Filed under: Capitalism, Freedom | Tags: Income Inequality, The United States, The World's Rich and Poor
This graph, posted by economist Veronique de Rugy, takes a minute or two to understand, but there’s a lot of information here, and it’s worth your time. The graph shows inequality within a country— in the context of inequality around the world.
The horizontal line at the bottom shows the population of each country divided into 20 equal-sized income groups, ranked by their household per-capita income. This is divided into 5 clusters (or ventiles) each of 5 percentiles, similar to the way we customarily divide people in this country from ‘poor’ to ‘rich.’ So the entire population of a country is divided, by income, into 20 equal parts.
The household income numbers are all converted into international dollars adjusted for equal purchasing power, since the cost of goods varies from country to country. In other words the chart adjusts for the cost of living in different countries, so we are looking at consistent living standards worldwide.
The vertical axis shows where any given ventile from any country falls when compared to the entire population of the world.
Trace the line for Brazil, a country with extreme income inequality. The poorest 5 percent of Brazilians are as poor as anyone in the entire world,while at the other end of the Brazil line are some of the world’s richest people. This one country spans the entire range of world income.
See how the entire line for the United States falls in the top portion of the chart? The entire country is relatively rich. Americas poorest people are still richer than most of the world.
Compare with the line for India. India’s poorest correspond with the 4th poorest percentile worldwide, and India’s richest are in the 68th percentile, about where America’s poorest are, as a group. The bottom chunk of Americans, some of whom make as much as $6,700, amounts to a good standard of living in India where about a quarter of the population lives on $1 a day.
When it comes to income inequality, in America, there is relatively not all that much of it. For most people in the world, where you are born makes all the difference.
What do the poor most need? They need to stop being poor. And how can that be done on a mass scale excpt by an economy that creates more wealth? Yet the political left has long had a remarkable lack of interest in how wealth is created. As far as they are concerned, wealth exists “somehow” and the only interesting question is how to re-distribute it.
The very fact that economists sweat over statistics purporting to demonstrate economic inequality in America proves that there is, relatively speaking, not much of it.
The chart comes from Catherine Rampell of Economix.
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