The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality

Published by EH.NET (December 2011)

Branko Milanovic, The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality. New York: Basic Books, 2011. xiv + 258 pp. $28 (hardcover), ISBN: 978-0-465-01974-8.

Reviewed for EH.Net by Thomas N. Maloney, Department of Economics, University of Utah.?

With the emergence of the ?Occupy? movement in the Fall of 2011, the issue of income inequality has gained an unusually prominent place in the political conversation in the United States.? The discussion of inequality has always been present to some degree, especially during the past 30 years or so as inequality has grown by a variety of measures.? Still, the American public lately appears to be engaged with issues of distribution in a newly vigorous, if not always rigorous, way.

Branko Milanovic?s ?idiosyncratic history of global inequality? has thus appeared at a propitious moment.? In this book, Milanovic (an economist at the University of Maryland and the World Bank) combines three primary essays on income inequality with a series of brief ?vignettes? designed to illustrate and expand on some of the issues raised in the primary essays.? This structure is perhaps not best suited to a straight read-through but rather invites some ?grazing? by the reader, so that someone attracted to a five-page piece entitled ?Who Was the Richest Person Ever?? might become curious enough to take on the more meaty material.? The book is not aimed primarily at those with a professional background in these topics, though it might provide a few new insights even for them, and it will almost certainly provide some useful new examples for classroom discussion.

The first essay, ?Unequal People ? Inequality among Individuals within a Nation,? introduces various methods for measuring inequality across persons or households within a nation and documents long-run changes in these measures.? It also briefly examines the effect of growth on inequality as well as the effect of inequality on growth.? In addition, it provides a provocative discussion of the relationship between inequality and well-being and about what degree of inequality (if any) is harmful enough to justify some intervention by government. Here, Milanovic draws on the work of Atkinson, Edgeworth, Sen, Pareto, and Rawls.

The second essay, ?Unequal Nations ? Inequality Among Countries in the World,? shifts the focus to differences between average incomes, or between overall income distributions, across political entities.? Again, Milanovic attempts to provide some intuition about important aspects of measurement, here devoting a good deal of discussion to the meaning of ?purchasing power parity.?? He then documents broad increases in inequality between nations and considers why this increasing divergence has occurred in the face of greater global economic integration, which might be expected to produce some convergence in incomes.

The final essay, ?Unequal World ? Inequality among Citizens in the World,? treats the population of the globe as one income distribution and examines changes in that distribution over time.? The historical window of observation here is much more limited than in the first two essays, as individual or household level income data for a range of countries sufficient for examining the global distribution have been available only since the 1980s.? Milanovic argues that inequality by this ?global individual distribution? measure probably has not changed much over the past 30 years because broad increases in between- country and within-country inequality have been offset by income growth in India and China (which weigh heavily in the global distribution).?

Each of these three essays is followed by several short ?vignettes? which are used mainly to illustrate concepts introduced in the longer essays.? Some of these are relatively breezy ? for instance, Vignette 1.1, ?Romance and Riches,? tries to place the characters from Jane Austen?s Pride and Prejudice into the late twentieth century income distribution.? Others take on weightier topics (e.g., Vignette 2.7, ?Did the World Become More Unequal during Deglobalization??).? Despite this variety, there are some common themes that run through several of these short pieces and the longer essays.

One recurring theme considers how we define inequality, why we care about it, and how those definitions and priorities change over time.? While Ricardo and Marx discussed income distribution mainly in terms of aggregate shares flowing to different classes (landowners, capitalists, and workers), the advent of marginalism, along with the development of individual- and household-level social statistics, shifted attention to these smaller units and away from sectoral or class aggregates.? Inequality between nations was not of much interest prior to the industrial revolution, when average incomes were fairly near subsistence in most countries and so variation in averages across countries was rather limited.? Industrialization and unprecedented rates of growth in some countries widened these gaps considerably and prompted questions about the sources of these aggregate differences.? The study of a global individual-level distribution is dependent both on the development of individual-level statistics in a sufficient number of countries and also on the process of globalization itself, which exposes people to conditions in a greater variety of places and provokes curiosity about the scale and sources of individual-level income differences across the globe.

A second recurring theme is the growing importance of geographic dimensions of inequality, both within and between countries, and the potential consequences of this phenomenon.? In Vignette 1.8, Milanovic describes how substantial differences in mean incomes across regions in the USSR and in Yugoslavia generated political tensions which made it harder to hold those countries together.? He draws lessons from this history in speculating about the potential future of China in Vignette 1.9 and of the European Union in Vignette 3.3.?? He also focuses (in Vignette 2.4) on growing geographic differences in mean incomes as a source of large and challenging migration flows, especially in places where nations with very different mean incomes are physically proximate, as in the cases of the U.S. and Mexico, Albania and Greece, Indonesia and Malaysia, and Morocco and Spain.

In his preface, Milanovic says that he is concerned that public discussion of inequality is often stifled by invoking the notion that it is the ?natural? outcome of ?the market? and so cannot be usefully questioned or altered.? Given that concern, it is somewhat surprising that there is little detailed examination of the causes of inequality in this brief book.? The focus instead is on documentation of the broad patterns, along with a very engaging discussion of what various thinkers have said about the moral and ethical dimensions of inequality.? Milanovic does provide a lengthy list of suggested readings which should allow those interested to examine the causes of inequality in greater detail on their own.

The Haves and the Have-Nots is an enjoyable read which helps us see the ubiquitous phenomenon of inequality in new ways.? It is generally quite accessible and could be used as a supplementary text in courses on labor economics or on income distribution, though some students will require guidance through the more technical sections.

Thomas N. Maloney is Professor and Chair in the Department of Economics and Director of the Barbara L. and Norman C. Tanner Center for Nonviolent Human Rights Advocacy at the University of Utah.? He is the co-author, along with Nathaniel Cline, of ?Inequality in Economic History,? forthcoming in R. Whaples and R. Parker, editors, The Routledge Handbook of Modern Economic History.

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