LONDON – Pope Francis warned in November that “ideologies which defend the absolute autonomy of the marketplace” are driving rapid growth in inequality. Is he right?
In one sense, Francis was clearly wrong: in many cases, inequality between countries is decreasing. The average Chinese household, for example, is now catching up with the average American household (though still with a long way to go).
But such examples do not negate the importance of rising inequality within countries. Both China and the United States are dramatically unequal societies – and are becoming more so.
In the US, the statistics are striking at both ends of the income distribution. The bottom quarter of US households have received almost no increase in real (inflation-adjusted) income for the last 25 years. They are no longer sharing the fruits of their country’s growth. The top 1% of Americans, however, have seen their real incomes almost triple during this period, with their share of national income reaching 20%, a figure not seen since the 1920’s.