- Paul Constant is a writer at Civic Ventures and co-host of “Fork Economy” podcast.
- He spoke with Professor Oded Galor, who has written a book on the history of wealth inequality.
- Galor said designing a more prosperous future starts with understanding past drivers of the economy.
We can prove that massive income inequality is not a necessary component of capitalism simply by looking at other capitalist nations and comparing them to ours. But has income inequality always been part of human society? Has it been in our DNA from the very beginning?
When we look at all 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”, that massive wealth inequality is a fairly recent invention.
“In the year 1800, only 200 years ago, the ratio of the richest parts of the world to the poorest parts of the world was about three to one,” Galor said in the latest episode of “Fork Economy.” But over the past two centuries, global inequality has grown. Today, 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 turn the tide.
Diversity equals prosperity
Galor argued that it is impossible to truly understand why countries like the United States are so wealthy compared to poor regions such as sub-Saharan Africa without looking back into the confines of history.
Since anatomically modern humans 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 – reaped the benefits of cross-cultural travel and exchange, stimulating technological innovation and widespread prosperity.
Two hundred years later, Galor said, “the cultural fluidity that existed in Europe finally allowed the people of Europe to gain the upper hand in terms of economic prosperity,” while America reaped the economic benefits of diversity for most of the 20th century through to today.
“The forces that operated during the agricultural revolution and perhaps even earlier are still operating in the world today,” Galor said. When humans stopped grazing for food and started the technological pursuit of agriculture, he said, people started grabbing the most fertile lands, establishing teams of winners and losers. geographies that still persist today. In fact, this imbalance has been magnified over the past 200 years as colonialism has reinforced wealth inequality through violence and ever-increasing technological advancement.
“Much of the inequality we see across the world today can be traced to elements that existed in the distant past,” Galor added.
Using the past to design the future
Solving inequality, Galor said, comes down to first understanding our history and then using it to “participate in designing 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 world. By identifying the root causes of the global distribution of wealth, the Unified Growth Theory proves that the global economy cannot be improved even with a one-size-fits-all political solution.
“If you want to alleviate the level of inequality that we see between nations today, we need to design policies based on the individual trajectory of each economy across the world,” Galor said. This means that regions like sub-Saharan Africa need policies that address the specific geographic and historical challenges and strengths of the region, including ensuring that the population boom can be have quality jobs and increase access to quality education.
At the same time, nations like the United States must combat growing economic inequality within their own borders by fostering social cohesion and preventing regressive political backsliding that could harm international prosperity.
Global wealth inequality was created by the random spread of humanity over millennia, but it will take intentional and thoughtful policy interventions to establish a fully prosperous planet Earth.