On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us? THOMAS BABINGTON MACAULAY Review of Southey’s Colloquies on Society

Even inequality is declining worldwide. It is true that in Britain and America income equality, which had been improving for most of the past two centuries (British aristocrats were six inches taller than the average in 1800; today they are less than two inches taller), has stalled since the 1970s. The reasons for this are many, but they are not all causes for regret. For example, high earners now marry each other more than they used to (which concentrates income), immigration has increased, trade has been freed, cartels have been opened up to entrepreneurial competition and the skill premium has grown in the work place. All these are inequality-boosting, but they stem from liberalising trends. Besides, by a strange statistical paradox, while inequality has increased within some countries, globally it has been falling. The recent enrichment of China and India has increased inequality within those countries by making the income of the rich grow faster than that of the poor – an income gap is an inevitable consequence of an expanding economy. Yet the global effect of the growth of China and India has been to reduce the difference between rich and poor worldwide. As Hayek put it, ‘once the rise in the position of the lower classes gathers speed, catering to the rich ceases to be the main source of great gain and gives place to efforts directed towards the needs of the masses. Those forces which at first make inequality self-accentuating thus later tend to diminish it.’