Prosperity Explosion: Is Income Disparity Necessary for Growth?

Hans Rosling recently released a marvelous video on the relationship between income and life expectancy over the last 200 years (HT). The visualization is stunning.

See it for yourself:

One item worthy of note is how Rosling describes our “remarkable progress” as occurring despite “enormous disparities.” It is a small but important distinction to dissect.

Is it not true that loosening up trade and expanding freedom requires income disparity, or the mere allowance of it? After all, it is during the de-centralization and the individual freedom of the Industrial Revolution that the bottom-left countries started moving decidedly toward the upper right. In a free society, income disparity is typically a sign of efficiency, i.e., maximizing, channeling, and organizing human potential and innovation effectively (thus a subsequent boost to life expectancy).

This isn’t to say that the current extent of income disparity is inevitable, or that all forms of such disparity are signs of efficiency, but overall, you cannot have steady growth without a steady improvement of allocation, and you cannot maximize allocation improvement without allowing for inequality in economic rewards.

Don’t get me wrong. I share Rosling’s optimistic outlook about the future. I do think we can close the gap between “the West and the rest.” It is indeed possible and desirable that we get most people to the healthy-wealthy corner of Rosling’s chart.

Hans Rosling, data, visualizationHowever, I don’t think we can accomplish this if we see economic inequality as an evil or a hindrance to our productivity. It is in the countries that view it as such that we consistently find resistance to upper-right movement.

It is not, as Rosling says, despite income disparity that prosperity has exploded; it is in part because freedom-loving people stopped fearing it. We began living lives of individual invention and personal risk rather than cowering beneath crippling insulation and slavish submission.

It is only by allowing for life to happen that we can hope for life to improve.

(Photo Credit)

, , , , , , , , , , , , ,