America’s Economic Bipolarity

Posted on December 23rd, 2011 in Commentary,Engineerboy by EngineerBoy

Income Equality (lower is more equal)

I’m a data person, and any time I have conceptions, preconceptions, prejudices, opinions, or assumptions, and there are relevant data available, I like to challenge my own opinions with facts.  One opinion I hold is that the United States is losing ground on being the ‘Land of Opportunity’ from an economic perspective.

I’ll stop here to state that I understand I’m talking about ‘first world problems’, and that the average American has it pretty good compared to the average world citizen.  Also, I’m not an economist, sociologist, futurist, or any other kind of credentialed -ist (other than ‘technologist’), so these are just the noodlings of an interested observer.

That being said, the people that put together the CIA World Fact Book seem to know a lot of things about a lot of things, and they share a portion of what they know via their public site.  The charts you see on this page are direct translations of their data into graphical form, and all credit/blame for that data goes to them.

One of the things they gather and post information about is relative income equality for countries around the world.  They share that information on this page:

The chart on the top right shows the Income Equality of the largest 100 countries (by population) from the CIA table, where a larger number is less income equality, and a lower number is more income equality (I know that’s counter-intuitive, but I didn’t develop the GINI scale).  So, the countries to the left-hand side of the chart are the most unequal from an income distribution perspective, and those on the right are the most equal.  The thumbnail view of the chart is pretty small (click chart for larger view), but the red line is the United States, and the green lines are the rest of the G8 countries.  You can see that the US is the left-most G8 member, meaning the one with the least equitable income distribution.

That sucks.  What it means is that the gap between rich and poor is pretty wide.  I think we can all look back over the last few years or decades and see that this has been happening, so although our place in the bottom third of countries isn’t a complete surprise, being the worst of the G8 nations is a bit disheartening.

Income Equality Trending (higher means increasing inequality)

I think that an impartial observer would agree that things are not good from an economic perspective in America today.  However, we have a legacy of bouncing back from adversity and overcoming obstacles.  Are we doing that here?

As you can see in the chart to the right (click chart for larger view), we are not only not improving, but are continuing to get worse.  In fact, only two G8 nations (Italy, Japan) have income equality gaps that are getting larger faster than ours.  Once again, the US is the red bar, and the rest of the G8 are the green bars.

So far all I’ve done is said we’re drowning, and then described the water.  What are the causes and solutions to this problem?  Although I have definite opinions about how we ended up where we are, I am not qualified to make any definitive statements about the economic and political forces that have put us where we are.  Note that I love to share my opinions, and I think that most of them are de facto facts just by virtue of being my opinions, but in this instance I don’t want to have this discussion degrade into partisan politics and bickering.

Also, I’m even less qualified to offer solutions.  I find it challenging to contribute to managing the finances of our household, and my wife does almost all of that work in the first place, with a competency that I can only stand back and admire with awe.  However, I do have opinions about what world economic and political leaders should be doing, but once again I don’t want the point of this discussion to be lost in partisanship and dogma.

And the point of this discussion is simply to point out, as factually and unemotionally as possible, where we are today.  The income gap in the US is one of the widest in the developed world, and it’s getting worse.  Income inequality is not the only factor that plays into quality of life, but consider, for a moment, the two extremes of income equality.

In the most unequal distribution, one single person would control all of the wealth of a country.  In the most equal distribution, everyone would have the exact same economic prospects.  I wouldn’t want to live in either of those countries.  In the most unequal one, there would be no chance to make a living or demonstrate economic worth, and any sustenance or shelter would be based on the largesse of the Grand Poobah.  In the perfectly equal one, the same would be true about economic worth – excellence and hard work would not be rewarded, because everybody would have the exact same standard of living regardless of ability, drive, ambition, or effectiveness.

Unfortunately, the United States is moving closer towards the situation where more and more of the country’s wealth is being held by fewer and fewer citizens.  In fact, according to a recent study: “Even the Roman Empire, a society built on conquest and slave labor, had a more equitable income distribution.”  The article also goes on to explain why the CIA publishes income inequality figures in the first place:  “Since too much inequality can foment revolt and instability, the CIA regularly updates statistics on income distribution for countries around the world, including the U.S.”

Does that match your vision of the United States?  That we are as decadent as Rome before the fall?  That China, the land of a billion socialist peasants, has a more equitable distribution of income?  That our immediate neighbors on the chart of income inequality are Uganda, Cambodia, Camaroon, Bulgaria, Jamaica, and Mozambique?  Is that really the economic neighborhood for a nation that considers itself the leader of the free world?  And not only that, it’s only getting worse, instead of better?

I don’t know about you, but none of that matches my expectation of the United States.  We are the land of opportunity.  We are a classless society, where anybody from any background can succeed through sheer force of will.  However, as wealth accumulates with a small group of the super-rich, so does economic and political power.

On a level playing field, I applaud anyone who is able to create wealth for themselves and their family.  However, I think it is clear from the simple charts on this page that the playing field is not level in the US.

And from here on out I will be interjecting opinion – as the rich have gotten richer, they have used their economic and political power to rig the game in their favor.  To protect what they have, and to have the opportunity to accumulate more.  I can understand that impulse, because who doesn’t want to protect and grow what is theirs?

However, every flexing of political muscle by the rich to keep and grow their wealth also has the equal and opposite reaction of denying someone less rich the opportunity for increased economic success.  I don’t know how to solve it, but the first step is admitting there is a problem.  I’m not sure how anyone could look at these figures still not be convinced that something is wrong and needs to be done to restore balance to the economic prospects of all Americans.

That’s where We the People and the government come in.  It should not be the job of the government to redistribute wealth by fiat.  However, it should be the job of government to make sure the playing field is level and that everyone has an equal opportunity.  Given the amount of money it takes to mount a campaign for federal office, the candidates are increasingly either personally rich, backed by the rich, or a combination of both.  What that means to me is that those that have the gold are making the rules.

That has always been the case, to a certain extent, and people with money will always be able to have an outsized impact by buying the cooperation of those willing to sell their influence.  However, it seems that this has become the rule rather than the exception in American politics today.  And although I can’t offer concrete solutions, I think the first step is for We the People to use the polling booth to reject candidates who, by their actions (not words), have shown their support for fostering and increasing the current economic imbalance.



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