Where the global 1 percent are

A working paper by World Bank economist and global inequality expert Branko Milanovic (via Salon) describes the composition of the world’s one percenters:

Who are the people in the global top 1%? Despite its name, it is a less “exclusive” club than the US top 1 percent: the global top 1% consists of more than 60 million people, the US top 1% of only 3 million. Thus, among the global top percent, we find the richest 12 percent of Americans (more than 30 million people) and between 3 and 6 percent of the richest Britons, Japanese, Germans, and French. It is a “club” still overwhelmingly composed of the “old rich” world of western Europe, northern America and Japan. The richest 1% of the embattled Euro countries of Italy, Spain, Portugal and Greece are all part of the global top 1 percentile. However, the richest 1% of Brazilians, Russians and South Africans belong there, too.

As usual with Milanovic’s writing, the paper is a little all over the place but all of it is fascinting. He argues that we are living in a “non-Marxian” world in which a person’s material wellbeing is determined less by class than location. “Differently put, more than fifty percent of one’s income depends on the average income of the country where a person lives or was born,” he writes. So much for workers of the world unite.

He also discusses the differences between 3 concepts of how to measures global inequality. The first simply measures inequality between the GDP of various nations. The second does the same, but weights countries differently based on population. The third treats the globe as a large pool of individuals, looking at total inequality in the world population. As the chart below shows, things look a lot more dire using concept three:

The good news is that despite growing global inequality, incomes are rising not just for the 1 percent (60 percent between 1988 and 2008), but by the growing global middle class (a 70 percent gain around the global median). Even the bottom third of the global income distribution saw significant gains over this period. The losers over this period have been the bottom 5 percent, who saw virtually no income increase at all. 

I’ve written before on Milanovic’s work here and here.