The gini coefficient does not measure the difference between the super rich and the super poor. It measures the inequality of the overall distribution of income. You could hypothetically have a decrease in the gap between rich and poor while also having an increase in the gini coefficient. Some people look at the Palma ratio to measure what you are talking about.
In fact, focusing on the very poor in America as a concern seems somewhat silly. We have a very strong social safety net that focuses on the poor. By most measures the very poor in America are extremely well off compared to the rest of the world, including other OECD nations. I remember reading that the bottom 5% Americans have higher income than the top 5% of Indians, for example. I think that the poorest 5% Americans are richer than something like 70% of the world overall. Poor people here are relatively very well off.
Inequality of income in the U.S. has certainly risen, and that is likely problematic, but we should be careful to understand what that really means.
Yes, those danged liberals who control the media and the educational system are now inventing fake statistics to confuse everybody!
The lunatic libertarian thread is located elsewhere. Comments that ignore the existence of society and civilization belong there.
The government is elected on the basis of whatever people have been led to believe, which is often very different from reality. This is why the poor and middle class so often vote against their own interests, and why there is still no universal health care, the US being the only industrialized country in the world that can lay claim to that shameful condition. Why? It’s certainly not a question of money, if every other country can do it.
They must be pretty damn incompetent, then, because the most significant legislation coming out of Congress is consistently pro-corporate and pro-wealthy. And at the state level, some states are engaged in outright union-busting, in case you’ve never heard of, for instance, Wisconsin or South Carolina or the whole plethora of so-called “right to work” states.
Coulda fooled me. So the Koch Brothers are internally conflicted about their lobbying objectives?
My cite is just about all the legislation that ever came out of Congress and most state governments. I mean honestly, a cite was recently provided to support the argument, made by many others, that the grip of corporate power and that of the wealthy plutocracy over the US political process is such that it’s hard to even consider the US to be a functional democracy any more, as opposed to a corporatocracy – and you want a cite for the fact that the wealthy have political clout? Read the link. Of course there are many many more. There’s Thomas Piketty’s Capital in the Twenty-First Century. And of course Moore’s Capitalism: A Love Story – oh sure, we all know Moore likes to be over the top, but in the final analysis he’s saying much the same things as Piketty and, for that matter, Paul Krugman.
Wasn’t my comment, but nor does it say what you claim it’s saying. It’s no different than when I pointed out that the Walton family makes billions while exploiting their workers with poverty-level wages, but OTOH Costco has no problems paying their employees decent wages for the same kind of work. Pointing out the many specific instances of exploitation isn’t making any kind of statement about whether the overall economy can create new wealth or whether it’s zero-sum.
First, I never argued that public and private enterprises don’t create wealth, or that the economy is zero-sum. You created that strawman, so there’s really no question there to answer. I wonder, though, what the opinions would be of the millions working twelve-hour days in horrific and often unsafe conditions for basically slave wages. Or maybe the hundreds of millions in China’s urban areas who have to breathe the air.
That is utter bullshit. The entire US social services system is a joke in the civilized world, and the absence of guaranteed universal health care makes it an even worse travesty. If you believe the US has “a very strong social safety net” then I don’t know how it’s possible to even have a conversation.
I just happen to have some comparative federal program spending numbers for the US and Canada for the year 2001, which I had around for other purposes. Many categories of program spending in the two countries are very close as a percentage of GDP. One major difference is the US spends way more on defense. But look at the social spending. Canada spent 11% of its GDP on the general category of “income security”, while the US spent 7.1% – the gap of 3.9% of the GDP was by far the largest differential of any spending category. On top of that, “housing and community services” was 1.4% of the GDP for Canada, 0.5% for the US. Those two categories together amount to an enormous 4.8% of the GDP that Canada spends on social services that the US does not, and that’s not even taking health care into account! And Canada is relatively a laggard in social spending compared to most European countries!
The other point you have wrong is, as already pointed out in this thread and also in other threads in the past, the absolute income level of the US poor compared to other countries is unimportant compared to relative income levels, the condition that poverty studies refer to as “relative poverty”. Who cares if the resident of a New York ghetto has 10 times or 100 times the income of a peasant in India? The New Yorker has to buy food in New York, not Punjab, and he has to find a decent and safe place to live in competition with all other Americans. All these factors of relative wealth have direct consequences in quality of life, which is why people in countries which are much poorer than the US but have less income disparity are happier and physically and emotionally better off.
You were probably paying about 24% if you include SocSec etc., incl. those employer paid on your behalf. Moreover, Romney’s net 14% tax would be much less if his huge unrealized capital gains were counted as income.
Why do you hate America? Move to North Korea you pinko Kenyan-lover!
Since poor in the U.S. are better off than in any other country, if the U.S. doesn’t have a strong social safety than no country does. My thought here is that you are not limiting your comments to the social safety net. The poor have had healthcare in this country for decades under medicaid. The social safety net also includes programs such as snap, wic, housing aid, disability insurance, unemployment insurance, and numerous other state and federal programs as well as private programs. Simply put, we do a better job than other countries at helping the extreme poor.
Right, so why are you including all types of social spending when I am only talking about the social safety net programs? I fail to see how universal healthcare helps out the extreme poor any better than medicaid. Universal healthcare might be a great idea for our society as a whole, but it’s not an improvement over what our poor already have.
Of particular note, see the following to address your complaint.
[QUOTE=Article]
The household income numbers are all converted into international dollars adjusted for equal purchasing power, since the cost of goods varies from country to country. In other words, the chart adjusts for the cost of living in different countries, so we are looking at consistent living standards worldwide.
[/QUOTE]
Rising income inequality is a problem in the United States. It is a result of a shrinking middle class though. It is better to be very poor in America than it is to be very poor in essentially any other country on Earth including countries like Germany. Other countries may have better more affordable and accessible healthcare for the lower middle class or certain other income groups, but they don’t take care of their poor like we do.
Yes, it sure would be different if you included taxes you didn’t pay on your side and included income he didn’t realize on his side. Makes a ton of sense.
His income that year was $13.7 million. He paid $1.9 million in taxes and donated $4 million to charity that year. The primary reason was that his income was primarily capital gains and dividends. Since then, the income tax rate on that form of income has risen from 15% to 23.8%.
To recap, much of what is considered wealth is actually credit, and most of it is created through loans.
In terms of the real economy, what ultimately matters are the availability of energy and material resources. Unfortunately, availability of both are countered by physical limitations and environmental damage.
First of all, I never claimed it was your comment.
And secondly I don’t agree with your interpretation that what was meant was exploitation of workers, since the statement is referring to the OP and the 3.5 billion poorest in the world. How many of those people are likely to be working (directly or indirectly) for the 85 richest, versus, say, as subsistence farmers?
Well we could ask the millions of people voluntarily moving into the cities, but I think the answer will obviously be that they prefer that life to abject poverty. A life where they can afford enough to eat, basic medical care etc.
Yes, there’s still great poverty, but by virtually all measures, conditions are far better than in the past for hundreds of millions, which absolutely is something to celebrate. And wages are now rising quickly.
By the way, I live in the center of Shanghai; one of the cities with the most polluted air. It can be pretty bad, but it must have been exaggerated a great deal in the west if you think someone would consider themselves worse off because they found a job but the air quality is bad.
Well, as has been pointed out, the Gini coefficient isn’t really a particularly liberal invention, but of course, that’s a bit besides the point. And you’re right in saying that, by itself, it’s just a number—there’s no inherent value judgment associated with having a Gini of 0.1 versus 0.5. However, the Gini coefficient correlates very well with a number of other measures for things that we do attach value statements to, and basically, high Gini = bad, to give you the short version.
One example is that severalstudies show that a high Gini is correlated with a higher incidence of depression, and with general worse health (this last link goes to a metastudy that reviewed the findings of 155 separate studies regarding the correlation between income inequality and poor health, 70% of which reported a link).
Also, the work of Richard Wilkinson is highly illuminating in this regard: in his research, he’s discovered links between income inequality and several other factors of well-being, which were generally adversarial. Here’s a TED talk where he presents his findings; if you don’t have the patience to sit through this, most of his points are neatly summarized in this article, which stresses that many of the adversarial effects that used to be associated with poverty are now actually being found to be associated with income inequality, such as: child wellbeing, High School dropout rate, homicide rate, personal trust, mental illness, social mobility, stress… Basically, for most factors of individual wellbeing you can think of, if you want to decrease them, increasing income inequality seems a good way to go.
Furthermore, income inequality is also bad for the economy: the IMF published a study claiming that income inequality is a factor in slowing economic growth, and that conversely, wealth redistribution has no effect on GDP growth.
So the Gini coefficient may be ‘just a number’, but that number tells you a lot about how well-off the citizens of a country typically are.
Also, and this is a more general notion, people in this thread have been advocating the myth of the benevolent rich, using their wealth to the benefit of everyone. I’d like to believe this, but according to behavioural psychological research, it’s just not how human psychology works—in fact, once you are put in the ‘wealthy’ bracket, you’re more likely to cheat, your capacity for empathy and compassion goes down, and your entitlement and self-serving ideology increases, at least according to the research of Paul Piff, which he presents in a TED talk here. (Also, there’s a discussion between Piff and the aforementioned Wilkinson here. A quote: “With each step up the inequality ladder, bigger income differences between rich and poor, the worse a country did in terms of life expectancy.”)
Regarding wealth, perhaps. But it’s a frequent fallacy in these threads to equate wealth with well-being: just because people that are typically happy with their life generally have some substantial level of wealth, doesn’t imply that increasing wealth will increase well-being. It’s something I like to call the proxy fallacy, though ultimately, it’s really just affirming the consequent. I’ve expanded upon it more in this post (which unfortunately seems to have killed that income inequality thread), but basically, we tend to create proxies, quantities that are supposed to tell us something about other quantities we care about, but are more readily measurable. One proxy for well-being is wealth: a high standard of living is typically correlated with a high income. But this doesn’t mean that a high income implies a high standard of living! It merely means that low income implies a low standard of living. Another example is in research: good research is often highly cited. But highly cited research isn’t automatically good.
So even though the poor may be ‘better off’ financially in the US than in some European country, with regards to other measures—as detailed above—they’re not. Basically, a child born in a high-Gini country has a higher chance of not being well cared for, a lower social mobility, higher chance to suffer from depression or related mental problems in the course of their life, is more likely to become a victim or perpetrator of a crime, has a lower life expectancy, and so on.
Ultimately, focusing on money in these discussions is really a bit of a red herring: money is not the issue, but whether people are happy, have a high likelihood of living a good life, and so on, is. We’ve set up a system that optimizes wealth, because it’s a nice and easy to assess proxy. But the system does so at the expense of numerous other factors contributing to well-being, and it’s time this is realized.
[QUOTE=The Economist]
SIZING up countries by GDP has long been criticised for placing too much emphasis on things that are measured monetarily. Over the past three years, the Organisation for Economic Co-operation and Development has released an alternative called the “Better-Life Index”. It tracks around 24 indicators in 11 categories. Some are easily quantifiable, like jobs (which includes unemployment and income), while others are more woolly, like civic engagement and community.
[/QUOTE]
In this study, the bottom 10% of Americans live a “better life” than almost every other country on here.
Let’s start with this. The reason I mention social spending overall is because this is precisely what defines the social support system we’re talking about. It’s not just about getting a handout if you’re about to starve to death, it’s also about things like the poor being able to live with dignity as part of the mainstream community, reasonable income support for the elderly, and the security of guaranteed health care. If you claim that America is just a terrific place to be poor because of how well the poor are coddled, then I will suggest that you have no idea what a social democracy is, or a social market economy. The US has many virtues and is well characterized as a land of opportunity, certainly a great place to start and run a business. It’s a fantastic place to be rich, but among first-world nations it is a very, very bad place to be poor, or even lower middle class. The fact that being poor in some Punjabi shithole is even worse is hardly a relevant argument. The second part of my post below may help clarify this a bit better.
Quite frankly when I read something this breathtakingly wrong it’s hard to know whether you’re really being serious. And it’s hard to know where to even start to respond.
Medicaid is, first of all, a system with specific categorical eligibility requirements – not everyone is entitled to it just on the basis of poverty, and millions of America’s poorest have been denied Medicaid. This is part of the reason that an estimated 45,000 Americans die each year from lack of adequate health care. It’s also the reason that health care costs are such a challenge for the elderly, despite Medicare and sometimes Medicare and Medicaid combined, such that financial advisors recommend significant asset allocations for health care costs as part of retirement planning. Beyond that, Medicaid has severe limits on coverage that vary by state, often including limits on frequency of doctor visits, limits on length of hospital stay, co-pay requirements, complicated cost-sharing requirements, and severe limits on what doctors and institutions will accept Medicaid coverage, often relegating the patient to low-quality HMOs. And just to put the icing on the cake – the ribbon and bow on the package, as it were – when the poor bugger finally dies, Medicaid has had clawback rules that allow them to go after assets in the deceased person’s estate to recover their costs.
Here’s how actual universal health care works, specifically as practiced in Canada, something I know a good deal about. The short version is: if you need medical care, you get it. At no cost to you – zero. At any provider of your choice. Period. There are no co-pays, there are no limits on coverage, there are no denials. This applies to everyone from the very wealthy to the very poor. The process for getting a flu shot at your doctor’s office is the same as the process for major surgery at a hospital: you present your health card. Done. And you fail to see the difference between this and the outrageous, demeaning, and incredibly limited and entirely inadequate mess called “Medicaid”? Well, now you know.
And you are not limiting your comments to the very poor. Right now, you are effectively guaranteed medicaid if you make up to 133% of the poverty line. The very poorest are covered.
Well, the better life index (as the OECD emphasizes) isn’t really intended to provide absolute data and establish a ranking between countries; nevertheless, that’s of course what everybody does. From the article you linked, it’s not entirely clear to me exactly which of the indicators they emphasized—they just said that they ‘crunched the numbers’ on 10 of the 24 indicators that go into the OECD better life index, whatever that may mean. (Have they just chosen ten arbitrary factors? How where they chosen? Which ones were chosen?) Plus, I’d seriously doubt that the bottom 10% in America as as well off as the top 10% in Italy by any reasonable definition of ‘well off’, so I’d really like to see how they arrive at that score…
But anyway, just to illustrate how much the conclusion here depends on how you ‘crunch the numbers’, if you concentrate exclusively on life satisfaction—which seems to be the most meaningful category if you want to know how happy you can expect to be living in a given country—then the US doesn’t even make the top ten.
Even if that were true as a result of ACA reforms, it doesn’t mean a lot to say they are “covered” given what I just said about the extreme limitations of Medicaid. The statement you made is that you don’t see any difference between Medicaid and single-payer universal health care, which is absurd.
One can get conflicting versions of how American poor compare to the poor in other countries because it’s hard to get equivalent metrics and there are many conflating factors, especially with significant economic and cultural differences. And I have to say that my recent experiences with the Economist – most recently dissecting an article they wrote about the latest IPCC report on climate change which was, frankly, a misleading pack of lies and distortions – makes me increasingly suspicious of this once-vaunted publication’s credibility and their particular way of “crunching” the OECD numbers. Nevertheless, even taking their crunched numbers at face value, the country with which the US is economically and culturally most similar is Canada right next door, and even by those numbers US poor are much worse off than the poor in Canada. So your argument seems to go out the window right there!
Perhaps as this thread’s swan song, here’s a pertinent cartoon about the dangers of simply optimizing the easily measured proxies, while disregarding what they were originally supposed to stand for…
You mean a computer can’t do all of the basics of double-entry data tracking these days? It is really just an error checking system.
Does check book accounting keep track of the depreciation on a car and help with the decision of whether to buy a new one or a used one?
But then our brilliant economists don’t talk about what Americans have lost on the depreciation of the 200,000,000 cars since 1995. How many of those cars don’t even exist any more? How much in depreciation of all of the cars on the planet? Doesn’t the accounting of all of the people on the planet add up to the economy of the planet? But Demand Side Depreciation disappeared. When did the experts debate that?
No, Keynes versus Hayek is more important.
Courses in accounting when it is 700 years old? Ridiculous!
They appeaaar have dropped the prices since I last checked. But it is 700 years old and not too complicated for 8th graders. This is about over charging for education. Some children need to be taught to be losers so we get unequal wealth distribution after so many generations. Surprise, surprise!
I’m not a liberal, and neither are many of the rest of the people who point at American inequality.
The Gini index isn’t a politically charged entity, it’s an entirely standard, orthodox economic index invented a hundred years ago. The Gini index ends up ranking South Africa, ruled by the unquestionably ‘liberal’ ANC, as one of the most unequal countries in the world, so one can hardly dismiss it as liberal propaganda.
I don’t know who David Flood is, but you’re basically regurgitating the Nozick argument about Wilt Chamberlain. Famous artists and basketball players are weird oddities who make up a trivial percent of the economy, and can’t be used to derive any general philosophical principles about economic fairness. For the most part, it’s access to capital that determines how successful you are, not innate talent or anything like that.
