Inequality Roundup
I’ve been delinquent in writing up the half a dozen stories on global inequality which I’ve been meaning to blog about, so here they all are in one go:
- “the richest 2% of adults in the world own more than half of global household wealth.”
- That’s looking at wealth, rather than income, but Michael Turton sent me a link to this great dynamic chart which tracks global income inequality as well as a host of other demographic factors, such as life expectancy and concentration of populations in urban areas.
- Michael also has this post about income inequality in Taiwan.
- The importance of wealth, as opposed to income, can be seen in this great editorial piece about inequality in Korea: “Forty percent of Korean households and half of Seoul’s citizens don’t own their own home. The more housing costs rise, the more they help to define people’s class status.” (Thanks Kotaji!)
- The NY Times has two great stories about educational inequality at the college leve. One from the US: “more leading public universities are striving for national status and drawing increasingly impressive and increasingly affluent students… In the process, critics say, many are losing force as engines of social mobility, shortchanging low-income and minority students, who are seriously underrepresented on their campuses.”
- And one from India: “The job market for Indian college graduates is split sharply in two. With a robust handshake, a placeless accent and a confident walk, you can get a $300-a-month job with Citibank or Microsoft. With a limp handshake and a thick accent, you might peddle credit cards door to door for $2 a day.”
- UPDATE: I should also add these three posts where Brad DeLong and Mark Thoma jump on Alan Reynolds who attempts, in the Wall Street Journal, to deny that inequality has risen: here, here, and here.
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Comments
Dear Alan. Thanks for stopping by.
Since it is unlikely that DeLong and Thoma will come here to post further recaps of their arguments, I suggest that readers do as Alan suggests and visit those posts themselves. There is plenty of discussion over there, and it seems to me that many of the points Alan makes in his comments are directly addressed.
I think this is a vigorous and vital subject. I only wish we could calculate true wealth rather than volume of assets in dollars. Wealth isn’t just dollars but also access to certain assets. For example there are undoubtedly individuals in Americna urban centers with incredible cash flow but can’t even keep up with rent, while there are individuals in third world countries having less than 1/100th the cash flow but in possession of high quality locally grown organic produce and a hand-built home made from high quality materials such as brick or stone. Imagine what such a home costs in Palo Alto versus what it costs in Mumbai. I’m not saying cash doesn’t matter because itt does, but a lot of American “wealth” in particular is very misleading. Buckminister Fuller defines wealth in terms of possession of certain goods, tools, technologies, etc. Income inequality particularly when the inequalities have radically different geographical centers can be more misleading than informative. I love that you bring into the discussion inequalities in Korean home ownership. Nice work!
Dear Patrick,
Good point; however, I think there do exist various metrics which economists have come up with to do exactly that. For instance, I’m fairly certain that Amartya Sen has attempted to tackle exactly this issue in terms of development economics.
Since wealth refers to assets that can produce future money income or in-kind income, we have to include human capital — formal education and on-the-job training. Young adults have not had time to accumulate financial capital (stocks & bonds) or real capital (home equity, furniture, cars & appliances), but older people face depreciating human capital (obsolete knowledge, inability to do physically demanding work).
Formal education has become much more equally distributed within the USA. Within the world, the Internet is a very equalizing force. Google alone is an amazing source of information and education. People in the US have a lot of physical, financial and human capital, to be sure, but human capital is becoming more globally dispersed and human capital is a major source of financial and real capital in the longer run.
RE: Formal education - this post contained two links to articles about inequalities at the college level within the US and India. Elsewhere I’ve written about inequalities that persist within the US at the primary level…for instance, the fact that wealth is a major factor in predicting educational success or failure (more than race or income).
Google is wonderful, but without adequate education it is hard to use Google effectively. Working at a think tank I don’t know how much teaching you actually do, but ask any college professor and you’ll find a tremendous amount of frustration with college student’s inability to use Google effectively. And we aren’t even talking about people who lack English ability (an increasingly important form of social capital around the world) or basic literacy …
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An anthropologist and documentary filmmaker, 
Please visit the DeLong & Thoma blogs — they’re 90% hysterical and off topic. My Wall Street Journal piece proves the commonly cited estimate (from Piketty and Saez) that the top 1% receiveed 16% of personal income in 2004 is false because they leave out (oops) 34% of personal income. Most of the alleged increase in that ratio (4.1 percentage points) happened in just two years, 1987 and 1988, which Saez rightly attributes to the elasticity of taxable income. The rest is due to income shifting from the corporate tax to the individual tax, through Subchapter-S corps and LLCs. That short article did not “deny that inequality has risen” — it just said you can’t use tax data to draw that conclusion. I will have a longish well-documented paper at cato.org next month that shows the data from Census, CBO, Survey of Consumer Finance, etc. That data shows no significant and sustained increase in inequality since 1988. It is easy to show an increase starting from 1981, because the top 5 percent’s share was at a record low thanks to what stagflation did to investors and small business owners. Since 1988, the evidence is slim or nonexistent. Don’t blame the messenger.