A Global Inequality Panel Must Be Resisted, for Democracy’s Sake

Climate scientists get thick reports and sombre press conferences to discuss the consensus effects of greenhouse gas emissions. Those who fret about income or wealth gaps now want similar deference. But does their pet subject deserve it? No. The analogy here is ludicrous.

Just as carbon dioxide floats through borders unconstrained, inequality, we are told, seeps into the social fabric, corroding growth, trust and the ozone layer of democracy. But unlike CO₂ generating a physical externality, economic inequality is a statistical artefact — a summary of billions of choices about work, saving, investing and governing, most of them unregrettable. To treat the Gini coefficient like a pollutant accumulating is not merely a category mistake; the idea of easily controlling it is the height of hubris.

It’s also an oddly mistimed “emergency”. The most significant decline in global income inequality in modern history has taken place over the past three decades. Between 1990 and 2019, the global Gini index measure of inequality dropped from 0.70 to 0.62, while the share of humanity living in extreme poverty fell from nearly 40 per cent to under 10. This, it must be said, was not achieved through UN communiqués or Davos plans but by the messy and miraculous growth of India and China, whose leaders opened markets somewhat.

Stiglitz does acknowledge this, but the campaign marches on. If inequality between nations is in retreat, then attention swivels — like a heat-seeking missile — to inequality within nations, or to wealth gaps, or whatever other measure evokes concern. Always a crisis, sirens blaring.

Why is economic inequality supposedly such a menace? This group thinks it causes everything from slower growth to populism to climate collapse. But these claims often blur the line between inequality and other issues like poverty, with analysis leaning on flimsy international correlations and cherry-picked regressions. I recently tried replicating a UN-backed paper suggesting that higher inequality led to more Covid-19 deaths. Re-run using updated global data from 2020 to 2023, the association crumbled.

Indeed, I doubt this group of advocates really see this panel as a dispassionate search for truth, but instead a pulpit to push their interventionist ideas. Concerns about wealth inequality are emblematic. Scandinavian countries, famously egalitarian, often rank high on wealth disparities because generous welfare systems mean people rely less on private savings. High taxes eat into middle earners’ ability to build wealth, and strong safety nets reduce their need to save. Result: the rich still save, the rest don’t and private wealth inequality broadens. Do Piketty et al suggest cutting social security programmes to fix this “crisis”? Of course not. They use these exact same stats to advocate more redistribution!

Angus Deaton, another Nobel prizewinner, has said economic inequality is concerning to the extent that factors generating it are unjust or undesirable. Yet shouldn’t we want to eliminate poverty and cronyism whatever their effects on the Gini coefficient? This panel instead sees inequality as inherently damaging, like more carbon in the air. It does not matter whether wealth gaps stem from rent-seeking or healthy returns to entrepreneurs whose innovations enrich us all. It’s all a problem to be quashed.

At heart, declaring an “inequality emergency” is an attempt to install a permanent lobby for more aggressive intervention, dressed up as neutral expertise. But there is no consensus in economics on the correct inequality level, let alone ethical agreement in politics. To embed one ideological answer inside a permanent global institution is not to advance reason. It is to circumvent democracy. Governments serious about growth, sovereignty and democratic deliberation should reject this proposal.