I had been reading the Haves and the Have Nots for a month or so before finishing it two weeks ago. It’s an exposition on global inequality, including historical perspectives on the differentials between households within countries and across the world.
Economics in general have been a hot button for me lately. Realistically, since the 2008 bubble and ensuing recession, thinking about how much the US makes compared to other nations has been eating at me. There are a lot of people in the states who lost their jobs and have been having a very tough time. It made me wonder about other countries, how much their people make compared to the US and what life is like comparatively.
This was a good inlet to the world of inequality. There are some really interesting aspects of the book and how intra-country inequality can be so diverse in the world. The author, Branko Milanovic, describes how the relative wealth of a nation is understood. Each country has a Gini Coefficient which measures the dispersion of monetary resources within the country. It’s a 0-1 scale of equality within the country, where 0 would be perfect equality and 1 would be perfectly unequal (one person has all resources). This measure is a good way to look at how equal the people inside a country are on a monetary scale, but it becomes much more interesting when you look at the entirety of countries compared to one another.
This graph doesn’t tell you an extreme amount, but you can get a better feel for how equal incomes are in different countries. For instance, here you can see that incomes in the nordic countries is far more equal than that of Southern Africa. The US is not extremely high on the scale, but it is higher than Canada, a geographically proximal country.
The idea of geographical dispersion of income is also interesting. In the US there are rich people and poor people, but they are generally evenly dispersed geographically. There are nice neighborhoods and less nice neighborhoods, but overall there is no state that rich people are from or poor people are from; for the most part we are dispersed evenly. In some countries, this is not the case. China, for instance, has heavy distribution by geography. Some portions of the country are very poor and some are much richer, the boundaries of these areas are clearly defined.
The book also introduces Purchasing Power Parity in order to understand the global distribution of income. Different currencies are valued differently, and as such we need to find a common denominator in order to adequately judge the differential in buying power of world citizens. When you have the GDP broken down with PPP, you can then see the differences in global purchasing power.
As you can see, the US and Canada have very good income compared to many countries in the world. This concept is important as you can judge it historically and also follow economic progress of different economies. Interestingly, the rich are getting richer. We often talk about China and India and how quickly they are growing. That’s certainly true, but they are growing from a much smaller base economically. If they grow a large percentage, it’s a large gain, but the gain may be less than a country such as the US which also grew at a lower rate.
These are only a few of the concepts explored in the book. It’s a well put together piece that touches on many high level subjects with some relatable anecdotes. I’d recommend reading it if you’re interested in global economies. It did not quickly and comprehensively explain the subject, but it was a good start.