Letters

SIR – Ian Castles (Letters, May 26th) says that world income distribution has become more equal over the past 25 years. My article (“Winners and losers”, April 28th) shows why one cannot make such an unqualified statement. Of the many plausible measures, Mr Castles's statement rests on the one most favourable to the view that inequality is falling. In particular, he uses PPP exchange rates, which introduce a very substantial downward bias. If we are interested in distribution from the point of view of issues such as migration, the marginalisation of developing countries and capacity to repay foreign debts, we should compare incomes with market exchange rates. The conclusion is then unambiguous: distribution became much more unequal over the past quarter-century.

Nancy Birdsall (Letters, May 26th) is right that inequality within developing countries is probably contributing to low growth. The same applies to inequality at the world level. America after 1945 realised that its own growth would be imperilled if it did not redistribute massively to Europe. Today, transfers from rich countries to poor, and downwards redistribution within poor countries, are in the collective interests of the rich countries. Those who say, as you do, that “pulling up the poor still seems a nobler calling than pulling down the rich”, overlook this (Economics focus, April 28th). Without downwards redistribution, the rich may not remain rich.