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Inequality In America Is Worse Than In Egypt, Tunisia Or Yemen

George Washington's picture





 

Washington’s Blog


Egyptian, Tunisian and Yemeni protesters all say that inequality is one of the main reasons they're protesting.

However, the U.S. actually has much greater inequality than in any of those countries.

Specifically, the "Gini Coefficient" - the figure economists use to measure inequality - is higher in the U.S.

[Click for larger image]

Gini Coefficients are like golf - the lower the score, the better (i.e. the more equality).

According to the CIA World Fact Book, the U.S. is ranked as the 42nd most unequal country in the world, with a Gini Coefficient of 45.

In contrast:

  • Tunisia is ranked the 62nd most unequal country, with a Gini Coefficient of 40.
  • Yemen is ranked 76th most unequal, with a Gini Coefficient of 37.7.
  • And Egypt is ranked as the 90th most unequal country, with a Gini Coefficient of around 34.4.

And inequality in the U.S. has soared in the last couple of years, since the Gini Coefficient was last calculated, so it is undoubtedly currently much higher.

So why are Egyptians rioting, while the Americans are complacent?

Well, Americans - until recently - have been some of the wealthiest
people in the world, with most having plenty of comforts (and/or
entertainment) and more than enough to eat.

But another reason is that - as Dan Ariely of Duke University and Michael I. Norton of Harvard Business School demonstrate - Americans consistently underestimate the amount of inequality in our nation.

As William Alden wrote last September:

 

Americans vastly underestimate the degree of wealth inequality in America, and we believe that the distribution should be far more equitable than it actually is, according to a new study.

 

Or, as the study's authors put it: "All demographic groups -- even those not usually associated with wealth redistribution such as Republicans and the wealthy -- desired a more equal distribution of wealth than the status quo."

 

The report ... "Building a Better America -- One Wealth Quintile At A Time" by Dan Ariely of Duke University and Michael I. Norton of Harvard Business School ... shows that across ideological, economic and gender groups, Americans thought the richest 20 percent of our society controlled about 59 percent of the wealth, while the real number is closer to 84 percent.

 

Here's the study:

 

norton ariely in press -

 

 

 


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Wed, 05/04/2011 - 22:19 | Link to Comment tp123
tp123's picture

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Sat, 01/29/2011 - 15:17 | Link to Comment No-1-U-Know
No-1-U-Know's picture

You claim that Egyptians are rioting to clamor for wealth equality and ask, in light of the fact that the US shows greater wealth inequality, why Americans are not doing the same. As reasons for their inaction, you then state that most Americans have sufficient means but also emphasize that they underestimate the level of inequality in their country.

Is inequality the source of the rioters’ discontentment?

The GINI map also shows many countries, including Brazil, Chile and South Africa, where income inequality is greater than in the US. And yet, there is no rioting in any of the three. Furthermore, income inequality was lower in the Soviet Union and its satellites. The Soviets were equal. Were they wrong in revolting against their overseers?

Civil unrest actually appears to show greater correlation to low per capita income than income inequality (http://en.wikipedia.org/wiki/List_of_countries_by_GDP_(nominal)_per_capita). The US, Brazil, Chile and South Africa rank 9th, 55th, 49th, 70th in GDP per capita, whereas Egypt, Tunisia and Yemen rank 116th, 97th and 136th.

So, absolute income appears to count, not relative income. This also makes sense intuitively, as a person might be willing to take his grievances to the streets if he can’t gain sufficient income to feed his family, but not because his neighbor drives a Mercedes when he can only afford a Hyundai.

 

As such, your first reason explaining lack of civil unrest in the US, sufficient means for most, appears valid. The second, ignorance of inequality, is unproven and dubious. Evidence suggests that income equality per se does not prevent civil unrest.

 

Might there be another, more fundamental reason explaining the unrest?

 

The three countries you bring up are rated as not free by Freedom House (http://www.freedomhouse.org/images/File/fiw/FIW2011_MENA_Map_1st%20draft.pdf). The US, Brazil, Chile and South Africa, which all have greater income inequality than Egypt, Tunisia and Yemen, are all rated as free.

 

An indivdual must have freedom to productively acquire wealth. In the US, the Hyundai owner may be less wealthy than the Mercedes driver but he has the opportunity to use his talents to surpass him. Egyptians, Tunisians and Yemenis don’t have that liberty.

 

But let’s suppose that wealth inequality is a problem. How can it be fixed? The only way is for the government to steal and redistribute the wealth of the most productive to the less or un- productive. The productive, whose hard work, ingenuity and/or entrepreneurialism benefit all, would then have no incentive to acquire wealth. The result would be more equality but lower wealth. Everyone would be worse off. I’m much less wealthy than Steve Jobs but I’ve also benefited greatly from his ingenuity. He hasn’t stolen anything. He has reaped the just rewards from enhancing peoples’ lives. He has billions, while most Americans have tens of thousands. Mubarak and his cronies have billions stolen from Egyptians who are struggling to put food on the table. In both cases, there's unequal wealth. See the difference? It's earned in one case, stolen in the other.

 

The drive for equality leads to mediocrity and reduced wealth for all. The liberty to pursue one’s ambitions and the freedom to enjoy the fruit of one’s labor is what must be aimed for. A rising tide lifts all boats, big and small. Egyptians are not fighting for income equality, they’re fighting for civil liberties, for freedom.

Sat, 01/29/2011 - 12:27 | Link to Comment kalum
kalum's picture

I am a middle class person rapidly becoming poorer due to policies of my govt and the Federal Reserve.  I am fed up with a corrupt government stealing from its citizens.

I imagine there are plenty more of you out there.

 

 

Sat, 01/29/2011 - 12:25 | Link to Comment Whalers
Whalers's picture

Its a map of socialist countries.  Of course it will be more "equal".  That's the very goal of socialism.  TAKE from one that "has" to give to those who "have not". The thought process is backwards, immoral and repugnant but that's how socialist's think. 

On the other hand one thing that is not up for debate is the fact that if the scumbags in Washington let the companies fail who should have failed during this crisis there would have been a NATURAL economic move to greater equality.

Sat, 01/29/2011 - 13:00 | Link to Comment AnAnonymous
AnAnonymous's picture

TAKE from one that "has" to give to those who "have not".

 

You've just depicted the Homestead Act. Welcome to the US.

Sat, 01/29/2011 - 12:10 | Link to Comment apberusdisvet
apberusdisvet's picture

Remember the deck of cards targeting Saddam's henchmen at the start of the Iraq War?  We need to have a similar deck here at ZH.  We can make Lloyd the Ace of Spades, and Blythe the Queen of Hearts, just for starters.

Sat, 01/29/2011 - 17:52 | Link to Comment Amish Hacker
Amish Hacker's picture

Queen of diamonds, please.

Sat, 01/29/2011 - 11:34 | Link to Comment hardcleareye
hardcleareye's picture

GW I am so glad you wrote on this subject.  Your information matches the research I did yesterday, I was thinking of emailing Tyer to suggest the reasons for the collapse of the middle class in America as a subject matter.

I came across an excellent lecture done in 2005 by Elizabeth Warren presenting her research at UC Berkley, regarding the reasons (supported by best available data, it is cited) for the demise of the middle class in the US.  It is a bit long but very insightful.  Breaks down the factual cost centers so you can follow the money.

http://www.youtube.com/watch?v=akVL7QY0S8A

 

Sat, 01/29/2011 - 11:31 | Link to Comment gold mining ceo...
gold mining ceos are idiots's picture

Inequality is not the issue. It is the rule of law. If the rich build a moat around their wealth

and in doing so, break the law then society is doomed. Therefore, the USA is doomed.

The joke of it is that people will call the end of this society as the collapse of capitalism

when it is nothing of the sort.

Sat, 01/29/2011 - 11:22 | Link to Comment kaiten
kaiten's picture

Just rename it to Estados Unidos de América, and the problem is solved. US will be like most of its neighbors.

Sat, 01/29/2011 - 11:12 | Link to Comment afriend2u
afriend2u's picture

Scott Adams the creator of Dilbert says it best in his Wall Street Journal opinion piece today. Here is an excerpt:

"In reality, fairness is not so much about the actual distribution of loot as it is about the psychology of how you feel about it. That's important to understand because the rich won't give up their cash unless they feel they are getting something in return. And so far, saving the country doesn't seem to be enough of a payoff."

All of the best humor is found in truth.

http://online.wsj.com/article/SB10001424052748703293204576106164123424314.html?mod=WSJ_hp_MIDDLENexttoWhatsNewsForth

Sat, 01/29/2011 - 11:14 | Link to Comment Mercury
Mercury's picture

Harvard has a lot more money than any other school.  Like, by far.

Do we get to redistribute their wealth too - or do these guys just have other people's money in mind?

Sat, 01/29/2011 - 10:59 | Link to Comment stev3e
stev3e's picture

From Harvard and Duke - this is supposed to scholarly?  Its hard to even begin to dissect this flimsy load of trash.

Sat, 01/29/2011 - 12:52 | Link to Comment brandy night rocks
brandy night rocks's picture

Word.  I guess I should know by now not to be surprised at the intellectual laziness that weighs down the higher education system, but it's still discouraging every time I see bullshit like this.

Sat, 01/29/2011 - 10:54 | Link to Comment anvILL
anvILL's picture

>Americans consistently underestimate the amount of inequality in our nation.

Uh...I think the use of gini coefficient itself underestimates America's inequality.
That thing is probably the best indicator of inequality we have today, but it has its own flaws and I think we seriously need some better way of measuring inequality mathematically, instead of reading 13pages of paper to get a better picture of WTF is going on.

http://en.wikipedia.org/wiki/Gini_coefficient   (Lots of disadvantages and general problems)

By the way, I found this to be quite interesting.
http://en.wikipedia.org/wiki/List_of_U.S._states_by_Gini_coefficient_of_income_inequality

CN, NY=amazing how much financials can help
AK=Equality in Pailin land
OH=The most average state happens to be in pretty much in the middle as expected.

Sat, 01/29/2011 - 10:51 | Link to Comment Salinger
Salinger's picture

GW you're not a closet NWO/Globalization type are you?

The World Bank makes extensive use if gini and other indicies in support of its various agendas.

 

http://siteresources.worldbank.org/INTDECINEQ/Resources/PSBSutcliffe.pdf

 

http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPA/0,,cont...

 

http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPROGRAMS/...

 

 

Sat, 01/29/2011 - 15:10 | Link to Comment George Washington
George Washington's picture

No, I'm not.  Sometimes I used the massa's language so that everyone can understand what I'm saying...

Sat, 01/29/2011 - 10:50 | Link to Comment Missing_Link
Missing_Link's picture

George, you fail yet again.

Egypt: 99.99% poor people, 0.01% Hosni Mubarak

USA: 30% poor people, 50% middle class, 20% rich people

OH NO!!!  INEQUALITY!!!!!!!

Sat, 01/29/2011 - 10:57 | Link to Comment Brother can you...
Brother can you spare a dime's picture

Missing link appears to be the correct description of you post, perhaps you could provide us all a link to the orifice in which you got those numbers. My guess is that you need to look behind you.

 

The peasants are revolting and their angry too...

Sat, 01/29/2011 - 13:04 | Link to Comment AnAnonymous
AnAnonymous's picture

The link is missing...

Sat, 01/29/2011 - 09:55 | Link to Comment wackyquacker
wackyquacker's picture

dude, you need to get a life.

Sat, 01/29/2011 - 10:48 | Link to Comment Brother can you...
Brother can you spare a dime's picture

This is what you chose to take a few minutes out of your life to post. Really? Was it GW's facts that so annoyed you, or maybe his supporting links?

 

Thanks again GW, I always look forward to your posts.

 

The peasants are revolting, and their angry too....

Sat, 01/29/2011 - 09:02 | Link to Comment cheesewizz
cheesewizz's picture

Those who make peaceful revolution impossible will make violent revolution inevitable.

 

http://www.ebaumsworld.com/video/watch/81291836/

Sat, 01/29/2011 - 11:30 | Link to Comment Arch Duke Ferdinand
Arch Duke Ferdinand's picture

Why Vancouver BC Canada is the Worlds Safe Haven..

(also check out, Vancouver BC, Canada's Geneva of Switzerland...)

http://seenoevilspeaknoevilhearnoevil.blogspot.com/2011/01/why-vancouver-bc-is-worlds-safe-haven.html

Fri, 01/28/2011 - 23:05 | Link to Comment Convolved Man
Convolved Man's picture

In the limited data set comprised of family and friends, I see more "middle-class" becoming poorer and the poorer relying on more government programs.  If this is a localized phenomena, then I am in need of better family and friends.

Fri, 01/28/2011 - 22:24 | Link to Comment Convolved Man
Convolved Man's picture

Shush, don't tell the bottom 40% of society that they should be malcontents.

Do NOT follow this link or you will be banned from the site!