Much has been said about the growth of income inequality in the U.S., but where exactly do we stand in comparison to other countries? Country data can be found in The World Fact Book published by the CIA. More U.S. data and a discussion of the Gini number can be found here. The Gini number is a statistical construct aimed at measuring the dispersion in a distribution. It varies between zero for a perfectly uniform distribution and one for perfectly non-uniform distribution (one family has all the income, presumably).
Data for the various countries is not always available at the same point in time and various agencies can come up with slightly different number, but some conclusions can be obviously and clearly drawn.
Let us compare Gini numbers for several counties with the latest data available.
U.S. 45.0 2007
U.K. 34.0 2005
France 32.7 2008
Germany 27.0 2006
Finland 29.5 2007
Denmark 29.0 2007
Canada 32.1 2005
Norway 25.0 2008
Sweden 23.0 2005
Australia 30.5 2006
Bolivia 59.2 2006
Brazil 56.7 2005
Mexico 48.2 2008
Namibia 70.7 2003
Paraguay 53.2 2009
Singapore 48.1 2008
The obvious conclusion is that inequality in the U.S. is exceeded mainly in Africa and Latin America. The developed countries of Europe have a much fairer income distribution than the U.S.
The next question is “what is the long term trend?”
U.S. +4.2 in ten years
U.K. -2.8 in seven years
France constant over thirteen years
Germany -3.0 in twelve years
Brazil -4.0 in seven years
Mexico -4.9 in ten years
We are one of the few countries in the world with a long term trend toward greater inequality. Ten years is a long time. Could more recent U.S. data tell a different story?
2006 47.0 highest number ever calculated
2007 46.3
2008 46.69
2009 46.8
These numbers are from a different source so they are not exactly the same as the previous tabulation. It would appear that matters are getting worse as the economy begins to recover.
Recall Galbraith’s warning that rising inequality leads to increased unemployment.
One could conclude from these numbers that the U.S. aspires to become a banana republic.
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A natural endpoint of unchecked capitalism is a few very rich and masses of very poor. many "banana republics" seem to fall into this failure. In spite of my worries about government regulation, one of the functions of government is to check this failure mode of capitalism - that is, preserve a middle class. I am not sure that we have done that very well in the last three decades....
ReplyDeleteSteve
Any effort to lower the inequality rating of the US is branded, by its opponents, as socialism. In support of that they mention that (per your listing above) four of the five countries with the world's lowest inequality are the four Scandinavian countries (Denmark, Finland, Norway, and Sweden).
ReplyDeleteWhat is not mentioned is that these countries are the wealthiest in Europe. I.e., their brand of socialism, if it can even be called that, creates the highest gross national product per person, and..............for some of them, even higher than the US.