<p>To add to some of the answers above, there is another subtle point one must bear in mind. 
Inequality is a <em>relative</em> concept, not an absolute one. Growing inequality by itself does not bear <em>any</em> consequences on absolute levels of wealth. For instance, think about the ratio of the 90-10 quantile of income for the past few years. If this ratio has been growing, <em>all</em> this means is that the 90th quantile of income is growing faster than the 10th quantile of income. Both could be growing, and one could be growing faster than the other. 
I suggest you check out the study by Dollar and Kraay (2002) "Growth is good for the Poor."</p>

CC BY-SA 3.0
2015-11-17T15:49:28.067Z
2015-11-17T15:49:28.067Z
ChinG
<p>The world as a whole is richer than ever. And people are richer than ever. The last 50 years show a remarkable decrease in extreme poverty in the world, especially in Asia. Your observation that growth in the richest countries have been slow the last 10 years is correct. However, compared to 50 years ago, people in the richest countries are much better off in general.</p>

<p>A good way to illustrate this is to view official statistics through the Gapminder tool.</p>

<p><a href="https://www.gapminder.org/tools/#" rel="nofollow noreferrer">https://www.gapminder.org/tools/#</a>$chart-type=mountain</p>

<p>Choose <strong>Income</strong> and press play. </p>

CC BY-SA 4.0
2018-08-17T10:40:30.547Z
2018-08-17T10:46:28.913Z
2018-08-17T10:46:28.913Z
Klas Lindbäck
<blockquote>
  <p>Rising inequality (the rich keep getting more so the majority has less)</p>
</blockquote>

<p>This is false. What do rich people do with their money? They invest. Investments stimulate business. They start companies. They buy million dollar homes that provide jobs for construction workers. They own companies that employ thousands. They buy 4k TV's and similar expensive products which gives companies the capital to begin producing things on a large scale.</p>

<p>The richer the rich people are, the better for us. Take more rich people and richer people as a sign of an improving economy, not a poorer one.</p>

<p>I recommend <a href="http://rads.stackoverflow.com/amzn/click/0465002609" rel="nofollow">Basic Economics</a>, by Thomas Sowell. It'll give you a great idea of how economies work. </p>

CC BY-SA 3.0
2015-11-17T16:22:45.720Z
"What do rich people do with their money? They invest. Investments stimulate business."

Demand stimulates business.

edit: hit enter instead of shift+enter, ops
industry7
CC BY-SA 3.0
2015-11-17T16:41:53.610Z
@industry7 Do you mean to say reduced inequality means everyone has more money, therefore the economy is better stimulated by demand than by investment? I don't know, I'm just asking.
Prinsig
CC BY-SA 3.0
2015-11-17T17:16:16.217Z
This is a very silly answer. The rich do not automatically invest in things which help the rest of us. In fact they waste a lot of what they have, because they don't have to watch every penny. They also tend to circulate their wealth among their own class. Kings in castles may have controlled most of the resources of a mediaeval country but that didn't make the peasants any less poor. Increasing inequality is a sign of an inefficient economy struggling to support the population as a whole. "Trickle down" was never more than a threadbare excuse for greed.
Nagora
CC BY-SA 3.0
2015-11-17T17:53:38.347Z
This answer is badly phrased to the point of being meaningless. The phrase "rising inequality" can neither be true nor false. Do you mean to say that, in your opinion, inequality is not rising? Or something else?
Jonathan Hartley
CC BY-SA 3.0
2015-11-17T17:58:10.440Z
This answer is wrong. Inequality is actually bad for the economy. While the things you write about rich people are true, it turns out that they are *more* true when you have a larger number of mediumly rich people, as opposed to a smaller number of very rich people. I recommend wikipedia's page about "Economic Inequality", which says "Too much inequality can be destructive, because income inequality and wealth concentration can hinder long term growth". This is intuitive: people who are only mildly rich still have lots of motive to better themselves through constructive economic activity.
Jonathan Hartley
CC BY-SA 3.0
2015-11-17T19:17:19.507Z
@JonathanHartley Let's imagine a world where there are lots of mildly rich people. They 'better themselves through constructive economic activity'. Where does that money go? To business owners. The rich and super rich. What does that do? Make the rich and super rich, richer! The rich don't have all their money sitting in a bank or in cash under their pillows. They invest it all over the place. This is constructive economic activity that benefits the economy.
SethWhite
CC BY-SA 3.0
2015-11-17T20:49:06.317Z
Hey Seth. Thanks for responding so civilly to my chilly comments. But I still don't get it. You have pointed out that mildly rich people will participate in some transactions that make the rich richer, and I agree that is true. But that doesn't mean greater and greater inequality is inevitable (because over history equality has waxed and waned), nor does it demonstrate anything about whether equality is good or bad for the economy as a whole (i.e. the "making the world poorer" of the original question.)
Jonathan Hartley
CC BY-SA 3.0
2015-11-17T21:25:04.593Z
Perhaps my and Seth's differences of opinion in these comments might stem from differing views on what "constructive economic activity" means. It doesn't just mean spending money (which is mostly just redistribution of existing wealth), but instead mostly consists of creating value, by working to provide goods or services. This is wealth generation, not just redistribution. This is what determines whether "the world is getting poorer" or not, and its effects are greater in a competitive network of many mildly rich small business owners, rather than a few very large incumbent oligopolies.
Jonathan Hartley
CC BY-SA 3.0
2016-05-17T15:23:02.447Z
@Prinsig When you invest in a company, that company can now afford to expand, open new stores, create new product lines, etc.  However, companies will only expand if they have reason to believe that there is sufficient demand.  So investment doesn't stimulate a business to do anything.  However, if there is in fact sufficient demand for a business to expand, investment is not required to do so.  Businesses take out loans all the time.  Businesses also save capital from year to year, so they can use those profits in order to do things like expand.
industry7
CC BY-SA 3.0
2015-11-17T15:18:40.097Z
2015-11-17T15:18:40.097Z
SethWhite
<p>The short answer is No. </p>

<p>Every single year, except 2009, for the past 55 years of continuously recorded economic history, the world has been getting richer. The -2.1% global recession in 2009 was made up in 2010 with 4.1% growth. I was just working with the World Bank's World Development Indicators, which track global GDP growth, and I double checked.</p>

<p>We measure prosperity and growth by the quantities of goods produced. Money is irrelevant. Every year we, humans, produce more and more goods and services and that makes us richer. Not every country grows steadily though. Some countries are stagnant, like Greece, and some grow remarkably rapidly over very long periods of time, like China. Moreover, there is increasing inequality withing many countries (measured by GINI coefficient). So it is very natural for many to feel like everything around them either stands still or degrades. But on average, the world keeps getting richer.</p>

<p>If you are in Switzerland, you may have felt the shock from recent currency appreciation. Sharp currency appreciations hammer exporters and industries reliant on tourism, which make up a large portion of Swiss economy.</p>

CC BY-SA 3.0
2015-11-17T11:21:26.083Z
Is that GDP per capita? Also could you please provide a link as I only found the GDP of each country and not the global 'GDP'
fishlein
CC BY-SA 3.0
2015-11-17T11:40:20.357Z
It was real GDP growth rate, but you are right, real GDP growth rate per capita is a more accurate measure of wealth per person. Nevertheless, GDP per capita has also grown steadily over the past 50 years and receded for 5 years (1974, 1975, 1982, 1991, and 2009). The link for the World Bank Databank is http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators    You can choose WDI as the database, World as the country, 'GDP per capita growth' as the series, and check all years for time. You can also switch to Chart View on top to make it easier to spot recessions.
Arthur Tarasov
CC BY-SA 3.0
2015-11-17T13:34:24.413Z
On a related note, the fraction of the world in extreme poverty has fallen from 44% in 1981 to less than 10% today: http://www.worldbank.org/en/topic/poverty/overview
dismalscience
CC BY-SA 3.0
2015-11-17T14:16:35.170Z
@dismalscience:  This oughta be on the headline news everyday, in every newspaper and on every new show.
JRE
CC BY-SA 3.0
2015-11-17T14:36:25.753Z
@JRE: well, depending what you think "news" means ;-)
Steve Jessop
CC BY-SA 3.0
2015-11-17T14:38:15.283Z
@SteveJessop:  Yeah, as a counter balance to all the gloom and doom that's on the news and in the newspapers.
JRE
CC BY-SA 3.0
2015-11-17T14:47:08.763Z
That is indeed good news but I am wondering whether the limit (1.90 USD / day) is inflation adjusted. The article seems to suggest not which might not make it a very good indicator. Of course it is not easy how to define inflation in this context as it varies quite a bit.
fishlein
CC BY-SA 3.0
2015-11-17T14:53:35.010Z
@JRE: it's not that I don't think it should be reported ever, it's that anything reported every day is not "news". I don't think the news should show a picture of a lovely puppy every day either: we already know there are puppies.
Steve Jessop
CC BY-SA 3.0
2015-11-17T15:41:07.050Z
@fishlein— Yes, the number is inflation-adjusted, and conversions are done using PPP. The World Bank is not full of total amateurs!
dismalscience
CC BY-SA 3.0
2015-11-17T11:05:03.597Z
2015-11-17T11:05:03.597Z
Arthur Tarasov
<p>This question is not backed by serious economic research but mainly by a very simple attempt to look at how the world economy has changed.</p>

<p>I am asking whether and why the world has, over the past 50 or so years, become less productive (not used in the strict economic sense here) and therefore people have less money to do stuff/buy things.</p>

<p>Several reasons why I believe this to be the case (I am open to be corrected):</p>

<ul>
<li>Real wages in developed economies have not risen for a long time</li>
<li>Financial crisis now been going on for many years (almost 10)</li>
<li>Unemployment in the EU is very high</li>
<li>Tax rates are ever-increasing (it seems) relative to median wages</li>
<li>More and more people are reliant on welfare (from what I gather, unfortunately I don't have a source at this point</li>
<li>Growth in developing countries (China) has decreased</li>
<li>National debts are ever-increasing</li>
</ul>

<p>This has left me with the feeling that in many situations, there is simply 'less' money to go around and be spent. I can observe this, for example, by the seemingly constant need of companies and countries (even where I live, in wealthy Switzerland) to save money and reduce expenses <em>(I don't know if it only seems this way because of some biases or it is actually the case)</em>.</p>

<p>Again, not sure if this is actually happening or if it only seems so to me (Also apologies for not being able to express this in very 'economy' terms).</p>

<p>Several reasons that I could explain to myself why it would seem like we have less to spend and are less productive than we used to be:</p>

<ul>
<li>Rising inequality (the rich keep getting more so the majority has less)</li>
<li>Less incentive for technological progress (apart from in IT). In many industries, there is no reason to keep making everything better, only to make it cheaper and more profitable. We have most of what we need and don't see a point in improving it (cupboards, beds, kitchen utensils etc.) </li>
<li>Lethargy of people. Many people are happy with what they have and do not want to work more/harder</li>
<li>We have most of what we need, and the things that are left to buy are luxury items (which we maybe didn't think about before)</li>
</ul>

<p>Again sorry for the very vague way of asking this question without any evidence, but if someone could help me make it more concrete I would be very open to that.</p>

<p>I guess what I want to say is do people have less money and less to spend than they used to, and if so, why?</p>

CC BY-SA 3.0
2015-11-17T13:10:05.777Z
Real wealth since the great depression in the United States has grown by 6 times, so no, the world has not gotten poorer.
BB King
CC BY-SA 3.0
2015-11-17T13:16:28.130Z
Please define real wealth
fishlein
CC BY-SA 3.0
2015-11-17T14:19:21.060Z
I guess that you are clearly distinguishing in your mind the evolution of total wealth from how this total wealth is _distributed_ among individuals, right?
Alecos Papadopoulos
CC BY-SA 3.0
2015-11-17T14:26:00.010Z
I know that if total wealth increases this doesn't mean that individual wealth must increase, too. However, in my question I am not as interested in individual wealth as total wealth; I am merely acknowledging that uneven distribution may make it *seem* as if total wealth is decreasing and asking whether this is true. Hope this makes sense
fishlein
CC BY-SA 3.0
2015-11-17T14:46:56.080Z
It makes perfect sense.
Alecos Papadopoulos
<macroeconomics><debt><productivity><inequality>
Has the world become poorer?
fishlein
# Has the world become poorer?

(Asked by: username_0 on 2015-11-17)

This question is not backed by serious economic research but mainly by a very simple attempt to look at how the world economy has changed.

I am asking whether and why the world has, over the past 50 or so years, become less productive (not used in the strict economic sense here) and therefore people have less money to do stuff/buy things.

Several reasons why I believe this to be the case (I am open to be corrected):

* Real wages in developed economies have not risen for a long time
* Financial crisis now been going on for many years (almost 10)
* Unemployment in the EU is very high
* Tax rates are ever-increasing (it seems) relative to median wages
* More and more people are reliant on welfare (from what I gather, unfortunately I don't have a source at this point
* Growth in developing countries (China) has decreased
* National debts are ever-increasing

This has left me with the feeling that in many situations, there is simply 'less' money to go around and be spent. I can observe this, for example, by the seemingly constant need of companies and countries (even where I live, in wealthy Switzerland) to save money and reduce expenses *(I don't know if it only seems this way because of some biases or it is actually the case)*.

Again, not sure if this is actually happening or if it only seems so to me (Also apologies for not being able to express this in very 'economy' terms).

Several reasons that I could explain to myself why it would seem like we have less to spend and are less productive than we used to be:

* Rising inequality (the rich keep getting more so the majority has less)
* Less incentive for technological progress (apart from in IT). In many industries, there is no reason to keep making everything better, only to make it cheaper and more profitable. We have most of what we need and don't see a point in improving it (cupboards, beds, kitchen utensils etc.)
* Lethargy of people. Many people are happy with what they have and do not want to work more/harder
* We have most of what we need, and the things that are left to buy are luxury items (which we maybe didn't think about before)

Again sorry for the very vague way of asking this question without any evidence, but if someone could help me make it more concrete I would be very open to that.

I guess what I want to say is do people have less money and less to spend than they used to, and if so, why?

**Tags:** macroeconomics, debt, productivity, inequality

> **Comments:**
> **username_1**: Real wealth since the great depression in the United States has grown by 6 times, so no, the world has not gotten poorer.  
> **username_0**: Please define real wealth  
> **username_2**: I guess that you are clearly distinguishing in your mind the evolution of total wealth from how this total wealth is _distributed_ among individuals, right?  
> **username_0**: I know that if total wealth increases this doesn't mean that individual wealth must increase, too. However, in my question I am not as interested in individual wealth as total wealth; I am merely acknowledging that uneven distribution may make it *seem* as if total wealth is decreasing and asking whether this is true. Hope this makes sense  
> **username_2**: It makes perfect sense.  

---

## 4 answers

### Answer by username_10 on 2015-11-17. Score: 17 | Accepted answer

The short answer is No.

Every single year, except 2009, for the past 55 years of continuously recorded economic history, the world has been getting richer. The -2.1% global recession in 2009 was made up in 2010 with 4.1% growth. I was just working with the World Bank's World Development Indicators, which track global GDP growth, and I double checked.

We measure prosperity and growth by the quantities of goods produced. Money is irrelevant. Every year we, humans, produce more and more goods and services and that makes us richer. Not every country grows steadily though. Some countries are stagnant, like Greece, and some grow remarkably rapidly over very long periods of time, like China. Moreover, there is increasing inequality withing many countries (measured by GINI coefficient). So it is very natural for many to feel like everything around them either stands still or degrades. But on average, the world keeps getting richer.

If you are in Switzerland, you may have felt the shock from recent currency appreciation. Sharp currency appreciations hammer exporters and industries reliant on tourism, which make up a large portion of Swiss economy.

> **Comments:**
> **username_0**: Is that GDP per capita? Also could you please provide a link as I only found the GDP of each country and not the global 'GDP'  
> **username_10**: It was real GDP growth rate, but you are right, real GDP growth rate per capita is a more accurate measure of wealth per person. Nevertheless, GDP per capita has also grown steadily over the past 50 years and receded for 5 years (1974, 1975, 1982, 1991, and 2009). The link for the World Bank Databank is http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators    You can choose WDI as the database, World as the country, 'GDP per capita growth' as the series, and check all years for time. You can also switch to Chart View on top to make it easier to spot recessions.  
> **username_11**: On a related note, the fraction of the world in extreme poverty has fallen from 44% in 1981 to less than 10% today: http://www.worldbank.org/en/topic/poverty/overview  
> **username_12**: @username_11:  This oughta be on the headline news everyday, in every newspaper and on every new show.  
> **username_13**: @username_12: well, depending what you think "news" means ;-)  
> **username_12**: @username_13:  Yeah, as a counter balance to all the gloom and doom that's on the news and in the newspapers.  
> **username_0**: That is indeed good news but I am wondering whether the limit (1.90 USD / day) is inflation adjusted. The article seems to suggest not which might not make it a very good indicator. Of course it is not easy how to define inflation in this context as it varies quite a bit.  
> **username_13**: @username_12: it's not that I don't think it should be reported ever, it's that anything reported every day is not "news". I don't think the news should show a picture of a lovely puppy every day either: we already know there are puppies.  
> **username_11**: @username_0— Yes, the number is inflation-adjusted, and conversions are done using PPP. The World Bank is not full of total amateurs!  

---

### Answer by username_3 on 2015-11-17. Score: 3

To add to some of the answers above, there is another subtle point one must bear in mind.
Inequality is a *relative* concept, not an absolute one. Growing inequality by itself does not bear *any* consequences on absolute levels of wealth. For instance, think about the ratio of the 90-10 quantile of income for the past few years. If this ratio has been growing, *all* this means is that the 90th quantile of income is growing faster than the 10th quantile of income. Both could be growing, and one could be growing faster than the other.
I suggest you check out the study by Dollar and Kraay (2002) "Growth is good for the Poor."


---

### Answer by username_4 on 2018-08-17. Score: 2

The world as a whole is richer than ever. And people are richer than ever. The last 50 years show a remarkable decrease in extreme poverty in the world, especially in Asia. Your observation that growth in the richest countries have been slow the last 10 years is correct. However, compared to 50 years ago, people in the richest countries are much better off in general.

A good way to illustrate this is to view official statistics through the Gapminder tool.

<https://www.gapminder.org/tools/#>$chart-type=mountain

Choose **Income** and press play.


---

### Answer by username_5 on 2015-11-17. Score: -2

> Rising inequality (the rich keep getting more so the majority has less)

This is false. What do rich people do with their money? They invest. Investments stimulate business. They start companies. They buy million dollar homes that provide jobs for construction workers. They own companies that employ thousands. They buy 4k TV's and similar expensive products which gives companies the capital to begin producing things on a large scale.

The richer the rich people are, the better for us. Take more rich people and richer people as a sign of an improving economy, not a poorer one.

I recommend [Basic Economics](http://rads.stackoverflow.com/amzn/click/0465002609), by Thomas Sowell. It'll give you a great idea of how economies work.

> **Comments:**
> **username_6**: "What do rich people do with their money? They invest. Investments stimulate business."  Demand stimulates business.  edit: hit enter instead of shift+enter, ops  
> **username_7**: @username_6 Do you mean to say reduced inequality means everyone has more money, therefore the economy is better stimulated by demand than by investment? I don't know, I'm just asking.  
> **username_8**: This is a very silly answer. The rich do not automatically invest in things which help the rest of us. In fact they waste a lot of what they have, because they don't have to watch every penny. They also tend to circulate their wealth among their own class. Kings in castles may have controlled most of the resources of a mediaeval country but that didn't make the peasants any less poor. Increasing inequality is a sign of an inefficient economy struggling to support the population as a whole. "Trickle down" was never more than a threadbare excuse for greed.  
> **username_9**: This answer is badly phrased to the point of being meaningless. The phrase "rising inequality" can neither be true nor false. Do you mean to say that, in your opinion, inequality is not rising? Or something else?  
> **username_9**: This answer is wrong. Inequality is actually bad for the economy. While the things you write about rich people are true, it turns out that they are *more* true when you have a larger number of mediumly rich people, as opposed to a smaller number of very rich people. I recommend wikipedia's page about "Economic Inequality", which says "Too much inequality can be destructive, because income inequality and wealth concentration can hinder long term growth". This is intuitive: people who are only mildly rich still have lots of motive to better themselves through constructive economic activity.  
> **username_5**: @username_9 Let's imagine a world where there are lots of mildly rich people. They 'better themselves through constructive economic activity'. Where does that money go? To business owners. The rich and super rich. What does that do? Make the rich and super rich, richer! The rich don't have all their money sitting in a bank or in cash under their pillows. They invest it all over the place. This is constructive economic activity that benefits the economy.  
> **username_9**: Hey Seth. Thanks for responding so civilly to my chilly comments. But I still don't get it. You have pointed out that mildly rich people will participate in some transactions that make the rich richer, and I agree that is true. But that doesn't mean greater and greater inequality is inevitable (because over history equality has waxed and waned), nor does it demonstrate anything about whether equality is good or bad for the economy as a whole (i.e. the "making the world poorer" of the original question.)  
> **username_9**: Perhaps my and Seth's differences of opinion in these comments might stem from differing views on what "constructive economic activity" means. It doesn't just mean spending money (which is mostly just redistribution of existing wealth), but instead mostly consists of creating value, by working to provide goods or services. This is wealth generation, not just redistribution. This is what determines whether "the world is getting poorer" or not, and its effects are greater in a competitive network of many mildly rich small business owners, rather than a few very large incumbent oligopolies.  
> **username_6**: @username_7 When you invest in a company, that company can now afford to expand, open new stores, create new product lines, etc.  However, companies will only expand if they have reason to believe that there is sufficient demand.  So investment doesn't stimulate a business to do anything.  However, if there is in fact sufficient demand for a business to expand, investment is not required to do so.  Businesses take out loans all the time.  Businesses also save capital from year to year, so they can use those profits in order to do things like expand.  

---

