Economic Inequality in the United States

 

 

By Jim Sullivan

As many people from academics to politicians to journalists to American workers have noted, economic inequality is becoming a serious problem in the United States.  Currently twenty people own as much as half the population owns in our country, and wages have been stagnant for several years.

To illustrate this problem I compared something called the Gini Index for three countries: Canada (a Democracy), the United States (a Democracy), and Saudi Arabia (a Monarchy).

If you are not familiar with the Gini Index it is a measure of inequality in countries.  The Index is on a scale from 0 to 100.  The lower the Gini score, the more equally wealth and income are distributed among the citizens of a country.  Here are statistics for Canada, the United States, and Saudi Arabia and their Gini Indexes:

[Note: Some of these statistics are dated, as it takes time, money and human resources to collect data for the Gini Index.]        

                                                                

ANALYSIS

As you can see, Canada has the least inequality in this sample, while Saudi Arabia has the most inequality.  Note especially that the U.S. score for inequality is not very far away from Saudi Arabia’s score

The percent change between the Gini Index for Canada and Saudi Arabia is 35%; between Canada and the U.S. is 22%;  and between the U.S. and Saudi Arabia is only 10%.  These figures clearly tell us that the U.S. and Saudi Arabia have significantly  greater inequality than Canada, a troublesome finding.  Of course the difficult issue is what to do about it and how.  

A more subtle issue is “How much economic pain must Americans feel before they begin to do something about inequality on a scale that will make a difference?”   Between home equity loans, credit cards, student loans, and income from two wage-earner households, I don’t think Americans are feeling enough economic pain to take action yet.  And for some reason, they do not accept (or are not aware of) the analogy of the boiling frog.  The boiling frog story says that if you put a frog into a pot of boiling water, it will immediately jump out.  But if you put a frog into a pot of room temperature water and very gradually increase the water’s temperature to the boiling pot, the frog will stay in the water and boil to death because it feels comfortable until it’s too late.  The point here is that inequality increases gradually in our country, and people don’t try to do anything about it until it’s too late.

At the moment it appears that only widespread poverty will motivate Americans to take effective action against inequality.   And by the time that occurs it may be too late, as well-financed authoritarian politicians gain more power and take advantage of Americans’ reduced economic circumstances.

Jim Sullivan is a Citizen Journalist and retired  businessman with graduate degrees in political science and business.  He lives in Ventura with his wife Juliette and two family cats.


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