Although politicians often talk about rising inequality, a new study has found that income inequality has actually decreased around the world since the fall of the Berlin Wall.
Although politicians often talk about rising inequality, a new study has found that income inequality has actually decreased around the world since the fall of the Berlin Wall.
Charles Dharapak/AP

Sen. Elizabeth Warren stood before the Democratic National Convention two years ago and told a spellbound audience that America had become rigged to favor the wealthy, while the middle class has grown steadily poorer.

Her focus on income inequality has since spread like wildfire.

The topic has now become a central campaign issue, as election season hurtles toward November.

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Democrats nationwide are condemning rising income disparities, calling for minimum wage hikes and tax increases on the wealthy—all under the guise of bolstering the middle class and reducing inequality.

So how has inequality developed outside the borders of the United States?

A recent study offers a perspective that runs contrary to how politicians usually describe American inequality.

Scholars Christoph Lakner and Branko Milanovic found that income inequality has actually decreased around the world since the fall of the Berlin Wall and a global middle class has at last formed.

Lakner and Milanovic call it the “the most profound reshuffle of individual incomes on the global scale since the Industrial Revolution.”

They highlight how developing countries are entering the global marketplace for the first time. Countries from China to Indonesia have begun to industrialize and trade internationally—two developments that have improved the fortunes of their poorer citizens.

Those countries—particularly China, India, and Indonesia—have populations that are large enough to drive overall measures of inequality up.

Lakner and Milanovic note that economists often herald the rise of the middle class as a harbinger of democracy.

They also point out the contrast between already wealthy countries where inequality has increased and developing countries with thriving middle classes.

Lakner and Milanovic then ask a thought-provoking question: could the divergence between rich and developing countries foreshadow an upheaval of the current social order?

Take a look at the full results of the study here.