The chart below depicts a measure known as the “Gini Coefficient” for the entire United States from 1967-2009:
This is the image that people typically have in mind when they make claims that inequality in the United States is increasing. By this measure called the Gini Coefficient, it appears that income inequality increased by about 18% since the Johnson Administration (from an index value of .397 to .467).
Here is a totally stupid point to make, but you’ll see others make analogous ones when it comes to GDP or employment or some other measure. Interestingly, this inequality increased the most during Clinton’s 8 years in office (6.7%) followed by a 5.7% increase during Reagan’s 8 years. During the reign of King Bush the Second, it increased by 0.9%. Of course, I take these numbers to be fairly meaningless, and I recommend that you should too, but they do provide a salve for those of you frustrated by seeing similar data used by others.
OK, back to the Gini data above. As compared to other industrialized nations, by this measure inequality in the United States is basically higher than anywhere in the wealthy world. There is no reason to dispute the statistic. The point of the next week (or more) of posts is to help you understand what they really mean, and in what ways I might be concerned or unconcerned about some of them.
In the third post in the series (WINTERCOW: I changed a few things, originally I said this would run tomorrow) I will describe briefly 4 different ways of measuring inequality. In today’s post, all I want to do is point out the following:
We’ve already run this post too long. We’ll show a rough breakdown of how this Gini measure has changed within some subpopulations tomorrow, and then we will go into some simple explanations of what this measure means, and what we hope inequality measures can capture.
Another quick thought. When very poor Mexican immigrants come to this country, wouldn’t this increase the Gini number? When no one has seen any negative material changes in their lives?
Bullet three is certainly important. Should we expect to see a graph showing Gini coefficients for lifetime earnings tomorrow? I also wonder about the Gini coefficient for a single person’s earnings over the course of the person’s life (or even just working years). Those two data points would give some reference for whether a particular value is “high” or “low”.
Obviously the Czar and his family have too much wealth. Just take a look at St. Petersburg. I say we break all the windows in the Hermitage as an exercise in social justice.
Vote for Stalin [no other choices, sorry].
Your graph begins in 1967, shortly after LBJ’s Great Society, continuing through Nixon’s abolition of Bretton Woods, three big recessions, the creation of the Department of Energy and New Oil/Old Oil, gas lines fifty deep, the price of gold going to $800 in 1980, and a deliberate effort to diminish American influence in the world. During that time the line on the graph is flat, except for the brief tic down in 1967.
One conclusion is that if equality, defined by the graph, was unchanged by all of that smart intervention. Did I mention Gerald Ford’s Whip Inflation Now buttons, Nixon imposing a 55-mph speed limit, or Jimmy Carter wearing his cardigan sweater?
Looking forward to Wintercow’s next illuminating essay.
Meant to say if equality was unchanged, why did we have to go through all of that?
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