Friday, August 16, 2013

No, Wonkblog, this chart does not make me feel better about American inequality

Yesterday morning, Dylan Matthews had an article in WaPo's Wonkblog entitled "This chart might make you feel better about American inequality."

You can see the graph mentioned here.  It comes from a working paper by Branko Milanovic, the lead economist at the World Bank’s research group.
 photo Graph_zps82de2be1.png
As you can see, the poorest 5% in the United States have higher incomes than all of India except (roughly) the top 5% and everyone in China except (roughly) the top 15%.

Should that make you feel better about American inequality?  No.

First of all, the argument "Don't feel as bad about poverty here because our poor are doing fine compared to the world average" sounds like something a Koch brother would say to gloss over poverty and rationalize reactionary policy.  That's because it is.

Gaping global inequality should not be used to whitewash the state of economic inequality at home.  Inequality is a problem within nations and between nations, and both domestic and global inequality demand more political will from our elected leaders and more rigorous policy efforts and experimentation.

Let's take a look at how the U.S. fares next to its peers in the OECD on the issue of income inequality.

Here's a chart of the Gini coefficients in OECD countries. The Gini coefficient is a measure of income inequality. It ranges from 0.0 (flat equality) to 1.00 (one person has all the income). The US is more unequal than every OECD country except for Mexico and Turkey. Unsurprisingly, Norway, Denmark, Finland, and Sweden all rank in the top 5 least unequal although, unfortunately, a turn towards neoliberalism has increased inequality in Sweden and Finland over the past two decades.
 photo GinicoefficientsOECD_zps8d8c4774.png
You might say that "this chart makes you not feel better about American inequality."

The disproportionate affluence of the top 1% in the U.S. and growing corporate profits show the need for both redistributive (steeper progressivity in taxation) and predistributive (higher minimum wage, better labor protections, stronger unions) policies.

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