America’s Income Inequality Worse than Egypt

[jojog]

From BeyondChron


As we watch the crisis in Egypt from afar, the blog ThinkProgress reported on a disquieting statistic this week. While “growing income inequality” is a factor that contributed to Egyptians taking to the streets, the gap between rich and poor in the U.S. is actually far worse. According to the CIA World Factbook, the United States is ranked as the 42nd “most unequal” country in the world, whereas Egypt as the 90th. Meanwhile, American conservatives celebrated the 100th birthday of Ronald Reagan this weekend – who did more to exacerbate the gap in this country than any other President. As Joan Walsh wrote in Salon, “it’s difficult to overstate how much Reagan-era propaganda hurt the country. It distorted our understanding of how to help low-income people, as well as our optimism they could be helped, and it corroded the social contract that had prevailed since the New Deal.” And it now raises all sorts of questions.


<http://www.beyondchron.org/articles/America_s_Income_Inequality_Worse_than_Egypt_8875.html>

[Kennah]

1. Where is our Tahrir Square?

[AndyTiedye]

2. Where Could It Be? Our Country is Too Big to Come Together in One Place Like That

[Kennah]

4. How about every state capital?

[dmallind]

3. Oh hell not this again

I am approximately 1/100000th as rich as Bill Gates. I am comfortable financially.

Somebody 1/10000th as rich as me - a ratio 1/10th as big as mine is to Bill's - is on the streets begging and hoping the shelter has a bed for him tonight (or if he lives close to a very cheap hotel, possdibly the night after).

America's GINI index is certainly a moral and economic challenge, but that does not mean we are comparable to the poor of Egypt. GINI inexes measure ratios, not levels of poverty.

Which of course would only even matter if the biggest impetus for Egyptian unrest were income inequality. The signs - at least the ones in English - aren't complaining about that.

[femrap]

8. The bottom 40%

of the US really has no assets. Some are in a negative net worth. But our gov't hands out food stamps....no long bread lines. Plenty of TV, pron, and crappy processed foods....which result in obesity, immobility, and diabetes.

Wherever you live, you must be quite insulated from poverty. Get outside of your comfort zone and drive to a poor section of town. You'd be amazed.

You have a stable job? What would happen to you if that was gone? And you had to go a couple of years w/o an income? Daddy leaving you a nice inheritance?

So glad to hear that you're 'comfortable financially.' I doubt if your emotional levels are as comfortable...especially on the Empathy Scale.

[femrap]

5. Our gov't subsidizes

our food with Food Stamps. No long lines for bread like in Egypt. And there's 'American Idol' and pron.....plus all of our 'citizens' are fat, lazy and have diabetes because they eat crappy processed food.

[cali]

6. lol. like clockwork.

[femrap]

9. What do you find funny? nt

[cali]

10. all kinds of things; that some folks are desperate to believe that

we're worse off than those in Egypt, that many don't grasp the Gini index, and that there are all sorts of problems with it. That this has been posted a couple of dozen times.

*
o Transfer principle: if income (less than half of the difference), is transferred from a rich person to a poor person the resulting distribution is more equal.

Disadvantages of Gini coefficient as a measure of inequality

* While the Gini coefficient measures inequality of income, it does not measure inequality of opportunity. For example, some countries may have a social class structure that may present barriers to upward mobility; this is not reflected in their Gini coefficients.

* If two countries have the same Gini coefficient but one is rich and the other is poor, it can be seen to measure two different things. In a poor country it measures the inequality in material life quality while in a rich country it measures the distribution of luxury beyond the basic necessities.

* The Gini coefficient of different sets of people cannot be averaged to obtain the Gini coefficient of all the people in the sets: if a Gini coefficient were to be calculated for each person it would always be zero. For a large, economically diverse country, a much higher coefficient will be calculated for the country as a whole than will be calculated for each of its regions. (The coefficient is usually applied to measurable nominal income rather than local purchasing power, tending to increase the calculated coefficient across larger areas.)

* The Lorenz curve may understate the actual amount of inequality if richer households are able to use income more efficiently than lower income households or vice versa. From another point of view, measured inequality may be the result of more or less efficient use of household incomes.

* Economies with similar incomes and Gini coefficients can still have very different income distributions. (This is true for any single measure of a distribution.) This is because the Lorenz curves can have different shapes and yet still yield the same Gini coefficient. For example, consider a society where half of individuals had no income and the other half shared all the income equally (i.e. whose Lorenz curve is linear from (0,0) to (0.5,0) and then linear to (1,1)). As is easily calculated, this society has Gini coefficient 0.5 -- the same as that of a society in which 75% of people equally shared 25% of income while the remaining 25% equally shared 75% (i.e. whose Lorenz curve is linear from (0,0) to (0.75,0.25) and then linear to (1,1)).

* It measures current income rather than lifetime income. A society in which everyone earned the same over a lifetime would appear unequal because of people at different stages in their life. However, Gini coefficient can also be calculated for any kind of single-variable distribution, e.g. for wealth.<13>

* Gini coefficients do include investment income; however, the Gini coefficient based on net income does not accurately reflect differences in wealth—a possible source of misinterpretation. For example, Sweden has a low Gini coefficient for income distribution but a significantly higher Gini coefficient for wealth (for instance 77% of the share value owned by households is held by just 5% of Swedish shareholding households).<14> In other words, the Gini income coefficient should not be interpreted as measuring effective egalitarianism.

* Too often only the Gini coefficient is quoted without describing the proportions of the quantiles used for measurement. As with other inequality coefficients, the Gini coefficient is influenced by the granularity of the measurements. For example, five 20% quantiles (low granularity) will usually yield a lower Gini coefficient than twenty 5% quantiles (high granularity) taken from the same distribution. This is an often encountered problem with measurements.

* Care should be taken in using the Gini coefficient as a measure of egalitarianism, as it is properly a measure of income dispersion. For example, if two equally egalitarian countries pursue different immigration policies, the country accepting higher proportion of low-income or impoverished migrants will be assessed as less equal (gain a higher Gini coefficient).

* The Gini coefficient is a point-estimate of equality at a certain time, hence it ignores life-span changes in income. Typically, increases in the proportion of young or old members of a society will drive apparent changes in equality. Because of this, factors such as age distribution within a population and mobility within income classes can create the appearance of differential equality when none exist taking into account demographic effects. Thus a given economy may have a higher Gini coefficient at any one point in time compared to another, while the Gini coefficient calculated over individuals' lifetime income is actually lower than the apparently more equal (at a given point in time) economy's.<15> Essentially, what matters is not just inequality in any particular year, but the composition of the distribution over time.
<snip>

http://en.wikipedia.org/wiki/Gini_index#Disadvantages_of_Gini_coefficient_as_a_measure_of_inequality

[femrap]

11. I don't see much in

desperation around here, but I have read that our bottom 40% in income live around or below the poverty line. Many, in fact, have a negative net worth.

The Walton Family has more money than the entire bottom 1/3rd of our nation...that's around 100 million people. One family has more money than 100 million Americans.

Of course, Americans have much in the way of Circuses...hundreds of TV channels, porn, gambling, lottery, liquor and online shopping. And food stamps which helps....no long lines for bread.....yet.

Dumfukistan, the former US of A.

[Initech]

7. Hearing crap like the CEO of Goldman-Sachs getting a 350% pay raise...

Really makes me want to join the Tahrir Square people.