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Thursday, June 15, 2017

Our Shameful Gini Coefficient

Originally Published October 25, 2008; Last Updated June 03, 2017; Last Republished June 02 , 2017:

Our shameful Gini coefficient (video explanation Gini) is more indicative of regressive, oppressive, and corrupt nations than the great nation we claim to be:

Gini by Country - Yellow USA @ .381
Unfortunately, the most recent USA Gini coefficient has trended up to .408 (see United Nations 2011 Table 3 below) .

Like we target economic growth with low inflation we must target income and wealth growth with low Gini (video explanation Gini).1  



Res:

UPDATED 08/26/2013 UnivWisconsin, Midwest International Economic Development Conference, Keynote Slides, 2013; The Idea of Antipoverty Policy, Martin Ravallion and NBER, The Idea of Antipoverty Policy

Interesting keynote further hastening the elimination of any historical stench of mercantile economics suggesting poverty as a necessary economic byproduct—a stench equally odoriferous to indentures, slavery, and rotten corpses.

UPDATED 12/05/2012 CRS, The U.S. Income Distribution and Mobility:Trends and International Comparisons, dated November 29, 2012 Courtesy FAS Secrecy News

Our current GINI continues to climb toward "nation-destructive" levels—.47+ is an acutely damaging level of income inequality that our policymakers must immediately reverse! Our policymakers need not waste time debating what levels of inequality are optimal until our nation approaches .30.

Continuing to parrot the delusion that America is an "exceptional meritocracy" is dangerous to the extent that it paralyzes our nation or prevents immediate action! Or as more eloquently stated in the above report:
"...In the United States, a longstanding argument against redistributionary policies has been that each person has an equal opportunity to move up the income ladder. Research raises questions about whether Americans’ perceptions of their likelihood of upward mobility are exaggerated. Empirical analyses estimate that the United States is a comparatively immobile society, that is, where one starts in the income distribution influences where one ends up to a greater degree than in several advanced economies. Children raised in families at the bottom of the U.S. income distribution are estimated to be especially less likely to ascend the income ladder as adults..."
UPDATED 04/26/2012 CES, Equality and Efficiency in Advanced Democracies:
Revisiting the Leaky Bucket Hypothesis

Neoliberals often cite Okun as support for their linear Darwinian, dog-eats-dog preference for unregulated economic market efficiency over reduced inequality.

This draft paper (Apr 2012) discusses a more nuanced relationship between market efficiency inequalities.

UPDATED 01/04/2012  CRSChanges in the Distribution of Income Among Tax Filers Between 1996 and 2006: The Role of Labor Income, Capital Income, and Tax Policy Link is Courtesy FAS Secrecy Blog.

If a single graph is capable of explaining much of our current protests, dissatisfaction and societal fragmentation it’s this one:



Our poorest 20% actually lost 6% of the income share during 1996-2006! Incredibly these are the same people our policymakers are currently "piling on" by proposing to further reduce their income share!

Perhaps we can impute the costs of our prisons, mental institutions and other coercive institutions to our poor so their share of our national income is less negative (just sarcasm not an idea).

The good news is that we do not have to accept these pathetic policies—we can demand policies, which decrease income distributional imbalances and thereby decrease both protests, dissatisfaction and societal fragmentation.
UPDATED 11/05/2011 Wikipedia, Gini Coefficient

UPDATED 11/05/2011 Wolfram Mathworld, Gini Coefficient

UPDATED 11/03/2011 United Nations, 2011 TABLE 3 Inequality-adjusted Human Development Index (pdf)

Our nation ranks fourth on the United Nations 2011 Human Development Index (HDI), but that respectable rank plummets a staggering 23 positions when our HDI is adjusted for inequality. Stated differently our 2011 adjusted HDI drops by a steep 15.3% (0.910 to 0.771) percentage points, moving our nation completely out of the very high development tranche.

Web: 

UPDATED 06/15/2017 Ted, Poverty Isn't a Lack of Character; It's a Lack of Cash and Brookings, Can Universal Basic Income Boost Financial Inclusion and Transparency?

When we handout money to recapitalize (aka rescue) the capitalists from their pathetic cannibalistic ways we call it "helicopter money"! Lets recapitalize our poor and call it a "minimum basic income".

Our religious zealots (some might say wackos) can still pray for our poor and the politicians can still rhetorically crucify them—we can unify all these similar programs under the budget line item "pay not pray or punish"!


UPDATED 06/03/2017 Economist, Gimme Shelter, The Super-rich Are Different: They Pay Less Tax

...a lot less! These are the (non)taxpayers, which our "new" alt-white-house's budget proposes to help with tax breaks at the price of providing healthcare coverage for an estimated 23 million of our citizens; higher premiums for insuring citizens with preƫxisting conditions; and higher premiums for aging seniors...


...and these are the taxpayers, which our "new" alt-white-house OMB Director Mulvaney asserts are not getting compassion...you cannot make this stuff up!

UPDATED 04/19/2017 IMF, Transcript of the Press Conference on the Release of the April 2017 World Economic Outlook

We'll see if our citizenry once again vote for the unproved canard that "tax breaks for our wealthy benefit our poor"?

UPDATED 03/23/2017 Economist, Economic shocks are more likely to be lethal in America ...and when the economic shocks turn to trends?

UPDATED 03/01/2017 CSM, Guaranteed Paycheck: Does a 'basic income' Encourage Laziness?

What's the basis for correlating "laziness" with a minimum income floor?

UPDATED 01/12/2017 WH, Household Incomes Rising: Facebook Live with President Obama


UPDATED 12/27/2016 MoJo, 11 Charts That Show Income Inequality Isn't Getting Better Anytime Soon




The "distribution of income" graph on top is problematic, but the graph of annualized (1870-2014) per-capita growth below that graph is disturbing because it presages a regressing future for America absent intervention of significant invention!

Those interested in the significant role meaningful inventions play in macroeconomic growth will want to read macroeconomist Robert Gordon's new book The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War.

Those thinking recently hyped technology "shared economy" platforms like Uber, Airbnb etc. will significantly alter Gordon's "bell-shaped graph" will want to study Robert Solow, Paul Romer et al. and take to heart any or all the many variants of a quote oft attributed to Solow:

"you can see the computer age everywhere but in the productivity statistics." (Wikipedia)

...and of course evaluate the growth implications of graphs contained in our census publications like: Projections of the Size and Composition of the U.S. Population: 2014 to 2060 Page 4   dated March 2015.

Thank you Mr. President,...your presidency has provided many Americans with much pride:


Your successor's leadership and government (regime?) will likely exacerbate America's distributional dilemma and economic growth problems4, in pursuit of its fervent laissez-faire (aka neo-anarchism) and paradoxical efforts to use government to end it!
  
UPDATED 09/02/2016 Reuters, U.S. Treasury says EU's Apple tax ruling aimed at U.S. companies  One nation's "money grab" is another nation's "level playing field"!


Plenty of multinational companies and competing nations use financial schemes and shenanigans for competitive advantage*. Instead of criticizing the EU, Treasury Secretary Lew should nominate or name a few or better yet jointly investigate the amount of taxes and penalties owed as a result of their unfair competitive advantage?

WSJ, Apple Ordered to Pay $14.5 Billion Irish Tax Bill How about imposing penalties for Apple et al. substitution of corporate financial schemes and shenanigans in lieu of responsibly participating in civil society?


* There is a big difference between a nation (or local entity within a nation) setting its own tax policy and using its tax policy to confer a subsidy or unfair competitive advantage!

With respect to "concerns" that Apple will deduct its Ireland tax from any owed our Treasury note that Apple (and other corporations) is engaging in a different set of financial schemes and shenanigans while awaiting favorable U.S. tax treatment (i.e. nominal or zero tax) before repatriating its overseas earnings!

UPDATED 08/29/2016 NYT, Central Bankers Hear Plea: Turn Focus to Government Spending

The current Congress is unlikely to correct the imbalances created by predominately relying on monetary policy, financial shenanigans, and unproved economic dogma for sustainable economic growth.

Stated differently as the financial shenanigans unwind, dogma ditched, and global interest rates begin to trend negative bankers are pleading for fiscal help!

Hopefully, our next Congress will be less dysfunctional?

UPDATED 04/29/2016 Economist, Household income inequality: ladders to climb
UPDATED 04/09/2016 UCTV, Income Inequality and the Future of the American Dream: Differing Perspectives


Ayn Rand's apostles and acolytes are not lacking in "strong beliefs"—they lack any theory of realpolitiks, economics, or governance to support those "strong beliefs", except, perhaps chaos and anarchy. Blowing things up might work for novelists, terrorists, libertarians, nihilists, actors, anarchists, and Howard Roark; not so much for democrats, economists, or statists.

It's unimaginative, unbalanced, and unnecessary to blow up government to correct market failures or economic and distributional imbalances.

UPDATED 04/01/2016 UCTV, Breaking Promises: The Young’s Declining Share of the Economic Pie with S.Druckenmiller G. Canada

How "precious", our confused cowboy-capitalists, who have spent the last several decades silently launching and participating in one catastrophic financial scheme after another are concerned about our children's declining share of the economic pie (i.e. our seniors are getting too much)!

Yes, there are capitalists concerned about our children's futures, but they're currently too busy scooping up the shit after the confused cowboy-capitalists' previous parades and figuring out how to sustainably grow the economic pie to lecture the public on a looted treasury.


Unfortunately, it's not an April Fools joke! You can't make this stuff up.

UPDATED 03/28/2016 MoJo, California Is About to Make a $15 Minimum Wage a Reality and UCBLC, The High Public Cost of Low Wages

The confused cowboy-capitalists currently cannibalizing "disrupting" our economy are unlikely to be responsive to an acute political pull for growing wage rates.

Is economic inequality simply a disguised and advanced form of rent-seeking?

UPDATED 02/17/2016 YouTube, Capitalism will eat democracy - unless we speak up, Yanis Varoufakis


Unconstrained capitalism is cannibalistic, which is capable of consuming itself—this is news to neither capitalism's proponents and opponents nor economic theorists.

UPDATED 02/11/2016 Economist, Going after Google and Guardian, How much does Google's European boss really earn? and Fortune, A Top Google Executive Said He Doesn't Know How Much He's Paid

Google does not what to be part of the estimate $7.6 trillion3 "off-shore tax problem" and must immediately take steps to completely extract and alienate itself from this problem.

Let no Google press release ever read "Google pays all the taxes we are legally obligated to pay" or other like drivel with respect to their participation in the "off-shore tax problem"!


Wonder how many more video's like this one will be required before Google decides to exit all "legal" tax dodging and avoidance schemes...? Taxodus - Playing The Global Tax Avoidance Game (documentary not to be confused with the game by the same name)

UPDATED 12/19/2015 NYT, Class Differences in Child-Rearing Are on the Rise and Stanford, The widening academic achievement gap between the rich and the poor: New evidence and possible explanations

Continuously parroting myths is not a substitute for publicly sponsored research.

UPDATED 11/06/2015 UCTV, Inside Inequality: The Making of the Book with Thomas Piketty and his Collaborators and UCTV, Capital in the 21st Century with Thomas Piketty - Helen Edison Lecture Series

 

UPDATED 10/12/2015 NYT, Nobel in Economics Given to Angus Deaton for Studies of Consumption and The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2015 to Angus Deaton:
"for his analysis of consumption, poverty, and welfare"

UPDATED 09/16/2015 NYT, Uninsured Numbers Drop as Poverty Rate Holds Steady Deceleration generally precedes a beneficial inflection (reversal) of a trend.


UPDATED 08/14/2015 UCTV, Economic Inequality and the Future of Progressivism with Bill De Blasio and Robert Reich

UPDATED 08/13/2015 Atlantic, The Resurrection of America's Slums and Atlantic, Income Inequality and the End of the Middle Class

The stakes are likely to be greater than a sustainable 21st century Middle Class—any sustainable solution set is unlikely to include prayer and parroted dogma.

UPDATED 05/29/2015 UCTV, The Great Divide with Joseph Stiglitz and Robert Reich

Stiglitz discussing his newest book, The Great Divide: Unequal Societies and What We Can Do About Them.


A collection of previously published media articles describing in nontechnical terms the harm inflicted by our "Great Recession", including the so-called "collateral damage".

UPDATED 04/22/2015 Ted, Why we need to rethink capitalism

UPDATED 01/01/2015 BBC, France economist Thomas Piketty rejects Legion D'Honneur

Piketty tells France's leaders to keep their encomium and focus on solving economic issues—politicos no doubt find it easier to hand out encomiums than solve pesky economic distributional imbalances?

UPDATED 10/18/2014 UPI, Janet Yellen says income inequality hurting U.S. economy

Continuously asserting that distributional imbalances are harming our economy and nation does nothing to reduce or eliminate these imbalances. Our income and wealth imbalances are so grossly large there is little harm in acting immediately, using crude methodology and tools, if necessary, to reduce these imbalances. We can debate the finer economic points of optimal imbalances in a capitalist economy while the imbalances are trending down (as opposed to up)!

Of course perpetually debating how best to achieve a balance between capitalism and confused-corrupt-cowboy-cannibal-carny-casino-capitalism is important. However, this debate, which has continuously occurred since the founding of our nation, need not impede immediate action to reduce or eliminate our grossly large income and wealth imbalances.

UPDATED 10/08/2014 Reuters, New data shows Americans' incomes still stagnant after recession

Well, on the upside talking about an important economic attribute usually precedes corrective actions—on the downside some prefer to substitute talking for corrective actions.


UPDATED 09/15/2014 WP, Income inequality is hurting state tax revenue, report says

UPDATED 09/15/2014 Twitter, Joseph Blasi Coauthor of the popular book The Citizen's Share: Putting Ownership Back in Democracy (out in paperback) and AuthorsAtGoogleTalk (~58:00).


UPDATED 05/29/2014 NYT, Taking on Adam Smith (and Karl Marx)

It's encouraging that these difficult (different than complex) discussions are finally beginning.

Discussions on how to improve capital distribution need not morph into a bipolar choice between capitalism and socialism.  Nor, need these discussions underestimate the benefits of speedily implementing demonstration projects aimed at convincing capital that "God and Darwin" have played no part in creating our current distributional imbalances.


* Piketty response to Giles concerns over the rate at which wealth distribution (Chapter 10) imbalances are accumulating—primarily the result of different interpretations concerning the reliability of the British noncontiguous heterogeneous data sets.

UPDATED 01/05/2014 NYT, Mapping Poverty in America Nice United States map listing county poverty (distributional imbalances twin sister) rates.

UPDATED 12/08/2013 Economist, Inequality in America Gini in the bottle and New Yorker, American Inequality in Six Charts












The good news about our nation's current income inequality is that it's enabled us to start an important dialog about inequality and related myths—notwithstanding the many subtle and not so subtle inferences to Darwinism, a money gene has not been located!

That will not dissuade some of our citizenry from sending saliva to 23andMe, cells to a cryonic laboratory or seriously consider whether to preserve their body post-death. It's unclear why these citizens would think future human habitats will require or apply their unique skill set or be constrained by today's myths?

UPDATED 12/04/2013 WH, President Obama Speaks on Economic Mobility (entire)



Sometimes all you can say is Wow!


UPDATED 10/12/2013 UPI, U.S. poverty rate stabilizes but number of poorest of poor grows 

What's "exceptional" about any nation simultaneously producing richer rich and poorer poor?!

UPDATED 08/03/2013 UPI, Obama: Reversing income gap is 'highest priority'

UPDATED 01/16/2013 Reuters, Number of working poor families grows as wealth gap widens
"Data showed that the top 20 percent of Americans received 48 percent of all income while those in the bottom 20 percent got less than 5 percent...In 2011, roughly 23.5 million, or 37 percent, of U.S. children lived in working poor families compared with about 21 million, or 33 percent, in 2007, the report (pdf) said."
UPDATED 09/19/2012 Atlantic, U.S. Income Inequality: It's Worse Today Than It Was in 1774

UPDATED 06/30/2012 GoogleTalk, Joseph Stiglitz, The Price of Inequality

UPDATED 06/06/2012 NPR, Growing Economic Inequality 'Endangers Our Future'

Cannibal capitalism is negatively distorting markets and the lives of millions of Americans—will we return to capitalism or proceed to carcass capitalism?

UPDATED 05/29/2012 UPI, U.S.: Second-highest child poverty level

UPDATED 11/03/2012 Moyer&Company, On Winner-Take-All Politics

By using a macro-measure target like the "gini coefficient" our policymaker are able to completely avoid winner-take-all-politics or accusation of "choosing winners and losers" or engaging endless and mostly useless debates about redistribution.

The "gini" is then discussed and managed in a manner not dissimilar to a discount or unemployment rate.

UPDATED 12/18/2011 TTBK, Decline of the Middle Class

UPDATED 12/16/2011 AP, Census shows 1 in 2 people are poor or low-income

The result American exceptionalism, survival of the fittest or just decades of pathetic public policy that "hallowed out" our middle-class? Jeffrey Sack talking on The Price of Civilization thinks it's the latter:


UPDATED 12/07/2011 SeattleTimes, Obama: Middle class at 'make or break' stage

President Obama takes direct aim at those seeming hell bent on returning America to the workhouses of centuries past—full video (55min) of the President's Osawatomie, Kansas speech on the economy.


Mr. President, reducing our gaping income inequality gap improves more than trust. A reduced income inequality improvements life expectancy, math and literacy, infant mortality, homicides, imprisonment, teen births, trust, obesity, mental illness and social mobility, are all positively correlated with lower income inequality!

The above graph is from Richard Willkerson's short Ted Talk on How Economic Inequality Harms Societies


Other research confirms Wilkerson et al's linear correlation between a nation's worsening quality of life measures and its increasing income inequality.

Some of our President's critics proudly assert that the difference between knowledge and ignorance is mere opinion and justification for seeking "God's" opinion, which they inform us they routinely do. Hopefully, before bothering "God" they will read Irving Fisher's 1907, "Why Has The Doctrine of Laissez Faire Been Abandoned?" (quoted in part below):
"...The adherents of this school seemed to treat the difference between knowledge and ignorance as a mere difference in opinion, with which the government has no more concern than with difference of religious creeds. It is certainly true that the attempts of governments to impose what is regarded by the ruling class as the 'true religion' upon the entire people have always proved ill-advised; the recognition of this has produced the modern sentiment of religious toleration. But we are carrying toleration too far when we refuse to correct errors which science demonstrates to be false. There are doubtless millions of persons to-day who jeer at the idea that indiscriminate spitting is dangerous to public health, but it would be silly to allow their ignorant prejudice to prevail. The bacteriologist knows what the ignorant do not know, and every effort should be made to pass down this knowledge to the masses as soon as possible after it is discovered. We can not let any dogma of laissez faire prevent us from checking suicidal ignorance...."--Fisher, Laissez Faire 1907--
UPDATED 11/07/2011 IMF, Inequality and Unsustainable Growth: Two Sides of the Same Coin? Berg, Andrew, and Jonathan D. Ostry, 2011

Paper makes the correlation between inequality and length of growth period—a decrease in the Gini from .40 to .37 is expected to lengthen the growth period by 50 percent.

It goes on to make the fascinating observation:
"...Second, the efficacy of some standard policy recommendations may depend on forces related to distributional issues. It may be simultaneously true that inadequate regulation lay behind the financial crisis in the United States and that increasing inequality underlay the pressures on lenders and borrowers to overleverage. Better analysis of macroeconomic and financial sector linkages, and thus more appropriate regulation, can surely help. But such analysis cannot ignore the larger context of rising inequality if it is to yield useful policy advice...."--Inequality and Unsustainable Growth--
The above correlation and observation would seem to favor President Obama's strategy to prevent our acute distributional issues from becoming chronic.

How ironic that our policymakers, so practiced at yelling "class warfare"2 and enacting policies that exacerbate our distributional inequalities are in fact truncating the very growth their yelling and policy seeks to create and sustain, thereby jeopardizing our nation.

UPDATED 11/05/2011 Reuters, Inequality dents U.S. rank in U.N. development index

UPDATED 11/03/2011 ProPublica, U.S.'s [Shameful] Growing Income Gap By The Numbers a troubling trend that must be immediately and significantly reversed.

UPDATED 04/15/2011 Vanity Fair, Of the 1%, by the 1%, for the 1%
"...An economy in which most citizens are doing worse year after year—an economy like America’s—is not likely to do well over the long haul...."--Joseph E. Stiglitz--
Growing Unequal? Income Distribution and Poverty in OECD Countries

-----notes------

1. When discussing or thinking about national inequality distributions and policy, measurements of income, wealth, GDP, GNP, and other economic indicators are often unhelpfully conflated with measurements of that nation's citizens.

2. One suspects that managing an economy that maintains equilibrium between incentives and inequalities requires policymakers with a different skill set.

3. Those interested may enjoy reading Gabriel Zucman's short seminal primer on off-shore tax havens, including initial data estimates on corporate participation (figure 8 of Excel Spreadsheet), The Hidden Wealth of Nations

4. UPDATED 12/28/2016 Economist Ken Rogoff sees 'significantly faster' growth under Trump. Rogoff generally asserts it's to early to predict stagnation of long-term growth, given our recent Great Recession (i.e.  lesser growth is an attribute of financial crises?).

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