According to the old adage, "the rich get richer and the poor get poorer." But the real story is far more complicated.
Take a look, for example, at Gapminder.org, a site that looks at global economic and human development trends—and that does a fantastic job of helping people visualize complicated data. Their most recent take on global income distribution offers competing insights: material wealth has increased since 1970, but in the U.S. at least, so has income stratification.
Here’s what U.S. income distribution trends looked like in 1970. There were essentially two humps, representing two broad classes: the poor (the smaller hump to the left), and everyone else (the bigger hump to the right).
Between 1970 and 2000 average incomes in the U.S. grew, adjusting for inflation. And even the incomes of the poor rose some. But by 2000 America’s income distribution (see below) consisted of three increasingly distinct bell curves, rather than 2. To the left of the graph, the divide between the poor and the middle class appeared to sharpen (immigration may have played a role here), while to the right of the graph, the super rich began to split off from the middle class (double-income families may play a role here). So on average, incomes grew over three decades; but so did income stratification.
The interesting thing is that Japan experienced the exact opposite trend. In 1970, Japan was a society clearly divided into rich, middle class, and poor. And the middle class made up a far smaller share of the population there than in the America.
But over time, Japanese incomes became more and more equal—to the point that there’s now a single bell curve representing the whole country, rather than three distinct classes. On average, the Japanese middle class still makes a little less than in the U.S. (though cross-national income comparisons are notoriously difficult to do: different cultures have very different standards of living). And there aren’t as many super-rich Japanese as there are in the U.S. But there are also fewer of the super-poor, and the middle class went from being far behind the U.S. in 1970, to just a little bit behind. So rising income equality was no barrier to rising middle-class incomes.
So two lessons for the Northwest. First, we should all be aware of the trend towards rising income inequality here—and be especially careful when we look at statistics concerning "average" income, since the average is increasingly influenced by income trends involving the very high end of the income scale.
And second, watch out for claims that rising inequality is a sign (or even a cause) of rapid economic growth. Japan emerged as a legitimate economic superpower even as its inequality fell. And rising equality may have had side benefits: Japan is now the world’s leader in promoting long, healthy lives, and developed nations with greater income equality tend to have better health.
Clearly, there’s no reason we can’t improve health, economic equality, and middle-class incomes all at the same time. If Japan can do it, so can the Northwest.
