Milanovic’s Inequality

Branko Milanovic Global Inequality: A new approach to the age of globalization Belknap Press, 2016.

Milanovic develops Kuznets’ hypothesis, that with development inequality within and between nations initially increases then decreases into his ‘Kuznets wave’ hypothesis: that each successive waves of development can trigger a more or less significant Kuznets phenomena, with the overall behaviour possibly the result of conflicting factors. He also introduces the pedagogic notion of ‘citizen rents’: that being a citizen of a particular community in effect commands a unearned premium. The USA and China on the one hand and the rich everywhere are currently the main drivers of inequality, and what happens to overall global inequality will very much depend on them. The book seems broadly fatalistic. It concludes with 10 questions, without any program for change, or even any view of how effective change (other than sleep-walking) could occur.

I found the work better as a spur to thinking than a manifesto. It seems to me that the best prospect for change is provided by those with high incomes and wealth, and that any program that seeks to influence them should first seek to understand them and then influence their conceptualisation of threats to their lives – and perhaps opportunities. The book seemed wanting in both respects.

The book has a brief section on scalable goods and services,  which can be replicated many times over. It notes how the growth of communications technologies (the web, smart phones) has made more goods and services scalable, and made the scalable goods and services more scalable, and how this leads to or enables greater inequality.

The book gives the impression that the rich mainly value money. But it seems to me that whatever the rich want, they want the best, and that this is often not scalable. Hence the situation is for them rather like house purchasing in the UK: since the supply of, for example, houses with a good view and with easy access to good services is to a large extent inflexible, an increase in the income for everyone above a certain level will only push up house prices, so that the benefit from the increase is much less than would otherwise expect. It seems to me more sensible for people to value their way of life, and for money only to be valued as an enabler, not in itself. To some extent, this seems to be what people already do.

If we lack big ideas for reducing inequality, there would seem to be a need for more small ideas. A better measure of value might focus on the median rather than the mean, and take account of benefits such as aces to free at the point of use education and health. Personally, I would also want to look at things like life expectancy, so that excessive pollution would have a negative value.

Dave Marsay

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