CAPITALISM'S ACHILLES HEEL Dirty Money and How to

CHAPTER 5 The Global Divide
Notes 411
1. Plato, Laws, Book V.
2. Angus Maddison published highly original work in Dynamic Forces in
Capitalist Development: A Long-Run Comparative View (New York: Oxford
University Press, 1991). Drawing on Maddison’s data, François
Bourguignon and Christian Morrisson published “Inequality Among
World Citizens: 1820–1992,” American Economic Review 92, no. 4
(September 2002): 727–744. Data are presented in constant PPP 1990
dollars.
3. Not all elements of GDP are necessarily reflected in personal incomes.
For example, foreign direct investment and some portions of government
spending may not show up in income levels derived from household
surveys. Thus, personal incomes tend to appear lower in data
developed from household surveys as compared to data from shares of
GDP.
4. Our inequality calculations use the following data from the World
Bank’s World Development Indicators 2004: GDP (at both PPP and market
exchange rates), population, and income shares for each quintile.
Only countries that report both GDP and population are included in
our data. For those countries without income share data, we use 1990s
regional estimated income share, as described in Deininger and Squire
(1996). We divided each country in our data set into five quintiles of
equal population and assigned the appropriate GDP share. We then
ranked these country quintiles from poorest to richest based on per
capita income and created global quintiles of very nearly equal population.
Using this data set, we calculated our estimates of inequality, such
as the ratio of the richest global quintile to the poorest quintile and the
per capita income ranges for each global quintile. All original income
inequality calculations were done by Jennifer Nordin.
5. These calculations are similar to those described in the previous note. It
may be useful to note here the inherent limitations of our (and many
other) inequality calculations. Breaking each country into its income
share quintiles refines the analysis from the earlier UN inequality estimate
that assumed all people within a given country had the same per
capita income. This gets us part of the way to the ideal way to count the
poor: Analyze all 6 billion people individually, clearly an unworkable