The decade of the very poor and the super rich
The 2010s may be remembered as the decade when the global 1% accumulated unfathomable wealth, but it was also perhaps the best decade ever for the world’s poorest people.
The big picture: The rate of extreme poverty around the world was cut in half over the past decade (15.7% in 2010 to 7.7% now), and all but eradicated in China.
A tipping point was reached in 2018, according to a Brookings analysis, with more than half the world in the middle class or above for the first time in history.
- Along with that came massive declines in mortality rates for women and infants, both of which have been halved since 1990.
- Meanwhile, primary education has become near-universal in nearly all of the world, including for girls. The global youth literacy rate was up to 91% as of 2016, though sub-Saharan Africa (75%) lags behind.
- The average income of the world’s bottom 50% of earners nearly doubled between 1980 and 2016, according to Abhijit Banerjee and Esther Duflo, MIT professors and the 2019 Nobel laureates in economics.
The other side: There was only one group that fared better over that time, Banerjee and Duflo write in Foreign Affairs: the global 1%. “The rich in already rich countries plus an increasing number of superrich in the developing world… captured an astounding 27% of global growth.”
An examination of Forbes’ billionaire lists over the past decade tells much of the story:
- In 2009, the world had 793 billionaires with a combined wealth of $2.4 trillion. There were 98 members of a more exclusive club: $5 billion or more.
- As of 2019, the world had 2,153 billionaires with a total net worth of $8.7 trillion. Membership of the $5 billion club quadrupled to 424, and 166 people now have at least $10 billion.
- To qualify as one of the world’s 100 richest people, you’d now need not $4.9 billion, as was the case a decade ago, but $14.4 billion.
The global picture: There were 130 billionaires in Asia a decade ago. Now there are 729, and 324 just in mainland China.
- Billionaires weren’t the only ones to benefit. Generally speaking, the 2010s were a decade in which the world’s rich got much richer.
As the global 1% captured more and more of the pie, Banerjee and Duflo write, “The 49% of people below them, which includes almost everybody in the United States and Europe, lost out, and their incomes stagnated.”
- There’s also cause for concern in China and India, which have been the primary drivers of global poverty reduction but are now experiencing slower growth.
The bottom line: Extreme poverty has fallen but not been eliminated, particularly in sub-Saharan Africa where poverty rates are stubbornly high and fast-growing populations mean more people now live in poverty than a decade ago.
- A rising economic tide has lifted some to unprecedented heights, but millions around the world remain underwater.