies converged.
The decline in global health inequalities since 1945 has been most striking. Non-communicable disease is now the leading cause of death everywhere except Africa. Reduced infant mortality has freed women from the burden of endless pregnancy – since they do not need to be pregnant as often to have the same number of children who survive – and the agony of watching their babies die. “It also frees them to lead fuller lives in other dimensions, becoming more educated, working outside the home and playing a fuller role in society.”
While malnutrition remains widespread, Prof. Deaton notes that people are growing taller almost everywhere. And because “cognitive function develops along with the rest of the body,” they are also likely growing smarter. More than 80 per cent of the world is now literate, up from about 50 per cent in 1950.
About a billion people still live in destitution, however. And those who have escaped, as Prof. Deaton puts it, have a moral obligation to help those who are still imprisoned. But he thinks that foreign aid is harmful and that rich countries would do better by lifting trade and immigration restrictions.
Prof. Deaton also believes that income inequality within rich countries, especially the United States, is a serious problem that threatens to undermine democracy and growth by “stifling the creative destruction that makes growth possible.” But he expresses cautious optimism for our future, mainly because the ingrained human desire to escape is too powerful to be suppressed.
“People may block the tunnels behind them,” he says, “but they cannot block the knowledge of how the tunnels were dug.”