Inequality Is Why We’re Not OK

It can be easily argued that inequality is the most significant thing wrong with us. Fix inequality, and just about everything else will fix itself. That much is known.

All measures of social health
worsen with inequality.

The Real-World Economics Review Blog has been running a series of statistics that show a depressing similarity. All of these charts show relative ratings, usually of 30 countries, of the modern world. On virtually all of them, the US ranks at or close to the bottom.

Some of the indicators include: 8 health indicators (28 out of 30); physicians per capita (23 out of 30); child poverty rate (25 out of 26); divorce rate (30 out of 30); public spending on family benefits (26 out of 29), and a number of others. In fact, on average ranking for 8 family indicators, we scored at the very bottom, 30 out of 30. This information is not unknown, and it is all perfectly predictable solely on the basis of inequality.

The GINI Index is a measure of inequality, with a range of zero (perfect equality; everybody has the same amount of money) to 1.0 (one person has all the money; perfect inequality). Here’s what has happened to America’s Gini Index since the forties:

In the mid-sixties our level of inequality was as low as the better countries today; it’s been steadily worsening since. The estimated GINI for pre-crash 1929 is about the same as today. And how do we rate in comparison with others? 31 out of 34, just above Chile, Mexico, and Turkey. Not so good.

I’ll mention again The Spirit Level, by Richard Wilkinson and Kate Pickett, which shows what I think is the most important socioeconomic fact ever. These researchers correlated a lengthy series of social measures from several countries, including the ones mentioned above and many more, with measures of inequality. All of this data is publicly available. They found that all measures of social health worsened with the degree of inequality. Conversely, in cases where equality was purposely improved, social measures also improved.

That’s why we’re not OK, and that’s why we won’t be OK until we do something to specifically improve the disgraceful degree of inequality that plagues our country.


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