I have stolen this chart from today’s Paul Krugman column — no, excuse the imprecision, blog — but my discussion will be in language accessible to high school students, as in my misspent middle age I devoted twenty-seven years to that profession.
In the chart above there are a series of horizontal light blue lines. Each line represents the measure of inequality, called after its inventor the Gini something-or-other [and the correct use of the jargon is to drop the something-or-other, a word which is common to physics but is alien to economics], for a particular country over a recent period of time.
The names of the countries are given on the left, and you see that the United States of America, the Land of Opportunity, the Land Which Rewards Hard Work, is on the top. We will come back to that fact later.
You can see that below the United States of America, the Land of Opportunity, on the chart comes something called the United Kingdom. The first word in that name, United, is a reference to the so-called Act of Union of 1703, which made a United Kingdom out of England and its perennially bothersome northern neighbor, Pictland — no, wait a second, that was what the Romans called it, the um, modern name is I think Scotland. Well, anyways, the Act of Union also embraces now Wales and Northern Ireland; the four little former kingdoms — well, little from the viewpoint of the American Empire, but not little to the Scots or Welsh — have been joined into the so-called UK for the last three centuries, and are possibly going to break up in the next 50 years.
That’s on the second line.
Next is Spain. And you’ll notice Spain has just about the same gini as the United States of America, Land of Opportunity, 0.51 compared to 0.52. Those two display a difference of one part in fifty, ladies and gentlemen, a difference which is quite impossible to credit as significant. In plain English, and this time I mean in the language we use in most of science, unadorned and direct, they’re the same, pretty much. We can drop the last two words, which are just polite mouthing. They are the same. In the language of real science, they are the same. Let us move on.
This measure of inequality says that if it is zero, then everyone in the society gets the same, in this immediate measure, the same disposable income. It is never zero. And it won’t ever be. The universe has a finite volume, ladies and gentlemen, and the laws of physics tell us that the probability for any one particle to be in any given neighborhood of a specific place in that finite universe is more than zero. Like the gini of Norway, bottom of the chart, 0.46. I linger on the impossibility of a zero. At the other extreme, if every good and service in the society were the possession of a single individual, you would have, I think we can all agree, maximal inequality. That is a gini of one. The gini varies between a perfect equality at zero and a maximal inequality at one. It’s always between zero and one.
While 0.51 and 0.52 are for all practical purposes the same, that is definitely not the case when you start to go 0.52 and 0.49. Now we’re talking about a 3 out of 50 difference, one in 17. And the difference between the dark blue lines of the US and Norway, the difference between a gini, after taxes, of 0.37 and one of 0.24, as you can read from the chart above, is a difference of 13 out of let us say 36 — that is, a difference of more than a third between the inequality measure in the United States of America, the Land of Opportunity and the stuffy Old Europe that whatshisname, ah I think it was Rumsfield or perhaps some German variant of that, used to scoff at.
You see, the figures show that the US has the same degree of inequality as everybody else, before taxes and transfers imposed by the federal government. After taxes, we’re number one, by a long way, in inequality. We lead the capitalist world. Our world-rank inequality is imposed by the federal government’s system of taxes and transfers.
How about that?
In America, the Land of Opportunity, the federal government enforces,. . . nay, enhances inequality .