CAPITALISM'S ACHILLES HEEL Dirty Money and How to

230 CAPITALISM’S ACHILLES HEEL
the country’s improving average income levels are enough to shift global
measures of inequality. India has also had good growth rates in recent years,
likewise aiding the global picture.
Now, there are problems with past conclusions about China and India.
First, neither was included, as mentioned earlier, in the 1993 International
Comparison Program price surveys, so data about these two
countries extrapolated from earlier surveys are suspect. Second, China’s
official growth rate is dependent on reports received by Beijing from
provincial governors, who have every incentive to exaggerate improvements
in their regions. Frankly, no one believes China’s self-alleged
growth rates, and the question among scholars is by how much—1, 2, 3
percent?—should China’s annual GDP be corrected and over how many
years should such corrections be applied. Bhalla’s assertion that global income
inequality is suddenly reversing, an analysis largely dependent on
China, is therefore problematic.
Branko Milanovic, also a World Bank economist, surprised researchers
studying global inequality with an analysis first offered in 1999 using actual
income and expenditure figures derived from household surveys (rather than
share of GDP) covering about 90 percent of the world’s population. 36 Focusing
his attention on two years, 1988 and 1993, Milanovic found that the
world Gini coefficient moved from 62.5 in 1988 to 66.0 in 1993, showing
that global inequality had swelled. As he says, “This is a very fast increase,
faster than the increase experienced by the US and the UK in the decade of
the 1980s.” 37 He then goes on to make a rather forthright judgment:
“World income inequality is very high. . . . One can conjecture that such a
high inequality is sustainable precisely because the world is not unified, and
rich people do not mingle, meet or even know about the existence of the
poor (other than in a most abstract way).” 38
To recap the first three big questions addressed in this section: (1) I remain
agnostic as to whether monetary or nonmonetary information provides
the better measure of poverty, (2) the jury has not rendered a verdict
on whether global poverty is up or down, and (3) the data are equally inconclusive
on whether global inequality is widening or narrowing. And I have
another ringer to throw into these debates in the pages to come.
Fourth question: Is economic growth good for the poor of the world?
There are at least three ways this question can be approached. I dispense
with the first two and focus on the third.