We are all the 1%

Yes, even you if you live in America. Emphasis added. [Link]

The recent Occupy Wall Street protests have aimed their message at the income disparity between the 1% richest Americans and the rest of the country. But what happens when you expand that and look at the 1% richest of the entire world? Some really interesting numbers emerge. If there were a global Occupy Wall Street protest, people as well off as Linda Frakes might actually be the target.

In America, the top 1% earn more than $380,000 per year. We are, however, among the richest nations on Earth. How much do you need to earn to be among the top 1% of the world?

$34,000.

That was the finding World Bank economist Branko Milanovic presented in his 2010 book The Haves and the Have-Nots. Going down the distribution ladder may be just as surprising. To be in the top half of the globe, you need to earn just $1,225 a year. For the top 20%, it's $5,000 per year. Enter the top 10% with $12,000 a year. To be included in the top 0.1% requires an annual income of $70,000.

Of course, goods and services cost different amounts in different countries. These numbers only apply to those living in the U.S. To adjust for purchasing power parity, those living in Western Europe should discount their dollar-denominated incomes by 10%-20%, Milanovic says. Those in China and Africa should increase their incomes by 2.5-fold. India, by threefold.

The global distribution figures may seem incomprehensibly low, but consider a couple of statistics you're likely familiar with: According to the U.N., "Nearly half the world's population, 2.8 billion people, earn less than $2 a day." According to the World Bank, 95% of those living in the developing world earn less than $10 a day.

Those numbers are so shocking that you might only think about them in the abstract. But when you consider them in the context of the entire globe, including yourself, the skewing effects they have on the distribution of income is simply massive. It means that Americans we consider poor are among some of the world's most well-off. As Milanovic notes, "the poorest [5%] of Americans are better off than more than two-thirds of the world population." Furthermore, "only about 3 percent of the Indian population have incomes higher than the bottom (the very poorest) U.S. percentile."

In short, most of those protesting in the Occupy Wall Street movement would be considered wealthy -- perhaps extraordinarily wealthy -- by much of the world. Many of those protesting the 1% are, ironically, the 1%.

This isn't to disparage the Occupiers' message. Protestors are, I think, upset because so many of America's top 1% are perceived to have earned their income unjustifiably -- think bankers and bailouts. Most are not against inequality of wealth; they're against inequality of opportunity. As they should be.

But take a step back and put things in perspective. As Milanovic notes, "One's income ... crucially depends on citizenship, which in turn ... means place of birth. All people born in rich countries thus receive a location premium ... all those born in poor countries get a location penalty. It is easy to see that in such a world, most of one's lifetime income will be determined at birth." He continues, "it turns out that place of birth explains more than 60 percent of variability in global incomes." And there are few better places to be born than America -- even if you end up poor by American standards. If there is inequality in opportunity, those born in America are the ones with the unfair advantage.

As author Matt Ridley put it, "Today, of Americans officially designated as 'poor,' 99 percent have electricity, running water, flush toilets, and a refrigerator; 95 percent have a television, 88 percent a telephone, 71 percent a car and 70 percent air conditioning. Cornelius Vanderbilt had none of these." Nor does much of the world.