Global Income Distribution: United Nations World Social Report (Term Test 2)

Inequality between nations is declining:

• Poorer nations have been growing faster than the quicker nations

• Asia has been the main driver of this decline

• Population-weighted national incomes per capita

• Rich countries is not getting richer

Inequality Between all people of the globe is increasing:

• The Rich (1%) were getting 20% of income

• Bottom 50% of people make up 9% of total income

• upper-middle group is getting their money taken from the top 1%

  • income that is generated is going far more to the top 1% than the upper-middle group.

• Related to curve of CEO Wages

• Least amount of people living below the world banks poverty line

  • World Bank Poverty Line: $1 a Day (Too low?)

Inequality between nations is still very high:

• The average income of people in Northern America is 16 times higher than that of sub-Saharan Africans

1. people don’t realize how unequal wealth distribution is in their country, think it is much more equal than it is

2. would like a more equal distribution of income than they even believe it to be

Theory:

Market Based Income Distribution

Milton Friedman: Liberal Economist

• A fair distribution of income is what you earn and the skills you posses earn

  • carpenter: income determined by the amount people are willing to pay you to frame houses

• If you don’t have a job, and don’t have a skill, your income should be zero

• Reflects your societal value of you production

• “only ethical responsibility of a cooperation is to maximize profits”

  • you are “stealing” money from investor if you spent money elsewhere for environment, etc.

Marginal Productivity Theory: Marginal Revenue Product

• The Value of what a worker produces

  • Marginal means last unit

• Productivity of labour (MPi) x value f output (MR)

• MRP=MPI x MR