How The World’s Wealth Is Really Increasing

I’m sure it doesn’t surprise you that we earn a lot more today than we did fifty years ago. But does that also mean that we are richer than our grandparents? And are we all benefiting from an increase in wealth?

According to Max Roser, professor of economics at Oxford University, yes. He claims that the income of the average earthlings today is 4.4 times higher than in 1950.

In 1950 – almost seventy years ago – at a global level, the average household earned about $3,300 a year. The wealthiest households at the time were the Americans, who at that time put about 15,241 dollars in his pockets. Three years ago, in 2016 to be precise, the average earthlings brought in about the the same amount of cash as an American in the past. Conclusion? The average citizen today is as rich as the average American in the 1950s.

But it could also have turned out differently. There used to be about 2.5 billion people living on our planet, but that number has risen to about 7.5 billion in the meantime. If that hadn’t happened, we would probably be three times poorer today than in the 1950s. But because the world population has tripled, and the income is 4.4 times higher than then, the economy has also grown by a factor of 13.

But does that mean that literally everyone earns 4.4 times more than before? Not necessarily. Behind these averages lay vast differences per country. The South Koreans, the Taiwanese and the Singaporeans profited the most from the gigantic economic progress and globalization. The reason? The successes in technology and finance. Taiwan for example, they are now 30-times richer than they were in 1950.
And I as a Belgian? I didn’t do badly myself, or well, at least Belgians in general. The average Belgian income increased on average 5.7 times, which is better than… the average.

No benefit

But unfortunately there are also losers. Just think of the former colony of Congo, Sierra Leone and the Central African Republic. The income of these countries has doubled over the past seventy years, but if you take inflation into account, it’s actually about halving it.
None of these countries is able to benefit from globalization, which has only increased income equality.

In fact, the inhabitants of these three countries are now on average a hundred times poorer than the Norwegians. The consequences of this are truly dramatic. Not only do people have a lower life expectancy, they are also at greater risk of disease, education is not what it should be or simply does not exist, and there is a major problem of malnutrition.

Mr. Rosser has a beautiful conclusion for this data. It shows that the world economy is not a zero sum game. The world is now a positive sum economy where more people can have access to more goods and services at the same time.

This growth is not the only thing tat matter through. this increase in prosperity is a means to many ends. Thanks to this prosperity the world as a whole can move further. It gives people options and choices that lacked in the past.

Sources:

• https://ourworldindata.org/economic-growth-since-1950