May 05, 2014 12:45 AM GMT
To add to this:
Almost all inequality in developed economies does not arise by the wealth of almost anyone else declining. (That does happen in less socially and politically developed societies, in which wealth arises from political control of resources or access to corruption.) In modern developed economies inequality arises when someone – a Gates or Zuckerberg or Cowell or Ronaldo or Rowling or just an ordinary businessman or professional – finds some way (some skill or invention or investment) that adds considerable value, and that value is not then shared equally.
In our modern globalised economy, the gains from a new idea or skill can now be leveraged over enormously more people. Instead of your new and better mousetrap being sold just to the fair folk of Wolverhampton, the whole world beats a path to your door. In such a world, improved added value creates large inequalities. But that is precisely because the added value of a Windows or Facebook or awesome evening's football skill benefits so enormously many people – even if each only benefits a little compared with the huge aggregate benefits benefits taken by the value-creator.
To add to this:
Throughout the history of the world, the average person on earth has been extremely poor: subsisting on the modern equivalent of $3 per day. This was true until 1800, at which point average wages—and standards of living—began to rise dramatically. Prof. Deirdre McCloskey explains how this tremendous increase in wealth came about. In the past 30 years alone, the number of people in the world living on less than $3 per day has been halved. The cause of the economic growth we have witnessed in the past 200 years may surprise you. It's not exploitation, or investment. Innovation—new ideas, new inventions, materials, machinery, organizational structures—has fueled this economic boom. Prof. McCloskey explains how changes in Holland and England in the 1600s and 1700s opened the door for innovation to take off—starting the growth that continues to benefit us today.