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Unformatted text preview: Lecture 27: Inequality among nations Introduction This is the first of two lectures on whether inequality is increasing or decreasing during the era of globalization on a world scale. We’ve already discussed whether inequality is increasing or decreasing within the US, and it seems fairly certain that it’s increasing. I now want to ask whether the same thing is true among different countries. Today we’ll discuss two things. On the level of substance, we’ll try to see whether countries are converging or diverging and why. As we’ll see, the answer is a bit complex. Some countries are converging and others are diverging, and we’ll have to see why that is. Next time, we’ll discuss in more detail those countries that are diverging. The second topic for today is one of methods, and we’ll discuss the use and misuse of statistics. After all, whether the average wealth of countries is becoming more equal or less should be fairly readily ascertainable; it’s odd to have continuing debates about it. So I want to look at the kinds of errors that allow these debates to continue. What do we mean by inequality? We have a range of answers in the readings for today. Article 27.1 says inequality is decreasing, Article 27.2 says that the top and bottom countries are doing best while the middle countries are not doing as well, while 27.3 takes lots and lots of time to say that the main distinction is not between top and bottom, but between participants in globalization and non- participants. The crucial distinction is the difference between inequality within countries and inequality between countries. For inequality within a country, the issue is whether the gap between average individuals in the top income brackets and average individuals in the bottom income brackets is getting wider or narrower. For inequality between countries, the issue does not concern individuals at all but national economies—whether the gross domestic product per capita of the entire country is gaining or losing relative to the gross domestic product per capita of other countries. Because these are different kinds of inequality, you can have more inequality of the first kind at the same time as you have less inequality of the second kind. Inequality may be increasing within some poorer countries, but if the average GDP within those countries is increasing faster than the world average, the inequality between those poorer countries and the top end countries is decreasing. The case of China is particularly in point here. China has the world’s fastest growing The case of China is particularly in point here....
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- Spring '08
- Developed country, Household income in the United States, Laos