The Inequality Effect of Income within the Economy
Branko Milanovic, a lead economist in the World Bank's research department, wrote an eye opening book dealing with poverty and inequality. Although not the best page turner, it was informative and intriguing. It spoke of income inequality, an important variable which others may not consider in determining the overall well-being of the economy. In 2008, 80 percent of the world’s population was considered to be living in poverty. Milanovic’s book discussed how the population changed over time, and how it has increased over the last 150 years. The author also pointed out how location shapes one's economic future, why the inequality gap between rich and poor exists around the globe, and the ways in which education connects with poverty.
The opening of the United States Declaration of Independence, written by Thomas Jefferson in 1776, states, “We hold these truths to be self-evident, that all men are created equal.” According to Milanovic, this statement is not necessarily true. He says that birth makes a difference in this world. “One’s income thus crucially depends on citizenship, which in turn means place of birth,” (Milanovic, 120). He points out that 60 percent of a person’s income is determined just by where a person is born, and an additional 20 percent is dictated by how rich his or her parents were. According to Milanovic, the economic position a person is placed in at birth is generally where his or her income will lie. He says that a person in a situation like this can hope for growth in the national mean income of his or her country, try to move up the economic ladder and hope to get lucky, or the person can “jump ship” and move from the poor country he or she was born in to a wealthier country where there may be more opportunities for him or her.
Some may find this theory appalling. According to Milanovic, if a person was born into poverty, it is unlikely that said person will be able to...