The Globalist: O fim do papel na civilização que o inventou - Branko Milanovic and the Paperless country, China

Global Diary

Paperless China?

January 7, 2024

Dear reader, The abolition of paper is in full swing in the country that invented it – China. As our contributor Branko Milanovic discovered, what is striking in today’s China is the complete disappearance of paper as a means to convey information. And while similar developments are observable elsewhere, China is ahead. This begs the question: Is placing all of modern knowledge in the electronic format a good idea? After all, it has already revealed its weaknesses – many websites, links and blogs where information was stored are already by now broken, deleted or have been moved elsewhere. Viewed in a global context, does this mean that when our civilization vanishes, the new researchers, perhaps thousands of years away, will eventually be faced by the conundrum: Did literacy simply disappear? Enjoy this fascinating read. Cheers, Stephan Richter Publisher and Editor-in Chief Global Diary January 7, 2024 Paperless China?  By Branko Milanovic  The abolition of paper is in full swing in the country that invented it.  https://www.theglobalist.com/paperless-china/  China is considered to have been the first country (civilization) to have created the modern version of paper. Paper is listed as one among the four big Chinese inventions (the other three are the compass, gun powder and printing). Perhaps it will be the first country to “dis-invent” paper, too. Coming full circle? What is striking in today’s China, compared to even as recently as five years ago, is the complete disappearance of paper. I mean paper as a means to convey information – not paper as in paper napkins in cafés. Some of this disappearance is perhaps justifiably celebrated. Instead of metro cards that can be easily displaced, there are electronic tickets on cell phones. Instead of plastic credit cards, there are Alipay and similar systems available on your phone. Instead of crumpled banknotes, there are touchless screens to use for payments. Slightly ahead of the rest of the world It would be wrong to take this as an ideological feature linked to the current system of electronic surveillance in China. Very similar developments are observable elsewhere, in all modern societies. China is just slightly ahead of the rest of the world. But, even the very ideological dimension of political propaganda is affected by this. In the past, Chinese museums linked with various CPC events had on display a variety of officially-approved publications – speeches, resolutions and biographies. Almost nothing of that remains. In the excellent Shanghai museum dedicated to the founding congress of the Chinese Communist Party, there is just one book that can be bought in the museum store. The store sells pens, badges, umbrellas, toys, bags and pandas – but no written documents. One would search in vain for such elementary publications as the Founding Act of the CPC, its first resolutions etc. Moreover, looking at the rich exhibits that deal with the New Culture movement of the 1920s and numerous publications that are displayed in the museum, one wonders what could in the future be shown from similar cultural movements of today? Copies of emails? Laptops where the texts are stored? The dematerialization of information Such dematerialization of information can be celebrated, perhaps at times excessively given the relatively modest gains in efficiency that are achieved compared to the older system. But the paeans disregard one important feature. People’s interactions are not solely based on the present. Our interactions and opinions are so many “bottles thrown into the sea” in the hope of explaining our current thinking and conveying to the future what we feel and what we have learned. This is the advantage of a written system compared to the oral. The oral system could neither transmit information over time, nor do it accurately. We have Homer’s verses today because somebody eventually was able to write them down. Things would not have come to us had they not been preserved on scripts made of papyrus. Or, even better, as the Egyptians, Greeks and Romans did, preservation of certain facts was entrusted to the stone. It was more durable than paper – but it was hard to carve and carry longer and more complex messages. Goodbye newspapers In the three weeks I spent in China, I saw two desultory copies of a Chinese-language newspaper in a Beijing hotel and “China Daily” displayed in a bar not touched by anyone, one person reading what appeared to be a newspaper in a Shanghai museum and a father reading a comic book to his child on a train. I saw no other piece of information recorded on paper. Surely, I went to a big bookstore in Shanghai with six floors of books, or have seen a beautiful new library at the Zhejiang University. There are plenty of books there. So paper as a means of conveyance or storage of information has not completely disappeared. But its function to convey today’s information into the future has apparently ceased. This is not a trivial issue. Whether information about a subway trip is encrusted on a piece of paper or stored within your cell phone does not matter to future generations. But placing the entire modern knowledge in the electronic format is dangerous. The danger We can already see the first effects of it. The electronic system of storage is old enough for us to have noticed that many websites, links and blogs where information was stored are already by now broken, deleted or have been moved elsewhere. Information on household income or people’s characteristics that was collected in the past is in many cases lost because the software systems used to read and process such information have changed. Ironically, but not at all surprisingly, all the information that we can get regarding some past surveys of population (and I am not talking here about ancient data, but information that is twenty years old) comes from the printed summaries of such sources. I have seen this very clearly with Soviet household surveys whose data have all been irretrievably lost because already by the early 1990s the technology had entirely changed, and short of enormous and expensive effort, the Soviet-made computer cards could no longer be read. But the problem is the same everywhere. U.S. micro data from the 1950s and early 1960s are impossible to access any more. Conclusion With full transfer to electronic-only information, we are moving to an ever-ruling “presentism.” Information can be seemingly efficiently and costlessly transmitted today or over a very short time period, but is afterwards lost forever. When our civilization vanishes, the new researchers, perhaps thousands of years away, will be faced by the conundrum: Did literacy disappear? How to explain that a civilization from which there are millions of written records (that would be saved the way that the Dead Sea Scrolls were saved) had suddenly abandoned literacy and gone back to oral communication and barbarism? In fact this very post, for whatever it is worth, will be forever gone as soon as the website you read it on folds and another format of dissemination takes over. Until then, try to carve it in stone…

“China is not the neo-colonial exploiter that many in the West see it as.” - Branko Milanovic, entrevista (Der Spiegel)

 Der Spiegel, Hamburgo – 18.5.2021

Social Consequences of the Pandemic"

The Super-Rich in the West Are Evading Their Responsibility"

China is not the neo-colonial exploiter that many in the West see it as. On the contrary. China's involvement has increased growth in many African countries. Europeans also benefit from this.

Former top World Bank economist Branko Milanovic is afraid that the coronavirus pandemic has deepened the wealth divide. Those who have profited most from the crisis, he fears, have broken their pledge to help countries in need.

Interview Conducted by Martin Hesse und Michael Sauga

 

Serbian-American economist Branko Milanovic, 67, was born in Belgrade. He began focusing on wealth distribution and income differences early on, writing his dissertation on the subject despite living in socialist Yugoslavia and its alleged classless society. Starting in 1988, Milanovic worked for 20 years at the World Bank. Since 2014, he has been teaching at City University in New York. The focus of his research has remained the same throughout his career. In numerous publications, Milanovic has examined the consequences of globalization for inequality both within countries and between countries and regions of the world.

 

 

DER SPIEGEL: Mr. Milanovic, emerging countries like India and Brazil are suffering badly from the pandemic, and far too little vaccine is arriving in poorer countries. Is the coronavirus pandemic widening the gap between rich and poor?

Milanovic: That is to be feared. However, the situation can change quickly. In South Africa, for example, where the pandemic only recently spread rapidly, the situation has improved significantly.

DER SPIEGEL: Global inequality has decreased in the world over the past few decades, primarily a function of China’s rapid growth. Will that continue after the pandemic?

Milanovic: No, China is now a global middle-class country. If it grows strongly, as it has recently, it will increase global inequality, not decrease it, as has been the case during the past 40 years. At the same time, countries like India, which is likely to experience two years of strongly negative growth, are falling behind economically. The bottom line is that it is to be feared that the gap between rich and poor countries will widen further.

DER SPIEGEL: The big tech companies like Amazon and Google are making billions in the crisis, and employees in other industries are losing their jobs. Has the virus also made the rich richer and the poor poorer within countries?

Milanovic: Not in general, although it is still too early to draw strong conclusions. Recent studies show that inequality is falling in many Western countries thanks to huge government aid programs. On the other hand, it can be observed that the super-rich in the Western world are evading their responsibility. They did not live up to their own claims during the pandemic.

DER SPIEGEL: What do you mean by that?

Milanovic: I can still remember how the global elite promised in large public appearances at the World Economic Forum meeting in Davos that they would use part of their wealth to fight emergencies. Unfortunately, little of this has been seen in the past few months. Words and actions have been far apart. The inaction of big money in the U.S. was particularly noticeable.

DER SPIEGEL: The wealthy in industrialized countries have become even more affluent in recent years.

Milanovic: The income elite in the West today typically benefit from high investment income and growing income from work at the same time. This applies to chief physicians, star lawyers or software developers, for example. This is a new phenomenon. In classical capitalism of the 19th and 20th centuries, only entrepreneurs and capitalists were at the top of the income pyramid. The change we are witnessing, though, is a long-term trend that is exacerbated by the pandemic – for example, by the boom on the stock markets.

"The pandemic has shown that you can work from practically anywhere in the world with the help of modern means of communication. As a result, something like a global job market is emerging for the first time in many professions."

DER SPIEGEL: Which deepens the gap between rich and poor.

Milanovic: That's right. But this change also has positive sides, because it levels out the old opposition between capital and labor. At the same time, it protects the elite, say, the top 10 percent, from losses because their prosperity comes from several sources, both from high labor and from capital incomes. That makes the privileged classes even stronger economically - and politically more influential.

DER SPIEGEL: The traditional middle class, on the other hand, has suffered economic losses over the past few decades. Will this development worsen?

Milanovic: There are a number of signs of that. The pandemic has shown that you can work from practically anywhere in the world with the help of modern means of communication. As a result, something like a global job market is emerging for the first time in many professions. This is bad news for numerous professional groups in the West who have not previously had to fear global competition.

DER SPIEGEL: You believe that salaries may go down?

Milanovic: Not only that. Those who live in Delhi and email their reports to Düsseldorf have a much lower cost of living than their local colleagues. This can lead to the paradoxical result that equality grows globally, but the middle class in the West suffers.

DER SPIEGEL: How should governments react to this?

Milanovic: It would make sense to make it easier for lower-paid workers to access capital income. For example, through tax advantages or a promotion of worker shareholding. Education is even more important. Today the elites of the West use their wealth to buy their children access to the best schools and universities. This isolates the top 10 percent even more from the rest of the population. It reduces the chances of advancing socially and leads to a new form of rule by the money nobility. I call it homoplutia because the elite is wealthy (plutia) in terms of both financial and human capital.

DER SPIEGEL: The pandemic has affected the education systems of many countries. Classes were either completely suspended for months on end or only partial instruction was possible. Does this reinforce the trend?

Milanovic: I'm afraid so. The educational misery hits poorer families harder. The wealthy can more easily compensate for missed lessons with tutors, and they simply have more space at home, which makes homeschooling easier.

DER SPIEGEL: In the United States, the rich are said to be paying higher taxes for the first time in decades. Will that reduce inequality?

Milanovic: I am pleased with Joe Biden's proposals. It is right to raise corporate and income taxes. There are also discussions about strengthening the unions and investing heavily in infrastructure. The global minimum tax is also to be welcomed. Perhaps U.S. inequality has indeed peaked.

DER SPIEGEL: In your book "The Clash of Capitalism” you describe the two formative forms of capitalism: the liberal-meritocratic American capitalism and the state capitalism of China. Which one is better suited to solving the problem of growing inequality?

Milanovic: In both countries, inequality has increased over the past 20 years, in China even more than in the U.S. This is mainly due to the fact that China is starting from a lower level and the gap has grown due to rapid industrialization and urbanization. This process is not complete. Also, the economic and political elites have become mixed: private entrepreneurs have gotten very rich, but party membership is still very useful, especially – and this is quite interesting – for the rich entrepreneurs. In the U.S., on the other hand, the economic elite manage to buy a policy that serves their interests. With regard to the U.S., I am a little more optimistic that politicians are now taking countermeasures. In China, the fight against corruption, to which the government has been committed for some time, gives hope. I think politicians in both countries understand that you can't just watch inequality grow.

DER SPIEGEL: Europe has lost ground to the U.S. and China. Has the European social model grown outmoded in the face of increased competition among the major economic blocs?

Milanovic: It is undoubtedly under pressure, due to migration, but also because with the entry of China and India into the global economic system, the factor labor was weakened compared to capital. Economically, Europe is more liberal, in the economic sense, than it was in the 1970s, and the influence of the trade unions has declined. But the welfare state is such an essential part of the European worldview that it will not be abandoned. And that's good.

DER SPIEGEL: Africa is at risk of being left behind economically as a result of the pandemic. What does this mean for Europe?

Milanovic: The stark income gap between the European and African Mediterranean coasts could shape the relationship between the two continents for a century. Where does an investor invest when asked whether he would like to get 1 percent return or where he gets 10 percentc It is the same with wages and salaries. Of course, this is the reason why people are drawn to Germany, France or Sweden, where they can earn many times what they get in Africa. That remains a driver for migration. Europe should have the greatest interest in improving the situation in Africa.

DER SPIEGEL: What would be the best way?

Milanovic: The EU should promote investments in Africa and cooperate more closely with China. Instead, it has made itself hostage to Turkey in terms of refugee policy.

DER SPIEGEL: Europe shouldn't just leave the African continent to China?

Milanovic: China is not the neo-colonial exploiter that many in the West see it as. On the contrary. China's involvement has increased growth in many African countries. Europeans also benefit from this.

DER SPIEGEL: Mr. Milanovic, thank you for this interview.

 

Capitalism, alone: a new book by Branko Milanovic

Capitalism, Alone: The Future of the System That Rules the World 

Hardcover – 24 September 2019

by Branko Milanovic (Author)

A provocative account of capitalism's rise to global dominance and, as different models of capitalism vie for world leadership, a look into what the future may hold. We are all capitalists now. For the first time in human history, the globe is dominated by one economic system. In Capitalism, Alone, leading economist Branko Milanovic explains the reasons for this decisive historical shift since the days of feudalism and, later, communism. Surveying the varieties of capitalism, he asks: What are the prospects for a fairer world now that capitalism is the only game in town? His conclusions are sobering, but not fatalistic. Capitalism gets much wrong, but also much right-and it is not going anywhere. Our task is to improve it. Milanovic argues that capitalism has triumphed because it works. It delivers prosperity and gratifies human desires for autonomy. But it comes with a moral price, pushing us to treat material success as the ultimate goal. And it offers no guarantee of stability. In the West, liberal capitalism creaks under the strains of inequality and capitalist excess. That model now fights for hearts and minds with political capitalism, exemplified by China, which many claim is more efficient, but which is more vulnerable to corruption and, when growth is slow, social unrest. As for the economic problems of the Global South, Milanovic offers a creative, if controversial, plan for large-scale migration. Looking to the future, he dismisses prophets who proclaim some single outcome to be inevitable, whether worldwide prosperity or robot-driven mass unemployment. Capitalism is a risky system. But it is a human system. Our choices, and how clearly we see them, will determine how it serves us.

Product details

• Hardcover: 304 pages
• Publisher: Harvard University Press (24 September 2019)
• Language: English
• ISBN-10: 0674987594
• ISBN-13: 978-0674987593
• Product Dimensions:: 15.5 x 2.5 x 23.6 cm
• Shipping Weight: 567 g

Review: 
An ambitious and provocative examination of the present and the future of capitalism. It is a valuable, data-rich, and thoughtful addition to several recent books examining the challenges facing this economic system...Milanovic says that while capitalism cannot be replaced--at least in the foreseeable future--it can be improved.-- (03/01/2020) The conceptions of political and liberal meritocratic capitalism prove to be both novel and compelling...Milanovic's proposition is valuable as framework for understanding the future of political capitalism, within China and beyond.--Panthea Pourmalek"Journal of East Asian Studies" (03/01/2020) Milanovic's method is eclectic and empirical, informed by Marxist concepts but not limited to them.--Max B. Sawlicky"Jacobin" (01/16/2020) A gift to those of us grappling with economic and political inequality, as we seek ways to promote a fairer and more productive, sustainable society.--Tim Page"Trades Union Congress (TUC) blog" (10/25/2019) A scholar of inequality warns that while capitalism may have seen off rival economic systems, the survival of liberal democracies is anything but assured. The amoral pursuit of profit in more liberal capitalist societies has eroded the ethical norms that help sustain openness and democracy, he argues; now that tendency threatens to push such places in the direction of more authoritarian capitalist societies, such as China.-- (12/07/2019) An excellent new book on the past, present, and future of economic systems.--Umair Javed"Dawn" (12/02/2019) An extraordinarily valuable book for anyone who wants to gain an understanding of current topics in economic research and their bearing on policy debates.--Matt Mazewski"Commonweal" (12/05/2019) [The] first three chapters are brilliant, original and make for gripping reading...Relish the erudition and panache.--Duncan Green"From Poverty to Power" (11/15/2019) A data-rich, provocative account of where capitalism is today and where it may be headed.--Samuel Hammond"Quillette" (10/24/2019) Branko Milanovic, the master narrator of global equality, brings an entirely new perspective to the topic in this remarkably astute book. By tracing the deep and evolving ideological foundations of capitalism and communism and analyzing the rise of Asia and particularly China, he contributes thought-provoking insights on the critical role of institutions and ideology for the long-term prospects of global economies.--Debin Ma, London School of Economics and Political Science Leaves little doubt that the social contract no longer holds. Whether you live in Beijing or New York, the time for renegotiation is approaching.-- (10/09/2019) May turn out to be a seminal work on the fin de siecle de capitalisme...His conclusions and concepts, make extraordinary contributions to considerations of the state of capitalism.--Business Day (10/01/2019) Milanovic gives an impressive amount of space and effort in his book to provide a thorough analysis of the role of corruption in globalization...What I have always most valued about Branko Milanovic is his willingness to follow his intuition to open up new aspects of the political discussion. I may not agree with him on some issues, but I always come away greatly enriched by the experience.-- (09/23/2019) Milanovic outlines a taxonomy of capitalisms and traces their evolution from classical capitalism before 1914, through the social-democratic capitalism of the mid-20th century, to 'liberal meritocratic capitalism' in much of the rich world, in particular America. He contrasts this with the 'political capitalism' found in many emerging countries, with China as the exemplar. These two capitalistic forms now dominate the global landscape. Their co-evolution will shape world history for decades to come.-- (10/31/2019) Milanovic has written what may be his most ambitious book yet. Featuring his trademark clarity and erudition, Capitalism, Alone contains wide-ranging and thoughtful insights into the nature of capitalism as it is currently structured and considers how it will evolve in the coming century.--Arjun Jayadev, Azim Premji University Branko Milanovic, a master economic statistician, here divides modern capitalism broadly into two versions: the 'liberal' one found in the West, and the 'political' one that has emerged in China. In this searching and richly argued work he weighs the choices we face and discusses whether the future may lie with one version, alone.--James K. Galbraith, author of The End of Normal A remarkable book, possibly the author's most comprehensive opus so far...I highly recommend Capitalism, Alone to all readers and scholars interested in challenging their understanding of the (supposed) sole socio-economic system we live in.--Roberto Iacono"LSE Review of Books" (11/11/2019) A brilliant sequel to the pathbreaking Global Inequality. Drawing on original research and a typically wide sweep of history, Branko Milanovic poses all the important questions about our future.--Gordon Brown, former Prime Minister of the United Kingdom Capitalism, Alone is an excellent work that covers a broad swath of the history of modern capitalism.--Edward Wolff, author of A Century of Wealth in America When politicians, pundits, and academics speak of a growing competition, or even a New Cold War, between the United States and China, one thing that is not asked enough is what is being competed for. Likewise, when we speak of an 'American' or 'Western' model, in contrast to a 'Chinese' one, it is worth asking what or who exactly is being modeled, and to what end. One of the virtues of Branko Milanovic's new book, Capitalism, Alone, is that it addresses these questions head-on and with useful insights and results.-- (11/18/2019) Milanovic writes as a good teacher, telling us what is coming, sharing the content, and then reminding us what we just learned. He takes the reader on diverting side journeys into the history of communism, the implausibility of a universal basic income, and even a brief summary from first principles of the past development and possible trajectories of Western liberal capitalism. The effect can be both exhilarating and overwhelming...Capitalism, Alone is a book to scribble questions all over, and then read again.-- (01/07/2020) Few economists can compete with [Milanovic's] stunning erudition, or with his skill in weaving together seemingly disparate figures with complex philosophical ideas to produce a coherent thesis that feels highly relevant to our troubled times. Capitalism, Alone is one of the most ambitious economics books published this year, in terms of its breadth and scope, and definitely one of the most fascinating.-- (12/20/2019) Countries with larger tax cuts experienced bigger increases in inequality... [The consequences] are richly detailed in Capitalism, Alone... Builds on Milanovic's previous book, Global Inequality... Ideally the two should be read together... [Milanovic] belongs to a new generation of data-driven economists who have helped track what has happened to income distribution in recent years.--Liaquat Ahamed"New Yorker" (09/02/2019) Attempts to make sense of the new world order and what could come of it. For that, it deserves to be read...An interesting and important read about the state of capitalism today and the directions it may take in the future. Milanovic's history of focusing on economic data--rather than simplistic theory--and his healthy skepticism of meritocratic capitalism ensure that Capitalism, Alone will inform and provoke readers.-- (11/15/2019) Milanovic's greatest contributions in Capitalism, Alone come from his fresh approach to the history of different capitalist countries. His taxonomy of Western countries evolving from classical, social-democratic, and now liberal-meritocratic capitalism helps us put the current state of affairs into better context and think about the ways policy can and cannot improve the system...His analysis of the forces and magnitudes of different kinds of inequality give a more nuanced story than is often found in public discussions.-- (12/30/2019)

Economia mundial: distribuicao anda melhor do que dizem os estagnacionistas e concentracionistas - Bryan Caplan

PERMANENT LINK | MAY 10, 2014 "Hollowing Out": A Global Perspective Bryan Caplan Library of Liberty and Economics	PRINTEMAIL  SHARE
Friday Night Video: Henderson ...

Stagnationists often complain about the "hollowing out" of the economy: Well-paid middle-income jobs are disappearing.  Normally, they only look at the United States and other developed countries.  As a cosmopolitan, however, I'd rather discover what's been happening to incomes at the global level.  Branko Milanovic's "Global Income Inequality by the Numbers: in History and Now" (Global Policy, 2013)has fascinating answers.

The key graph:



Discussion:

What parts of the global income distribution registered the largest gains between 1988 and 2008? As the figure shows, it is indeed among the very top of the global income distribution and among the 'emerging global middle class', which includes more than a third of the world's population, that we find most significant increases in per-capita income. The top 1 per cent has seen its real income rise by more than 60 per cent over those two  decades. However, the largest increases were registered around the median: 80 per cent real increase at the median itself and some 70 per cent around it. It is between the 50th and 60th percentiles of global income distribution that we find some 200 million Chinese, 90 million Indians and about 30 million people each from Indonesia, Brazil and Egypt. These two groups - the global top 1 per cent and the middle classes of the emerging market economies - are indeed the main winners of globalization.

The surprise is that those in the bottom third of global income distribution have also made significant gains, with real incomes rising between over 40 per cent and almost 70 per cent. The only exception is the poorest 5 per cent of the population, whose real incomes have remained the same. This income increase at the bottom of the global pyramid has allowed the proportion of what the World Bank calls the absolute poor (people whose per-capita income is less than 1.25 PPP dollars per day) to go down from 44 per cent to 23 per cent over approximately the same 20 years.

But the biggest losers (other than the very poorest 5 per cent), or at least the 'nonwinners', of globalization were those between the 75th and 90th percentiles of global income distribution, whose real income gains were essentially nil. These people, who may be called a global upper middle class, include many from former communist countries and Latin America, as well as those citizens of rich countries whose incomes stagnated.

So has the global economy "hollowed out"?  A pessimist would say so.  Yet a more balanced view is that 80% of the global population has done great over the last two decades - and the remaining 20% are not so much "losers" as "nonwinners" or "marginal winners".

Milanovic then insightfully breaks down the distribution by country:

Who are the people in the global top 1 per cent? Despite its name, it is a less 'exclusive' club than the US top 1 per cent: the global top 1 per cent consists of more than 60 million people, the US top 1 per cent only 3 million. Thus, among the global top 1 per cent, we find the richest 12 per cent of Americans (more than 30 million people) and between 3 and 6 per cent of the richest Britons, Japanese, Germans and French. It is a 'club' that is still overwhelmingly composed of the 'old rich' world of Western Europe, Northern America and Japan. The richest 1 per cent of the embattled euro countries of Italy, Spain, Portugal and Greece are all part of the global top 1 percentile. The richest 1 per cent of Brazilians, Russians and South Africans belong there too.

To which countries and income groups do the winners and losers belong? Consider the people in the median of their national income distributions in 1988 and 2008. In 1988, a person with a median income in China was richer than only 10 per cent of the world's population. Twenty years later, a person at that same position within Chinese income distribution was richer than more than half of the world's population. Thus, he or she leapfrogged over more than 40 per cent of people in the world.

For India the improvement was more modest, but still remarkable. A person with a median income went from being at the 10th percentile globally to the 27th. A person at the same income position in Indonesia went from the 25th to 39th global percentile. A person with the median income in Brazil gained as well. He or she went from being around the 40th percentile of the global income distribution to about the 66th percentile. Meanwhile, the position of large European countries and the US remained about the same, with median income recipients there in the 80s and 90s of global percentiles...

Who lost between 1988 and 2008? Mostly people in Africa, some in Latin America and post-communist countries. The average Kenyan went down from the 22nd to the 12th percentile globally, the average Nigerian from the 16th to 13th percentile.

Fascinating stuff.  My main thought: Milanovic's results are a Rorschach test for sheer misanthropy.  If you like human beings - as I do now - you'll look at Figure 4 and say, "Wow, living standards are swiftly growing for most of mankind - especially the poor."  If you dislike human beings - as I did in high school - you'll look at Figure 4 and say, "Horrors, living standards are stagnant for the 80th percentile, but the <scorn>super-rich</scorn> are making out like bandits."

20/20 hindsight: No one should be like I was in high school.

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CATEGORIES: Economic History , Growth: Causal Factors , Income Distribution
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johnleemk writes:

I'm surprised you haven't mentioned Milanovic's work on estimating "citizenship rent" -- somewhat similar to the Clemens, et al. "place premium". This paperhttp://heymancenter.org/files/events/milanovic.pdf is quite interesting -- here are some select quotations with the occasional added emphasis:

Around 1870, class explained more than 2/3 of global inequality. And now? The proportions have exactly flipped: more than 2/3 of total inequality is due to location. This is a remarkable achievement for a single explanatory variable. Differently put, more than fifty percent of one’s income depends on the average income of the country where a person lives or was born (the two 19 things being, for 97% of world population, the same). There are of course other factors that matter for one’s income, from gender and parental education which are, from an individual point of view externally given circumstances, to factors like own education, effort and luck that are not. They all influence our income level. But the remarkable thing is that a very large chunk of our income will be determined by only one variable, citizenship, that we, generally, acquire at birth. It is almost the same as saying, that if I know nothing about any given individual in the world, I can, with a reasonably good confidence, predict her income just from the knowledge of her citizenship.

If most of global inequality is due to differences in location, can we treat location, and thus citizenship, as a rent? Is citizenship—belonging to a given country, most often through birth—something that gives us by itself the right to greater income? Is there a difference in our view of the matter if we take a global, as opposed to national perspective? Is there a contradiction between the two?

If citizenship explains 50 percent or more of variability in global incomes, then there are three ways in which global inequality can be reduced. Global inequality may be reduced by high growth rates of poor countries. This requires an acceleration of income growth of poor countries, and of course continued high rates of growth of India, China, Indonesia etc.

The second way is to introduce global redistributive schemes although it is very difficult to see how that could happen. Currently, development assistance is a little over 100 billion a year. This is just five times more than the bonus Goldman Sachs paid itself during one crisis year. So we are not really talking about very much money that the rich countries are willing to spend to help poor countries. But the willingness to help poor countries is now, with the ongoing economic crisis in the West, probably reaching its nadir.

The third way in which global inequality and poverty can be reduced is through migration. Migration is likely to become one of the key problems—or solutions, depending on one’s viewpoint— of the 21st century. To give just one stark example: if you classify countries, by their GDP per capita level, into four “worlds”, going from the rich world of advanced nations, with GDPs per capita of over $20,000 per year, to the poorest, fourth, world with incomes under $1,000 per year, there are 7 points in the world where rich and poor countries are geographically closest to each other, whether it is because they share a border, or because the sea distance between them is minimal. You would not be surprised to find out that all these 7 points have mines, boat patrols, walls and fences to prevent free movement of people. The rich world is fencing itself in, or fencing others out. But the pressures of migration are remaining strong, despite the current crisis, simply because the differences in income levels are so huge.

I conclude with something that resembles a slogan: either poor countries will become richer, or poor people will move to rich countries. Actually, these two developments can be seen as equivalent. Development is about people: either poor people have ways to become richer where they are now, or they can become rich by moving somewhere else.

Posted May 9, 2014 11:49 PM

orthonormal writes:

I can't help feeling that the graph would have been still more informative if they'd kept on breaking down the top of the distribution (top 0.2%, top 0.04%) as far as statistically reasonable; I expect there's more variation within the top 1% than within any other part of the graph.

That being said, I agree that the shape of global economic expansion has been really great so far from a utilitarian point of view. Inequality is a perfectly acceptable price to pay for that, as long as the political process is healthy enough to prevent cartels, collusion, and monopolies that might reverse the positive trend.

Posted May 10, 2014 12:35 AM

Mike W writes:

"But the biggest losers (other than the very poorest 5 per cent), or at least the 'nonwinners', of globalization were those between the 75th and 90th percentiles..."

I was confused because the graph doesn't really show any "losers". But in Milanovic's Figure 4 the vertical axis actually goes below zero and the 5th, 80th and 85th percentiles are negative.