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History gives us a clue as to how we can solve global wealth inequality

Paul Constant   

History gives us a clue as to how we can solve global wealth inequality
  • Paul Constant is a writer at Civic Ventures and the cohost of the "Pitchfork Economics" podcast.
  • He spoke with professor Oded Galor, who wrote a book about the history of wealth inequality.

We can prove that massive income inequality isn't a necessary component of capitalism just by examining other capitalist nations and comparing them to our own. But has income inequality always been a part of human society? Is it written into our DNA from the very beginning?

When we view the whole 300,000 years of human history through an economic lens, Brown University economics professor Oded Galor argues in his new book "The Journey of Humanity: The Origins of Wealth and Inequality," massive wealth inequality is a fairly recent invention.

"In the year 1800, only 200 years ago, the ratio between the richest regions of the world and the poorest regions of the world is about three to one," Galor said on the latest episode of "Pitchfork Economics." But over the course of the last two centuries, global inequality has spiked. Now, that ratio between the richest and poorest regions is "about 15 to one or 20 to one — and even a hundred to one, depending on how you define regions of the world," Galor said.

Here's how we got here, and what it would take to reverse course.

Diversity equals prosperity

Galor argued that it's impossible to truly understand why nations like the US are so wealthy compared to impoverished areas like sub-Saharan Africa without looking back into the far reaches of history.

Since anatomically modern humans first began spreading around the world more than 60,000 years ago, the most diverse places have always been the most prosperous, Galor said. Around the year 1500, for example, societies in Southeast Asia — the places we now recognize as countries like China, Japan, and Korea — enjoyed the benefits of travel and intercultural exchange, spurring technological innovation and widespread prosperity.

Two-hundred years after that, Galor said, "the cultural fluidity that existed in Europe ultimately permitted the European population to have the upper hand in terms of economic prosperity," while America enjoyed the economic benefits of diversity for most of the 20th century through to today.

"Forces that operated during the agricultural revolution and perhaps even earlier are still operating in today's world," Galor said. When humans stopped grazing for food and started the technological pursuit of farming, he said, people began seizing the most fertile land, establishing teams of geographic winners and losers that still persist today. In fact, that imbalance was magnified over the last 200 years as colonialism reinforced wealth inequality through violence and ever-increasing technological advancement.

"Much of the inequality that we see across the globe today can be traced to elements that existed in the distant past," Galor added.

Using the past to design the future

Solving for inequality, Galor said, comes down to first understanding our history, then using it to "participate in the design of our future."

Galor is the founder of a field of study called Unified Growth Theory, a complicated mathematical explanation of the spread of human prosperity and poverty across the face of the globe. By identifying the root causes of the global distribution of wealth, Unified Growth Theory proves that the global economy can't be made more even with a one-size-fits-all policy solution.

"If you would like to mitigate the level of inequality that we see between nations today, then we need to design policies based on the individual trajectory of each economy across the globe," Galor said. That means regions like Sub-Saharan Africa need policies that address the specific geographical and historical challenges and strengths of the region, including ensuring that the population boom can be employed in high-quality jobs and increasing access to quality education.

At the same time, nations like the US must combat the growing economic inequality within their own borders by encouraging social cohesion and preventing regressive political backsliding that could damage international prosperity.

Global wealth inequality was established through the haphazard spread of humanity over millennia, but it's going to take intentional, thoughtful policy interventions to establish a fully prosperous planet earth.


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