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Global Inequality

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Global Inequality

A New Approach for the Age of Globalization

Belknap Press,

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Globalization’s double-edged sword has cut poverty and jobs, and it now threatens democracy.

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Recommendation

Income and wealth distribution has long been a neglected topic in the field of economics. Economists and political leaders once took for granted that capitalism and globalization would ultimately benefit everyone. It is now clear that this is not the case. Drawing on vast amounts of data, economist Branko Milanović corroborates the growing sense that the gap between rich and poor is widening. Milanović, who approaches his subject dispassionately and without ideological bias, continues to view capitalism as the most effective way of lifting countries out of poverty. He also considers economic growth to be a prerequisite for wealth creation. Nevertheless, he warns that growing inequality poses a real threat to democracy. While he presents the scientific data on inequality at great length, he gives only brief consideration to solutions on how the dynamics that drive inequality might be reversed. His case for open borders, however, leaves a lot to think about. Milanovic’s authoritative book makes for a technical but compelling read for politicians, economists and anyone who wants to understand the forces driving inequality. 

Summary

The New Global Middle Class

Globalization has changed the world dramatically with the promise of growing prosperity for all. But the reality is different: Globalization also has its losers. Between 1988, which approximately marked the end of communism, and the 2008 financial crisis, globalization mostly benefited middle-income earners and the wealthy. The term “middle-income earners,” however, does not refer to members of the middle class in advanced countries but to the global middle class, whose per capita household earnings amount to roughly the world’s median income. Most people who belong to this global middle class live in Asia, especially in China and India, and, to a lesser degree, in Thailand, Vietnam and Indonesia. The richest 1% of the world’s population – “the global plutocrats,” ­who reside mostly in Europe and North America – also recorded large increases in wealth during the same period.

The Old Middle Class Is Losing Out

Those between the 80th and 95th percentiles on the global income distribution scale, most of whom form part of the lower middle class in advanced economies, have experienced almost...

About the Author

Branko Milanović is a senior scholar at the Luxembourg Income Study Center and a visiting professor at the City University of New York. 

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