Thursday, December 8, 2011

Location divide is more important than class divide today

A very interesting study by Branko Milanovic from the World bank concludes that differences in income between countries have increased tremendously in our modern society. And these difference also extent to salaries of workers. The difference in salary between worker in the richest countries and the poorest countries were small at the footstep of modern industrial society. Today, they are huge.

Among many things, it means that:
- capitalist globalisation has lead to increasing gaps, not decreasing (which is why the elite loves it)
- workers in the industrial countries are most likely profiting from exploitation of workers in developing countries (which is why it is hard to engage them in a global social movement).
- migration has a lot more appeal than ever before, and its potential to reduce difference in income is great(which is why there is such resistance to it).

Read also the post:

Growing inequality, between people, between countries, between region, between urban and rural

Some quotes from the report below

"Inequality between world citizens in mid-19th century was such that at least a half of it could be explained by income differences between workers and capital-owners in individual countries. Real income of workers in most countries was similar and low. This was the basis on which Marxism built its universal appeal. More than 150 years later, in the early 21st century, the situation has changed fundamentally: more than 80 percent of global income differences is due to large gaps in mean incomes between countries, and unskilled workers' wages in rich and poor countries often differ by a factor of 10 to 1. This is the basis on which a new global political issue of migration has emerged because income differences between countries make individual gains from migration large. The key coming issue will be how to deal with this challenge while acknowledging that migration is probably the most powerful tool for reducing global poverty and inequality."

"Angus Maddison has estimated that around 1850, the mean income in the poorest countries in the world (Ceylon and China) was around $PPP 600. 5 At the top were the Netherlands and the United Kingdom with a GDP per capita of about $PPP 2,300. Thus, the ratio between the top and the bottom (of country mean incomes) was less than 4 to 1. Consequently, the better-off workers who earned incomes close to the national means, could not, in terms of their standard of living, differ from each other by more than the ratio of 4 to 1. And the bulk of workers who lived at less than their countries’ average income and closer to the subsistence, could not have incomes that differed by more than 2 to 1—with many of them living at approximately the same subsistence level. Indeed, Broadberry and Gupta (2006, Table 6, p. 17) show that in the period 1800-1849, the wheat-wage of an unskilled daily laborer in India (among the poorest countries in the world then) was about 30% of the wage of a similar worker in England. And comparing the Netherlands with the Yangtze valley, two relatively developed areas sharing a number of similar geographic features, Li and van Zanden (2010, p. 21) conclude that in the 1820s, real wages in the Netherlands were about 70% higher than in the Yangtze valley."

"In 1870, the gap between the richest countries (Australia and Great Britain) and the poorest (Nepal and Ghana) was 8 to 1; in 2007, it is 31 to 1 (United States and Norway vs. Nepal, North Korea and Ghana)."

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