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Global Inequality: A New Approach for the Age of Globalization Paperback – Illustrated, April 9, 2018

4.4 4.4 out of 5 stars 311 ratings

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Winner of the Bruno Kreisky Prize, Karl Renner Institut
A
Financial Times Best Economics Book of the Year
An
Economist Best Book of the Year
A
Livemint Best Book of the Year


One of the world’s leading economists of inequality, Branko Milanovic presents a bold new account of the dynamics that drive inequality on a global scale. Drawing on vast data sets and cutting-edge research, he explains the benign and malign forces that make inequality rise and fall within and among nations. He also reveals who has been helped the most by globalization, who has been held back, and what policies might tilt the balance toward economic justice.

“The data [Milanovic] provides offer a clearer picture of great economic puzzles, and his bold theorizing chips away at tired economic orthodoxies.”
The Economist

“Milanovic has written an outstanding book…Informative, wide-ranging, scholarly, imaginative and commendably brief. As you would expect from one of the world’s leading experts on this topic, Milanovic has added significantly to important recent works by Thomas Piketty, Anthony Atkinson and François Bourguignon…Ever-rising inequality looks a highly unlikely combination with any genuine democracy. It is to the credit of Milanovic’s book that it brings out these dangers so clearly, along with the important global successes of the past few decades.
―Martin Wolf,
Financial Times

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Editorial Reviews

Review

“The data [Milanovic] provides offer a clearer picture of great economic puzzles, and his bold theorizing chips away at tired economic orthodoxies.”The Economist

“In this fascinating book, Milanovic is able to articulate the study of inequality between and within countries in the clearest possible way. A must-read.”
Thomas Piketty, Paris School of Economics

“This outstanding book adds significantly to recent works by Thomas Piketty, Anthony Atkinson and François Bourguignon. Milanovic concludes that inequality is rising within most countries, although global inequality, albeit huge, has been falling. Unfortunately, he sees no end to the current upswing in inequality in the high-income countries. That creates disturbing political dangers.”
Martin Wolf, Financial Times

“[Milanovic] makes a case that the rapid growth of poorer countries since 1988 has brought the first decline in inequality since the Industrial Revolution…The very rich or the very corrupt may still hide their wealth in tax havens. Politicians in developed countries may decry rising inequality. But global trends and new data tell an alternative story about the progress already made to lift the poor.”
Christian Science Monitor

“Branko Milanović’s much underestimated
Global Inequality: A New Approach for the Age of Globalization, now being published in many languages, tells us more than any other recent book about the state of the world we live in and, at a time when hope is so urgently needed, offers us thought-provoking insights into the world we could become.”Gordon Brown, The Guardian

“Continuing with his extraordinarily important work on the empirics of global inequality, Branko Milanovic in this book expands on that work to lay the basis for a more theoretical understanding of the evolution of inequality. It is seen to be the product of two forces: Kuznets cycles of rising and decreasing within-nation inequalities, and convergence of mean incomes among countries. The relative strength of these two forces has profound political implications: Shall we live in the world of class cleavages, or of huge international income gaps? Is the world to be ruled by the global top 1 percent, or by a large global middle class?”
Joseph Stiglitz, Columbia University

“[Milanovic] believes that growing inequality within countries will not threaten capitalism as a system for allocating economic resources but will pose a serious threat to liberal democracy. As middle classes everywhere get squeezed, the United States will become even more plutocratic, and nativistic populism will become more mainstream in Europe―a process that is already under way, aided in no small part by the influx of migrants, a feature of globalization that is likely to only intensify.”
Richard N. Cooper, Foreign Affairs

“[Milanovic] brings an enormous scope of knowledge of recent and past income trends…The data assembled in the book are incredibly useful and will be eye-opening to most readers…There is an enormous amount of valuable material in a short book and he does raise a number of important basic moral questions that deserve careful thought. The book is well worth reading.”
Dean Baker, Huffington Post

“Branko Milanovic has written an outstanding book.
Global Inequality: A New Approach for the Age of Globalization is informative, wide-ranging, scholarly, imaginative, and commendably brief. As you would expect from one of the world’s leading experts on this topic, Milanovic has added significantly to important recent works by Thomas Piketty, Anthony Atkinson, and François Bourguignon…Ever-rising inequality looks a highly unlikely combination with any genuine democracy. It is to the credit of Milanovic’s book that it brings out these dangers so clearly, along with the important global successes of the past few decades.”Martin Wolf, Financial Times

“Milanovic offers us not just a plethora of facts about income inequality that will surely make his readers think twice. More importantly, he shows us the power of bringing the facts into focus by putting a new lens over these pressing issues―a global perspective…If you do read it, your focus will be sharper, you will be able to see further, perhaps even globally, and your image of a whole host of public policy challenges will be clearer and much more nuanced.”
Miles Corak, American Prospect

“Branko Milanovic’s new book is a welcome companion to Thomas Piketty’s
Capital in the Twenty-First Century.”Vicky Pryce, Prospect

“[A] seminal book.”
Edward Luce, Financial Times

Global Inequality goes well beyond the narrative of rising inequality captured by French economist Thomas Piketty’s surprise 2014 best-seller, Capital in the Twenty-First Century. In his highly readable account, Milanovic puts that development into the context of the centuries-long ebbs and flows of inequality driven by economic changes, such as the Industrial Revolution, as well epidemics, mass migrations, revolutions, wars and other political upheavals.”Matt Phillips, Quartz

“[Milanovic] brings fresh insights to one of today’s most talked-about issues, clearing up confusion on the way.”
Craig Calhoun, New Statesman

“In
Global Inequality, Branko Milanovic continues his lifelong investigation into the past, present, and future of inequality, within and between nations and in the world as a whole. Full of new and provocative ideas―including Kuznets waves and citizenship rents―the book will cement Milanovic’s reputation as one of the most thoughtful and enterprising of inequality scholars.”Angus Deaton, Princeton University

“This is a most unusual and stimulating book. It covers a remarkably broad sweep in time, and deals with issues that are central to the future evolution of humanity across the globe.”
Brian Nolan, University of Oxford

“This is an important book on an issue which has surprisingly been overlooked in the increasing debate on inequality: global inequality. A must-read.”
Ann Harrison, University of Pennsylvania

“Milanovic is one of the first scholars of contemporary income inequality who globalized its study, not just comparing the landscape of income distribution country by country, but integrating all our viewpoints into a global panorama. This book, his latest research and thinking on inequality, gives fresh ideas and insights in global historical perspective, on the profoundly important economic changes in all our lives. This is a book that truly deserves to be read, talked about, and proudly displayed on everyone’s bookshelf.”
Danny Quah, London School of Economics and Political Science

“Hard-hitting…
Global Inequality reveals that the main losers of the past three decades of globalization have been the western middle classes. No wonder then that politics is turning so populist and pear-shaped in so many countries. In fact, Milanovic quite persuasively puts inequality worldwide at the heart of a wide range of ills, as threatening our economies and threatening our long-cherished democracies too…Whether you agree with his politics or not, the statistical support for Milanovic’s story is as compelling as that garnered by Piketty last year. He is persuasive that political concern about rising inequality is more than a passing fad, and that we need to think about narrowing the gaps, inside countries in particular, if we are going to avoid very ugly social and political developments worldwide.”David Dodwell, South China Morning Post

Global Inequality: A New Approach for the Age of Globalization is a brilliant and thought-provoking essay stuffed with enough graphs to satisfy the numerati, anecdotes for the general reader and political insights for the policy wonks. Read it.”Duncan Green, LSE Review of Books

“Drawing on two centuries’ worth of household survey data, the book provides an important empirical picture of inequality patterns within and among nations…Milanovic’s marshaling and analysis of the data are an achievement in themselves. But I also appreciated his imaginative vision and probing sensibility, especially in the fascinating final chapter, in which he poses 10 big questions, offers predictions and proposals, and outlines a future filled with both possibility and peril.”
Jeff Kehoe, Harvard Business Review

“If there is one book you want to read to understand the tumultuous events of 2016, it has to be Branko Milanovic’s
Global Inequality: A New Approach for the Age of Globalization. Using clear prose and armed with tons of data, Milanovic presents a fascinating tale of the rise and wane of global inequality to identify very precisely the winners and losers of globalization within and across countries. In doing so, he revisits some of the hoary assumptions about inequality in economics, and raises disturbing questions about the stability of democratic capitalism.”Pramit Bhattacharya, Mint

“Excellent…can help us better understand inequalities both between and within countries.”
Erik Berglöf, Project Syndicate

“From assessing inequality in the Byzantine Empire to musing over where people fall on the global distribution of income, Branko Milanovic has made a name for himself as an innovative thinker in this field. Even before Thomas Piketty made it cool, he was using Jane Austen vignettes to explore historical patterns of inequality. Milanovic’s new book does not disappoint.”
Anthony Annett, Finance and Development

“Milanovic provides an illuminating analysis.”
Kirkus Reviews

About the Author

Branko Milanovic is Senior Scholar at the Stone Center on Socio-Economic Inequality at the City University of New York and Visiting Professor at the International Inequalities Institute at the London School of Economics and Political Science. Formerly Lead Economist in the World Bank’s research department, he is the author of Capitalism, Alone; and The Haves and the Have-Nots.

Product details

  • Publisher ‏ : ‎ Belknap Press: An Imprint of Harvard University Press; Reprint edition (April 9, 2018)
  • Language ‏ : ‎ English
  • Paperback ‏ : ‎ 320 pages
  • ISBN-10 ‏ : ‎ 067498403X
  • ISBN-13 ‏ : ‎ 978-0674984035
  • Item Weight ‏ : ‎ 10.1 ounces
  • Dimensions ‏ : ‎ 5.5 x 1 x 8.25 inches
  • Customer Reviews:
    4.4 4.4 out of 5 stars 311 ratings

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Customers say

Customers find the book provides valuable information and analysis on current trends. They describe it as a worthwhile, impressive read that is challenging yet fun. However, some readers feel the author uses economic determinism which they consider flawed and contributes to slower economic growth, plutocracy, and populism. They also mention that inequality within countries has increased, with wealth inequality being greater than income inequality, and both kinds of inequality are increasing.

AI-generated from the text of customer reviews

20 customers mention "Information quality"19 positive1 negative

Customers find the book provides valuable information and analysis to understand current trends. They appreciate the detailed analysis and extensive data collection. The book is a must-read for those interested in economic and social policy, as well as political dynamics. Readers describe it as an accessible work for scholars and laypeople alike, providing important insights into the assumptions, significance, and implications of global inequality.

"This is an astonishingly good read, packed with deep insights and thoughtful perspectives. My main interest at the moment is automation and jobs...." Read more

"...Milanovic addresses the problem, presenting data describing the problem, more effectively than any work I’ve seen, more effectively than Piketty..." Read more

"...It is written and reads like an academic paper (which it is) packed with data points and relevant examples on how globalization impacts inequality..." Read more

"...explaining, in terms that a layman can understand, the assumptions, significance, implications, as well as limitations of his statistical analyses...." Read more

10 customers mention "Value for money"10 positive0 negative

Customers find the book offers good value for money. They describe it as an important work with accurate analyses of wealth and income trends. The book provides useful information and well-considered analyses, describing the problem more effectively than other works.

"...Even so his speculations are audacious and worthy...." Read more

"...the problem, presenting data describing the problem, more effectively than any work I’ve seen, more effectively than Piketty (2014), a recent widely..." Read more

"This is by far the best book that I have read on the worldwide distribution of wealth. It combines meticulous research with thoughtful analysis...." Read more

"...Worthwhile read, insightful yet not to demanding." Read more

5 customers mention "Readability"5 positive0 negative

Customers find the book readable. They say it's packed with insightful and thoughtful content, challenging, and informative. Readers find it enjoyable, even on a serious subject.

"This is an astonishingly good read, packed with deep insights and thoughtful perspectives. My main interest at the moment is automation and jobs...." Read more

"...This work merits careful reading and many readers. Milanovic is a visiting professor in economics at the City University of New York...." Read more

"...It is, in fact, a lot of fun reading his book even on such a serious subject...." Read more

"...And let me tell you, that other book is a super fun read if you like short vignettes about economics that build towards a larger point - there he..." Read more

3 customers mention "Economic determinism"0 positive3 negative

Customers dislike the economic determinism in the book. They say it leads to slower growth, plutocracy, and populism.

"...rich, this measure tends to show low inequality; so it is a poor measure of a plutocracy...." Read more

"...because income inequality led to it." This is economic determinism of the worst sort...." Read more

"...particularly in the US, contributes to slower economic growth, plutocracy, and populism..." Read more

3 customers mention "Inequality"0 positive3 negative

Customers are unhappy with the current level of inequality. They mention that wealth inequality is higher than income inequality, and both kinds are increasing. It decreases the middle class' ability to limit power of both the rich and the poor. There is too little support for the poor, and there is decreased support for social services like education and health care.

"...Everywhere you turn, there is too little support for the poor. Tax the rich. It is the only answer...." Read more

"...between countries has decreased somewhat, but the inequality within countries has increased in ways that differ substantially between emerging and..." Read more

"Income inequality ... the world's most important problem..." Read more

Top reviews from the United States

  • Reviewed in the United States on July 4, 2017
    This is an astonishingly good read, packed with deep insights and thoughtful perspectives. My main interest at the moment is automation and jobs. Technology like driverless cars and automated fast food preparation and delivery will decimate the lower working classes and AI for medicine and surgery will depreciate higher wage earners; but the current technological effects are hollowing out the middle class. Milanovic explains the link with globalization beautifully: Lenovo and Apple are giving us the technology and globalization both inextricably intertwined. Milanovic hopes that the huge increase in cheap labor as the middle class is pushed lower will create technologies to exploit this labor and more jobs. Aside from Amazon's delivery centers, there doesn't seem to be any evidence for this; so I think it is a pipe dream that extrapolates past economic analysis in an unwarranted way into the future. Similarly his creation of endless Kuznets cycles seems an unwarranted speculation; but his speculations are darned good! and well worth reading. It seems much more likely to me that the plutocrats of the world will unite with no regard to democracy or the poor people around them. LIke the Raj of India, or the Kings of old, they will have no meaningful contact or sympathy for the poor. Only revolutionary power will constrain them or alter the future. Much of what Milanovic describes accords with this future but he seems unwilling to have so negative a view of the dystopia to come.
    Global Inequality by Branko Milanovic was a really informative and challenging read. I’ve long thought that international economic equality lay at the heart of our developing dystopia; but never really fleshed my ideas out. I found his ideas challenging and even exciting. Many of his speculations I totally agreed with, and I think I understand his motivations for the things I don’t agree with. Even so his speculations are audacious and worthy.
    I particularly agree with his recommendations to equalize endowments of inheritance and education. Inheritance distorts our democracy much too much. We think that who you know is much more important than what you know or do. We create dynasties in presidents as if that is the natural order instead of struggling to find people meriting our leadership. Reason enough for Hillary to be defeated. Education is a disaster. We should have a thousand Harvards and Stanfords, and if we can only create a handful, then they should all be brought down to a level of excellence we can manage. No more of these exclusive clubs. I doubt it would decrease our innovation much. Huge amounts of innovation are going on in secondary universities, but they have no sense of exclusivity or natural superiority. The whole public school system is an underresourced fiasco. How can we let private schools drain so many resources too? Everywhere you turn, there is too little support for the poor. Tax the rich. It is the only answer.
    Milanovic has too great a faith in the existing democratic forces for social support and transfer. He thinks that the threat of wars will support population growth up and progressive taxes will continue. This seems very unlikely to me. Only one threat will hold the plutocracy in check, and that is the threat of rebellion. They are outnumbered and know it. The Atlantic has this great article about newly minted centi-millionaires buying fancy condos in abandoned missile silos in Kansas, with pilots to take them there at a moment’s notice. They promise their pilots to bring their own families too. They’re that scared about rebellion. And they use their riches effectively to pass laws in their favor. If we don’t watch out, the vast majority will be powerless before we know it. Democracy is a farce already: soon it my have no bearing on reality at all. The NRA is a total farce. The militia is a paper tiger.
    Milanovic recognizes that his hope for a low-skilled technology breakthrough is totally unanticipated, but he cherishes it anyway. Again, he seems to be relying on general rules that capitalism will take advantage of labor wherever it can, but seemingly ignores that robots will be the cheapest labor ever, and humans can go hang. I see no possibility that low paying jobs will be found through technology. Yes, Amazon warehouses may find temporary jobs for people to be the eyes and ears of robots in their warehouses, but that technology is rapidly advancing and those jobs will be gone in no time. The consequence of my expectations is that the roll of unemployed will soon be staggeringly large even in the “advanced” countries. There is clear evidence already that millions have been forced out of the labor market entirely, and millions more have been forced into low paying jobs way below their skills. Driverless cars will destroy another huge set of jobs for poorly educated workers. Automated fast food creation and delivery will destroy the last resort of menial jobs. There will be no place left. Baker relies on history to argue that technology will create as many jobs or more than it destroys, but this is wishful thinking. The past is not a faithful guide to the future. The dystopic changes have already begun for anyone with open eyes to see them.

    Milanovic seems to make a similar error to Baker’s in supposing that there are never ending Kuznets cycles where inequality will go up and down. He seems to think that because there was one and the final leg is reversing itself, that another is beginning. His analysis of pre-industrial inequality waves is informative and may even be accurate, but his predictions of where the current wave in the rise of inequality in advanced countries is heading is unconvincing and even he seems unsure of its length or direction. One aspect of his analysis I find troubling is the use of Gini measure. This measures the average differences in income between all pairs of people in an economy. Sadly, when everyone is poor except for a tiny handful of ultra rich, this measure tends to show low inequality; so it is a poor measure of a plutocracy. Gini tends to lead economists to focus on the differences between low paying and high paying jobs, because that is where the numbers are to create large dispersion as measured by the Gini. That’s ok for a functioning democracy, but lousy for a plutocracy with a handful of billionaires calling the shots, which is closer to what we have, and exactly what I expect in the near future. So the Gini may soon go down very far and fast, but inequality here and in the world will be out of control.
    I like what he has to say about automation and globalization as inextricably intertwined and his simplification of this link with: Apple and Lenovo produce our technology with underpaid labor in China. His book rightly deals with globalization’s effects on hollowing out our middle class and building up China’s middle class. But his predictions of the future do not take automation’s rampant changes into account. Driverless cars, robots for entry level jobs; AI for finance and medicine; so many jobs will be destroyed at all levels of wages. If we lost 5 M jobs to China in the last decades we will lose 10s of M jobs to automation in the next decades. Anything a human mind can do, AI will be able to do in the next decades; with this notable improvement: the AI will do it at a level of the best human minds, not the average or the worst. If the middle class does not assert its power now, it will be powerless to stop the plutocrats in the next decades. Articles have appeared to suggest that China and the US will dominate AI and create jobs for educated experts, with the ignorant rest of the world subservient to this technology. But this is foolish. Once the AI technology is tested and effective,and proven,w anyone will be able to implement it. It is just simple correlation done on massive data bases. Anyone can do it. IN fact, technology companies are counting on its simplicity. Just take a look at Microsoft’s Azure Studio as an example of the democratization of the technology. However, once released, jobs will disappear. AI weapons will follow, and that is the main threat to the plutocrats: AI weapons of rebellion and democracy. Hacking banks and hidden accounts is our only defense against dystopia.
    If history has a lesson for us, it seems to be that high wages lead to faster technological change. This was true in the past, and seems to hold for automation and AI. But any human wages will now promote smart technology. Raising minimum wages will be a real stimulus to its adoption. In a series of papers and a book, Allen (2003, 2005, 2011) argued that it was not British property rights (which were weaker than in France), or low taxation (which was actually higher than in France) that were crucial for the British take-off of industrial technology, but rather the high cost of labor. High wages made it profitable to try to find ways to replace labor with capital. Going further back into the past, the same mechanism was adduced by Aldo Schiavone (2002), following Marx (1965), as an explanation for why capital-intensive production never took place in the ancient world.
    Milanovic’s analysis of the forces for increased inequality are superb. The forces pushing for a continuation of the increase in inequality seem overwhelming in the United States. They include not only the existing, and well-studied, forces of technology, openness/globalization, and policy (TOP)., but new ones too. Especially important are the combination of high labor and capital incomes received by the same individuals or households (which increases inequality) and the greater influence of the rich on the political process and thus on rule-setting favorable to themselves.
    His most revealing analysis and recommendations, I thought, were about immigration. As Figure 3.3 shows, the location element was almost negligible in 1820: only 20 percent of global inequality was due to difference among countries. Most of global inequality (80 percent) resulted from differences within countries; that is, the fact that there were rich and poor people in England, China, Russia, and so on. It was class that mattered. Being “well-born” in this world (as we also see in the literature of the time) meant being born into a high income group rather than being born in England, or China, or Russia. But as the upwardly rising line in the figure shows, that changed completely over the next century. The proportions reversed: by the mid-twentieth century, 80 percent of global inequality depended on where one was born (or lived, in the case of migration), and only 20 percent on one’s social class. This world is best exemplified by European colonialism in Africa and Asia, where small groups of Europeans disposed of incomes a couple of hundred times greater than those of the native people. The key point is not just to compare the incomes of Europeans in Africa with those of Africans, but to realize that these were typical incomes for such classes of people in western Europe.
    I think that we will revert to class societies again with the rise of smart technology. It will not matter where you live: you will be poor if you are not part of the plutocracy.
    However, until then, his analysis of immigration is cogent. His recommendation for several classes of citizen, some of whom have to pay more taxes, etc. is rife with danger. Plutocrats could easily arrogate to themselves primary and superior citizenship. I think that is what will happen. In many ways they already have. They don’t have to pay taxes at all already.
    His analysis of money in politics is spot on. This plutocratic system is evident in a perhaps unwitting quotation from George W. Bush, when he was speaking to a rich crowd in Washington, DC: “This is an impressive crowd—the haves and the have-mores. Some people call you the elites; I call you my base.” A plutocracy is thus confirmed. The government has become little more than in Marx’s words from the Communist Manifesto, “the committee for managing the common affairs of the bourgeoisie.”
    “People’s Capitalism
    It has been a standard view in economics that factor shares tend to be constant, with some 70 percent of national income going to labor and some 30 percent to capital. This nostrum has been overturned in the past couple of decades as it has become clear that capital shares are increasing in all advanced economies. A continuation of this trend of machines (such as robots) becoming less expensive would be expected to lead to further declines in the labor share, and thus to the increase in the share of capital.
    Rich countries’ workers are squeezed between their own countries’ top earners, who will continue to make money out of globalization, and emerging countries’ workers, whose relatively cheap labor makes them more attractive for hiring. The great middle-class squeeze (which Milanovic discussed in Chapters 1 and 2), driven by the forces of automation and globalization, is not at an end.
    This squeeze will in turn further polarize Western societies into two groups: a very successful and rich class at the top, and a much larger group of people whose jobs will entail servicing the rich class in occupations where human labor is cheap. Already, among the top 10 percent of wage-earners, we cannot identify differences in observable characteristics (education, experience) that could explain why salaries between the top 1 percent and the remaining 9 percent differ by a factor of ten or more.
    Policies that would work toward this long-term equalization include (1) high inheritance taxes (as Piketty calls for), which would keep parents from being able to transfer large assets to their children, (2) corporate tax policies that would stimulate companies to distribute shares to workers (moving toward a system of limited workers’ capitalism), and (3) tax and administrative policies that would enable the poor and the middle classes to have and hold financial assets. But these policies would not be sufficient. The high volatility of returns from capital and the need for lots of information in order to make wise investment decisions, in addition to the problem of combining the risk of working for a company with the risk of owning shares in the same company, make a “people’s capitalism” very difficult to realize. “ Free AI financial management systems will be necessary to make this work and create a people’s capitalism for all.
    Global Inequality by Branko Milanovic was a really informative and challenging read. I’ve long thought that international economic equality lay at the heart of our developing dystopia; but never really fleshed my ideas out. I found his ideas challenging and even exciting. Many of his speculations I totally agreed with, and I think I understand his motivations for the things I don’t agree with. Even so his speculations are audacious and worthy.
    I particularly agree with his recommendations to equalize endowments of inheritance and education. Inheritance distorts our democracy much too much. We think that who you know is much more important than what you know or do. We create dynasties in presidents as if that is the natural order instead of struggling to find people meriting our leadership. Reason enough for Hillary to be defeated. Education is a disaster. We should have a thousand Harvards and Stanfords, and if we can only create a handful, then they should all be brought down to a level of excellence we can manage. No more of these exclusive clubs. I doubt it would decrease our innovation much. Huge amounts of innovation are going on in secondary universities, but they have no sense of exclusivity or natural superiority. The whole public school system is an underresourced fiasco. How can we let private schools drain so many resources too? Everywhere you turn, there is too little support for the poor. Tax the rich. It is the only answer.
    Milanovic has too great a faith in the existing democratic forces for social support and transfer. He thinks that the threat of wars will support population growth up and progressive taxes will continue. This seems very unlikely to me. Only one threat will hold the plutocracy in check, and that is the threat of rebellion. They are outnumbered and know it. The Atlantic has this great article about newly minted centi-millionaires buying fancy condos in abandoned missile silos in Kansas, with pilots to take them there at a moment’s notice. They promise their pilots to bring their own families too. They’re that scared about rebellion. And they use their riches effectively to pass laws in their favor. If we don’t watch out, the vast majority will be powerless before we know it. Democracy is a farce already: soon it my have no bearing on reality at all. The NRA is a total farce. The militia is a paper tiger.
    Milanovic recognizes that his hope for a low-skilled technology breakthrough is totally unanticipated, but he cherishes it anyway. Again, he seems to be relying on general rules that capitalism will take advantage of labor wherever it can, but seemingly ignores that robots will be the cheapest labor ever, and humans can go hang. I see no possibility that low paying jobs will be found through technology. Yes, Amazon warehouses may find temporary jobs for people to be the eyes and ears of robots in their warehouses, but that technology is rapidly advancing and those jobs will be gone in no time. The consequence of my expectations is that the roll of unemployed will soon be staggeringly large even in the “advanced” countries. There is clear evidence already that millions have been forced out of the labor market entirely, and millions more have been forced into low paying jobs way below their skills. Driverless cars will destroy another huge set of jobs for poorly educated workers. Automated fast food creation and delivery will destroy the last resort of menial jobs. There will be no place left. Baker relies on history to argue that technology will create as many jobs or more than it destroys, but this is wishful thinking. The past is not a faithful guide to the future. The dystopic changes have already begun for anyone with open eyes to see them.

    Milanovic seems to make a similar error to Baker’s in supposing that there are never ending Kuznets cycles where inequality will go up and down. He seems to think that because there was one and the final leg is reversing itself, that another is beginning. His analysis of pre-industrial inequality waves is informative and may even be accurate, but his predictions of where the current wave in the rise of inequality in advanced countries is heading is unconvincing and even he seems unsure of its length or direction. One aspect of his analysis I find troubling is the use of Gini measure. This measures the average differences in income between all pairs of people in an economy. Sadly, when everyone is poor except for a tiny handful of ultra rich, this measure tends to show low inequality; so it is a poor measure of a plutocracy. Gini tends to lead economists to focus on the differences between low paying and high paying jobs, because that is where the numbers are to create large dispersion as measured by the Gini. That’s ok for a functioning democracy, but lousy for a plutocracy with a handful of billionaires calling the shots, which is closer to what we have, and exactly what I expect in the near future. So the Gini may soon go down very far and fast, but inequality here and in the world will be out of control.
    I like what he has to say about automation and globalization as inextricably intertwined and his simplification of this link with: Apple and Lenovo produce our technology with underpaid labor in China. His book rightly deals with globalization’s effects on hollowing out our middle class and building up China’s middle class. But his predictions of the future do not take automation’s rampant changes into account. Driverless cars, robots for entry level jobs; AI for finance and medicine; so many jobs will be destroyed at all levels of wages. If we lost 5 M jobs to China in the last decades we will lose 10s of M jobs to automation in the next decades. Anything a human mind can do, AI will be able to do in the next decades; with this notable improvement: the AI will do it at a level of the best human minds, not the average or the worst. If the middle class does not assert its power now, it will be powerless to stop the plutocrats in the next decades. Articles have appeared to suggest that China and the US will dominate AI and create jobs for educated experts, with the ignorant rest of the world subservient to this technology. But this is foolish. Once the AI technology is tested and effective,and proven,w anyone will be able to implement it. It is just simple correlation done on massive data bases. Anyone can do it. IN fact, technology companies are counting on its simplicity. Just take a look at Microsoft’s Azure Studio as an example of the democratization of the technology. However, once released, jobs will disappear. AI weapons will follow, and that is the main threat to the plutocrats: AI weapons of rebellion and democracy. Hacking banks and hidden accounts is our only defense against dystopia.
    If history has a lesson for us, it seems to be that high wages lead to faster technological change. This was true in the past, and seems to hold for automation and AI. But any human wages will now promote smart technology. Raising minimum wages will be a real stimulus to its adoption. In a series of papers and a book, Allen (2003, 2005, 2011) argued that it was not British property rights (which were weaker than in France), or low taxation (which was actually higher than in France) that were crucial for the British take-off of industrial technology, but rather the high cost of labor. High wages made it profitable to try to find ways to replace labor with capital. Going further back into the past, the same mechanism was adduced by Aldo Schiavone (2002), following Marx (1965), as an explanation for why capital-intensive production never took place in the ancient world.
    Milanovic’s analysis of the forces for increased inequality are superb. The forces pushing for a continuation of the increase in inequality seem overwhelming in the United States. They include not only the existing, and well-studied, forces of technology, openness/globalization, and policy (TOP)., but new ones too. Especially important are the combination of high labor and capital incomes received by the same individuals or households (which increases inequality) and the greater influence of the rich on the political process and thus on rule-setting favorable to themselves.
    His most revealing analysis and recommendations, I thought, were about immigration. As Figure 3.3 shows, the location element was almost negligible in 1820: only 20 percent of global inequality was due to difference among countries. Most of global inequality (80 percent) resulted from differences within countries; that is, the fact that there were rich and poor people in England, China, Russia, and so on. It was class that mattered. Being “well-born” in this world (as we also see in the literature of the time) meant being born into a high income group rather than being born in England, or China, or Russia. But as the upwardly rising line in the figure shows, that changed completely over the next century. The proportions reversed: by the mid-twentieth century, 80 percent of global inequality depended on where one was born (or lived, in the case of migration), and only 20 percent on one’s social class. This world is best exemplified by European colonialism in Africa and Asia, where small groups of Europeans disposed of incomes a couple of hundred times greater than those of the native people. The key point is not just to compare the incomes of Europeans in Africa with those of Africans, but to realize that these were typical incomes for such classes of people in western Europe.
    I think that we will revert to class societies again with the rise of smart technology. It will not matter where you live: you will be poor if you are not part of the plutocracy.
    However, until then, his analysis of immigration is cogent. His recommendation for several classes of citizen, some of whom have to pay more taxes, etc. is rife with danger. Plutocrats could easily arrogate to themselves primary and superior citizenship. I think that is what will happen. In many ways they already have. They don’t have to pay taxes at all already.
    His analysis of money in politics is spot on. This plutocratic system is evident in a perhaps unwitting quotation from George W. Bush, when he was speaking to a rich crowd in Washington, DC: “This is an impressive crowd—the haves and the have-mores. Some people call you the elites; I call you my base.” A plutocracy is thus confirmed. The government has become little more than in Marx’s words from the Communist Manifesto, “the committee for managing the common affairs of the bourgeoisie.”
    “People’s Capitalism
    It has been a standard view in economics that factor shares tend to be constant, with some 70 percent of national income going to labor and some 30 percent to capital. This nostrum has been overturned in the past couple of decades as it has become clear that capital shares are increasing in all advanced economies. A continuation of this trend of machines (such as robots) becoming less expensive would be expected to lead to further declines in the labor share, and thus to the increase in the share of capital.
    Rich countries’ workers are squeezed between their own countries’ top earners, who will continue to make money out of globalization, and emerging countries’ workers, whose relatively cheap labor makes them more attractive for hiring. The great middle-class squeeze (which Milanovic discussed in Chapters 1 and 2), driven by the forces of automation and globalization, is not at an end.
    This squeeze will in turn further polarize Western societies into two groups: a very successful and rich class at the top, and a much larger group of people whose jobs will entail servicing the rich class in occupations where human labor is cheap. Already, among the top 10 percent of wage-earners, we cannot identify differences in observable characteristics (education, experience) that could explain why salaries between the top 1 percent and the remaining 9 percent differ by a factor of ten or more.
    Policies that would work toward this long-term equalization include (1) high inheritance taxes (as Piketty calls for), which would keep parents from being able to transfer large assets to their children, (2) corporate tax policies that would stimulate companies to distribute shares to workers (moving toward a system of limited workers’ capitalism), and (3) tax and administrative policies that would enable the poor and the middle classes to have and hold financial assets. But these policies would not be sufficient. The high volatility of returns from capital and the need for lots of information in order to make wise investment decisions, in addition to the problem of combining the risk of working for a company with the risk of owning shares in the same company, make a “people’s capitalism” very difficult to realize. “ Free AI financial management systems will be necessary to make this work and create a people’s capitalism for all.
    Global Inequality by Branko Milanovic was a really informative and challenging read. I’ve long thought that international economic equality lay at the heart of our developing dystopia; but never really fleshed my ideas out. I found his ideas challenging and even exciting. Many of his speculations I totally agreed with, and I think I understand his motivations for the things I don’t agree with. Even so his speculations are audacious and worthy.
    I particularly agree with his recommendations to equalize endowments of inheritance and education. Inheritance distorts our democracy much too much. We think that who you know is much more important than what you know or do. We create dynasties in presidents as if that is the natural order instead of struggling to find people meriting our leadership. Reason enough for Hillary to be defeated. Education is a disaster. We should have a thousand Harvards and Stanfords, and if we can only create a handful, then they should all be brought down to a level of excellence we can manage. No more of these exclusive clubs. I doubt it would decrease our innovation much. Huge amounts of innovation are going on in secondary universities, but they have no sense of exclusivity or natural superiority. The whole public school system is an underresourced fiasco. How can we let private schools drain so many resources too? Everywhere you turn, there is too little support for the poor. Tax the rich. It is the only answer.
    Milanovic has too great a faith in the existing democratic forces for social support and transfer. He thinks that the threat of wars will support population growth up and progressive taxes will continue. This seems very unlikely to me. Only one threat will hold the plutocracy in check, and that is the threat of rebellion. They are outnumbered and know it. The Atlantic has this great article about newly minted centi-millionaires buying fancy condos in abandoned missile silos in Kansas, with pilots to take them there at a moment’s notice. They promise their pilots to bring their own families too. They’re that scared about rebellion. And they use their riches effectively to pass laws in their favor. If we don’t watch out, the vast majority will be powerless before we know it. Democracy is a farce already: soon it my have no bearing on reality at all.
    13 people found this helpful
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  • Reviewed in the United States on November 2, 2016
    Review of Milanovic’s "Global inequality" by Paul F. Ross

    Inequality in income, the difference between incomes received by the world’s poorest and the world’s richest, is the world’s most important problem. It has been the world’s most important problem for at least two centuries. Milanovic addresses the problem, presenting data describing the problem, more effectively than any work I’ve seen, more effectively than Piketty (2014), a recent widely read treatment of the topic. This work merits careful reading and many readers. Milanovic is a visiting professor in economics at the City University of New York.

    In five chapters, Milanovic (Chapter 1) describes the rise of the middle class and the very, very rich over the last century and a half, (Chapter 2) documents this rise and fall, discussing possible causes, ____________________________________________________________________________________

    Milanovic, Branko "Global inequality: A new approach for the age of globalization" 2016, Harvard University Press, Cambridge MA, ix + 299 pages
    ____________________________________________________________________________________

    (Chapter 3) stresses the difference in mean per capita domestic product among nations and its implications, (Chapter 4) considers the likely routes to greater equality, and (Chapter 5) asks ten questions, then offers answers for the future as he sees the answers.

    The reader must learn the Gini coefficient. Wikipedia presents a useful discussion. The coefficient was invented by an Italian statistician in 1912. Usually it is used to describe income inequality within a nation, but it can be used to describe inequality for a cluster of nations or for the world. The Gini coefficient varies from zero (expressed as 0.00 describing a circumstance in which all households in a national economy receive exactly the same income) to one (expressed as 1.00 describing a circumstance in which a very small percentage of a nation’s households receive very large incomes and all other households receive incomes close to zero, say, sufficient only to provide enough food for survival). The Gini can be calculated for before-taxes income (Milanovic calls these “market incomes”), for after-taxes income, for after-income-redistribution income, and so forth. As you read, you will want to note carefully the Gini coefficient being presented. Another index describing income inequality (Theil) is mentioned briefly.

    Building on the work of many economists with special emphasis on recent work, Milanovic describes forces that increase income disparity (increase the Gini coefficient) and forces that decrease income disparity (decrease the Gini coefficient). The forces driving increased disparity are (1) increase in international trade (manufacturers’ access to low wage workers through globalization, increasing profits), (2) increase in capital flow among nations (tax shelters available to the rich through globalization), (3) the rich owning most of the capital, (4) return on capital, (5) the education premium (well educated people get high wages), (6) the tendency for well educated people who are also well paid people to marry each other, (7) a nation’s high historical per capita GDP (Gross Domestic Product), (8) graft, (9) … The forces driving decreased disparity are (1) free, quality education for all people, (2) national social policy leading to redistribution of income (social security taxes, progressive income taxes, progressive inheritance taxes), (3) a stable law-based national society, (4) the prevalence and power of labor unions, (5) war, (6) accidental shocks (like the Great Depression of 2007-2009), (7) …

    The empirical base for Milanovic’s analysis is strong. He is often using studies based on data from the World Bank, the OECD, the International Monetary Fund, and world-spanning household surveys in which Milanovic himself has been a leading participant. While the quality of household surveys by national statistical offices varies widely worldwide and does not provide the empirical base for analyses that many scholars would like to have, Milanovic accomplishes access to important data through his own work and the work of others that persuades this reader that his empirical base is as solid as is available today.

    Having sung praises for this work by Milanovic, having listed some of its important insights, having declared this to be the best work known to this reader on this high priority topic, it is important to also describe very significant flaws in this work. (a) Milanovic is an economist and thinks like an economist. Thus the nation state is the only unit of analysis within which an acting agent generates “forces” that drive economic and social change. In fact, many influences ignore national boundaries. Multiple examples can be named :: the political sentiment denying migration rights to people wanting to leave one nation to go to another, the intent of those with power to maintain their own power, the desire to gain an education as taught by parents to their children, racial discrimination, gender discrimination, communication networks and access to news, readiness to learn from the sciences, etc. etc. etc. By building theories using nations as units of analysis, by making forecasts for nations, vital opportunities to understand human behavior and increase the usefulness and accuracy of forecasts are placed out of reach. The fences restricting Milanovic’s work need to be set aside.

    (b) Milanovic has chosen a topic important to everyone, no matter their special knowledge, but denies his responsibility for bringing to his work the insights available from all the behavioral and management sciences, from all of human knowledge. For example, he writes “[understanding] the human right to migration belongs properly to political philosophy, so we shall not consider it further here (p 148).” He writes about “a set of factors that are almost by definition impossible for an economist to account for even though they could have huge economic effects (p 164).” This is “silo” thinking all too common among scientists of all kinds. It is too easy to think “I know my science and am expert at it, but I take no responsibility for relating what my science knows to what others know.” Psychologist Pinker (2011) addresses the question of whether humans have learned to decrease their tendency to kill each other. He gathers data from history, archaeology, political science, and the like to show that the rate of killing each other is lower today than at any time in human history. That may be hard to believe, but Pinker lays out the data. Pinker addresses a question and gathers evidence from all sciences. All scientists have the same obligation and the same opportunity.

    (c) Milanovic, like many economists, observes a trend, gives the trend a name, and elevates the trend to the dignity of a scientific truth embedded in the way the universe operates. Milanovic’s use of the Kuznets curve is a prime example of this bad habit. Simon Kuznets (1966) noted that the Gini coefficient in several nations grew from a low value (0.30) (little income inequality) to a high value (0.55) (important income inequality) between the start of the Industrial Revolution and the beginning of WWI, then decreased through WWII into the 1950s. This rise and fall of the Gini coefficient across time became known as the Kuznets curve. The causes for the rise and causes for the fall were sought mostly by taking thought … doing too little data scrounging and multivariate analysis across multiple nations. The onlookers in 1966 wondered if the curve would continue its downward trend into the late twentieth century. Milanovic, writing about fifty years after Kuznets’ work, sees that the Gini coefficient in the US (also in the UK, France, Germany, …) began to rise again in the 1970s and is approaching the 1912 high in 2015. Will inequality continue to rise? Will the middle class continue to disappear, leaving only the very rich and the very poor? Milanovic sees there is not just one Kuznets curve, 1850 to 1966. The rising part of a second curve has presented itself between 1970 and 2015. So Milanovic proposes that there are “Kuznets waves.” Milanovic’s look into the future, Chapter 5, builds his speculations around this second Kuznets wave. This leaves this reader very uncomfortable.

    (d) We need much more than Kuznets curves to gain understanding of why income inequality sometimes grows, sometimes subsides. First, note Milanovic’s data showing the Gini coefficient for a nation growing at the same time the mean income in a nation grows (e.g. the US, 1850-1914; China, 1970-2015). Everyone in these nations at these times gets increasingly higher pay. Why? Probably because productivity is increasing. Probably because, with more earnings in hand, the willingness for the rich and the organizationally powerful to share pay increases among the middle and lower classes is easier to find.

    (e) Milanovic realizes that today’s distribution of pay and pay increases is often tied to luck. He writes “A person could become a Wall Street banker rather than a yoga instructor simply because of walking down the right street and meeting the right person one evening (p215).” This psychologist asks: what would happen to productivity if those who work, everywhere, in every kind of job, understood (believed, saw evidence) that excellent work is rewarded with excellent pay? As China transitioned to a capitalist society after Mao’s death and rural workers were given authority to decide how their land would be used, rural incomes and China’s mean income increased as did China’s Gini coefficient. Could it be that Chinese workers realized that their own improved productivity brought them desired material rewards. Psychology (the psychometric aspect of that science) has known how to measure job performance since the mid twentieth century. Seventy years later, no organization is using state of the art job performance measures … not even the psychological scientists who claim to do peer review of scientific work offered for publication, publishing only the best of what is offered. Unless one has measured job performance objectively, in a way in which equally competent/informed observers making independent judgments agree in their judgments, it becomes impossible to pass to those who merit rewards the rewards that they merit. What would happen if organizations dotted around the world learned what psychology has known for over half a century and installed rewards for merit-worthy individual and team performance? Would the national Gini coefficient go down (because productivity increased dramatically and rewards were shared more equitably)?

    (f) Clearly economic outcomes (such as per capita GDP) reflect the influence of many variables. The correlation coefficient, a statistic, was invented in about 1870 to describe quantitatively the relationship between two social or economic variables. Pearson described the Pearson r in 1885, today’s commonly used method for calculating a correlation. Yule invented multiple correlation in about 1890, a means for using multiple variables to forecast an outcome of interest. Spearman invented factor analysis in 1903 as he tried to partial what people view as intelligent behavior demonstrated in various kinds of paper-and-pencil tasks into a minimum number of separate components of intelligence (is there just one kind of intelligence affecting performance of every kind, or are there several independent kinds of intelligence?). By 1970, the statistical procedure called factor analysis had improved to its current state of the art. Factor analysis has as its purpose, using statistical methods, to examine the relationships among many variables in order to derive the simplest possible explanation for an observed outcome … and that, of course, meets the gold standard for a scientific result of highest value. Milanovic’s book cites no multivariate studies of economic and social variables, no studies of income inequality using factor analysis. For that matter, factor analysis is little used in any science even though every science is tasked with understanding the effect of many variables on outcomes of importance. Does it take economists, does it take scientists of all kinds, more than a century to discover and use a vital tool for advancing scientific knowledge !!!

    (g) Milanovic, among other things, notes that households formed when two highly educated and highly paid people marry enjoy high incomes that increase the inequality of household incomes. Not only is this pair highly paid, they probably also are able to save and thus own increasing capital assets. This, Milanovic speculates, is a new force increasing inequality in household incomes. He records the degree to which women have joined the paid workforce in the last five decades, increasing from 40 percent to almost 90 percent. All this is true. But this reader suspects that this is not a new force affecting the inequality of household incomes. This psychologist suspects that able young men and able young women, in societies that allow individuals to make their own choice of mates, have been finding each other, and marrying, for millennia, giving their households and families extraordinary privileges. Come on, Dr. Milanovic, let’s avoid seeing an ancient tendency as a new force driving income inequality. The practice is real and, where societies allowed individual choice, it has driven household inequality for many thousands of years.

    (h) There seems to be a ghost in the closet that economists prefer overlooking. Piketty (2014) provides extended descriptions of the proportions of a nation’s wealth owned by the one percent of families who are most wealthy and compares that with the proportion owned by the bottom fifty percent of the nation’s households. The numbers are shocking. If the inequality of incomes were to grow even beyond what exists now, it seems to this observer that the world’s societies wander into increasing risks of violent uprisings by the poor against the rich. One has to wonder if uprisings of the poor against the rich are what we see in ISIS’ dedication to inflicting injury on western nations. The number of gated communities would increase worldwide as wealthy families seek safety at home. Milanovic notes that some nations have experienced increasing shares of the GDP spent on policing in reent years (recall the increased policing of the boarding of aircraft worldwide following the attacks on New York, Pennsylvania, and Washington on 11 September 2001). He avoids discussing the uncomfortable possibility of increased risks of riots and revolutions.

    Summarizing briefly, there are few topics that are more important than income inequality around the globe. Within this reader’s knowledge, Milanovic treats the topic as competently as it is being treated anywhere. His work should be widely read and discussed. But his work should also be seen for the opportunities the work overlooks as noted in this review. The world needs to address the challenge of income inequality with more insightful science in the interest of containing the risks of social havoc.

    Bellevue, Washington
    2 November 2016

    Copyright © 2016 by Paul F. Ross All rights reserved.

    References

    Kuznets, Simon "Modern economic growth" 1966, Yale University Press, New Haven CT

    Milanovic, Branko "Global inequality: A new approach for the age of globalization" 2016, Harvard University Press, Cambridge MA

    Piketty, Thomas "Capital in the twenty-first century" 2014, The Belknap Press of Harvard University Press, Cambridge MA

    Pinker, Steven "The better angels of our nature: Why violence has declined" 2011, Viking, New York NY
    5 people found this helpful
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  • Reviewed in the United States on November 7, 2022
    Global Inequality is truly amazing.

    It is written and reads like an academic paper (which it is) packed with data points and relevant examples on how globalization impacts inequality and what we can expect the situation to look like in the future. With that being said this book is not something you can skim through. It requires time and patience to be fully processed. However, this is its biggest downside, and it’s such a pity that this book is not written in a more accessible manner so these important topics could reach more people.

    Warmest recommendation!
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  • Reviewed in the United States on January 25, 2017
    This is by far the best book that I have read on the worldwide distribution of wealth. It combines meticulous research with thoughtful analysis. The author maintains an objective stance (unlike some other academics or economists, who tend to get all worked up over this emotive subject) throughout. His study examines data from a wide range of global and national statistics over a considerable period, from which he draws sound conclusions.

    A treatise by an economist on the subject of global inequality inevitably entails detailed study of complex statistical data. In presenting such data, the author takes great care in explaining, in terms that a layman can understand, the assumptions, significance, implications, as well as limitations of his statistical analyses. It is, in fact, a lot of fun reading his book even on such a serious subject.

    For anyone interested in the subject, this book packs a great deal of information and well-considered analyses. It is highly recommended.
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  • Strongbow
    5.0 out of 5 stars Read it...
    Reviewed in Germany on November 11, 2022
    A great book...
  • Cliente Amazon
    4.0 out of 5 stars Nova abordagem para o problema da desigualdade.
    Reviewed in Brazil on April 22, 2017
    Fundamentada em amplas pesquisas familiares.
    Bastante abrangente e atual.
    Para ler, refletir e reler.
    Mostra quem perdeu e quem ganhou nos últimos 30 anos, levando ao mundo como o vemos hoje.
  • Carlo Crispino
    5.0 out of 5 stars Una guida indispensabile per comprendere la globalizzazione
    Reviewed in Italy on August 22, 2018
    Un saggio indispensabile non solo per l’analisi delle disuguaglianze causate al fenomeno della globalizzazione ma per farsi una idea generale su un fenomeno ampiamente dibattuto e però, forse ancora poco compreso
  • Leon74
    5.0 out of 5 stars Tremendous book!
    Reviewed in the United Kingdom on August 1, 2018
    This is an excellent book by a very clever author - almost too clever - I felt it would have benefitted from slightly more editorial control in the early chapters; at first the book seemed uncertain whether it was academic economics or for the general reader. The main thing though is that it contains genuine analysis of genuine data and not moralising of a right or left wing variety. Its central conclusion - that inequality is falling globally, but rising in the developed world, helps make sense of the troubled times in which we live and how in e.g. the UK, the march of progress has recently benefited the few and not the many.
  • SueH
    4.0 out of 5 stars The best and most up-to-date work on data on global inequality
    Reviewed in Canada on February 2, 2017
    Branko Milanovic has done an excellent job in documenting global inequality and the "elephant curve". This is an updated study with recent data - a labour of love on his part to put this all together. I thought chapter 1 was great, but I was not persuaded by his theories of the causes of inequality and Kuznets waves. So I would recommend reading chapter 1 and skipping the other chapters.