Any way you calculate it, income inequality is getting worse

A flurry of new reports have provided yet more data demonstrating that inequality is getting worse. All right, this does not qualify as a shock. But it really isn’t your imagination.

The economic crisis, nearly a decade on now, has been global in scope — working people most everywhere continue to suffer while the one percent are doing just fine. One measure of this is wages. A newly released report by the Organisation for Economic Co-operation and Development finds that median wages in the OECD’s 35 member countries are still below where they were in 2007. For the bottom 10 percent of wage earners, the news is worse; wages for this bottom decile have declined 3.6 percent since 2007. But wages have risen for the top 10 percent.

Graphic via the Institute for Policy Studies

Graphic via the Institute for Policy Studies

The report on wage inequality by the OECD, the club of the world’s advanced capitalist countries and a few of the biggest developing countries, also found that inequality has increased in most of those countries. No part of the world has been immune. The report, “Income inequality remains high in the face of weak recovery,” states:

“The crisis has not only heavily affected the number of jobs but also their quality. … Even in countries where labour market slack has been re-absorbed, low-quality jobs and high disparities among workers in terms of work contracts or job security weigh heavily on low-earning households and contribute to maintaining high levels of income inequality. Wages have stalled in most countries, including those that were largely spared by the recession (e.g. Japan) and fallen in those hard hit (e.g. Greece, Portugal, Spain, and the United Kingdom).”

Chile and Mexico are the most unequal countries among the OECD members, followed by the United States, as measured by the gini coefficient. Iceland, Norway and Denmark are the least unequal. (The gini coefficient, the standard statistical measure of income distribution, is equal to zero if everybody has the same income and to one if a single person takes all income.) To put that scale into some tangible form, Iceland’s gini coefficient is 0.24 and Chile’s is 0.46.

Global inequality worse than any country’s

The world’s most unequal country is South Africa at 0.65. Calculating this scale on a global basis gives a better idea of the scale of inequality but is a difficult statistic to find. One measure, as calculated for a United Nations Food and Agricultural Organization paper, estimates the world gini coefficient in 2005 was 0.68, significantly higher than in the 19th century but a bit lower than it had been in 1981. That’s higher than South Africa. The Economist, crunching data from several sources, estimates a global gini coefficient of 0.65 in 2008, a very slight dip from the 1980s peak.

Global inequality has very likely worsened since but no more recent statistics appear to be available.

Rising inequality has been particularly acute in the global center of world capitalism, the United States, and a quick examination of trends there are useful as capitalists elsewhere seek to emulate the new U.S. gilded age. Those at the top of the pyramid are grabbing ever more. The Economist reports:

“Including capital gains, the share of national income going to the richest 1% of Americans has doubled since 1980, from 10% to 20%, roughly where it was a century ago. Even more striking, the share going to the top 0.01%—some 16,000 families with an average income of $24m—has quadrupled, from just over 1% to almost 5%. That is a bigger slice of the national pie than the top 0.01% received 100 years ago.”

Another new study, by economists Thomas Piketty, Emmanuel Saez and Gabriel Zucman, found that the average pre-tax income of the bottom 50 percent of U.S. adults is flat since 1980 in inflation-adjusted dollars — and this includes government transfers, other public spending and the value of job-derived fringe benefits — and thus the share of national income going to the bottom half of United Statesians declined to 12 percent in 2014 from 20 percent in 1980. The top one percent, meanwhile, hauled in 20 percent of income in 2014. Another way of looking at this inequality, the authors write, is that the top one percent of U.S. adults earned on average 81 times more than an adult in the bottom 50 percent. This ratio was 27 times in 1980.

The top of the pyramid does well around the world

To zero in on the tip of the pyramid, the U.S. Internal Revenue Service released a report this month on the 400 tax returns showing the highest incomes reported to it. Those 400 taxpayers reported an aggregate income of $127 billion in 2014 — a fourfold increase in inflation-adjusted dollars since 1980. Those 400 taxpayers by themselves accounted for 6 percent of all interest income and 11 percent of all capital gains (profits from financial assets such as stocks and bonds). To put that in perspective, 149 million tax returns were filed in the U.S. in 2014. Stock-market bubbles and other forms of financial speculation truly are the province of the super-wealthy.

In Canada, Statistics Canada reports that, in 2013, the top one percent grabbed 10.3 percent of income; the average Canadian in this grouping received $450,000 that year. In Britain, the top one percent have doubled their income since 2005, collectively adding another £250 billion to their wealth. Meanwhile, a fifth of Britons live below the poverty line and life expectancy in some areas is lower than in many developing countries, The Independent reports. Australian inequality has not yet reached the above levels, but is getting wider — the percentage of total Australian income grabbed by the top 0.1 percent there has more than doubled since 1980.

Again, nothing here is going to make you fall off your chair in shock. The question becomes: What will we do about all this? This is the internally logical result of the development of capitalism — the upward distribution of income as exploitation accelerates through work speedups, layoffs, movement of production to low-wage havens and the panoply of deregulatory measures resulting from corporate capture of governments.

So-called “free trade” agreements, with their use of clauses enabling multi-national corporations to use secret private tribunals controlled by their lawyers to overturn laws they don’t like, are an exemplary example of the processes used to ratchet up inequality, even if but one of many manifestations. Capital is international and our resistance to it must be international as well. The rise of far right and even fascist movements across Europe and in the United States, decked in the cloaks of nationalism and fake populism, is all the more dangerous because the scapegoating that is always front and center in such movements deflects attention from the real problems.

If the beginning of the end of capitalism is upon us — admittedly something that none of us can yet be certain of — then the need to build movements that can move societies toward a better world is all the more a necessity. Even if the final decay of capitalism has arrived, that decay is likely to unfold over decades unless a global Left movement, uniting the variety of social and environmental movements and struggles across borders, can speed up the process. The only alternative is for inequality to get worse and the repression necessary to impose that inequality to get still more severe.

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23 comments on “Any way you calculate it, income inequality is getting worse

  1. Power concedes nothing without a demand. It never has and it never will.

  2. Reblogged this on Catskill bob's Blogosphere and commented:
    WE DON’T HAVE DEMOCRACY ANY LONGER.
    Rising inequality has been particularly acute in the global center of world capitalism, the United States, and a quick examination of trends there are useful as capitalists elsewhere seek to emulate the new U.S. gilded age. Those at the top of the pyramid are grabbing ever more. The Economist reports:

    “Including capital gains, the share of national income going to the richest 1% of Americans has doubled since 1980, from 10% to 20%, roughly where it was a century ago. Even more striking, the share going to the top 0.01%—some 16,000 families with an average income of $24m—has quadrupled, from just over 1% to almost 5%. That is a bigger slice of the national pie than the top 0.01% received 100 years ago.”

  3. […] через Any way you calculate it, income inequality is getting worse — Systemic Disorder […]

  4. Paul D says:

    The problem is that the modern entertainment and social media methods, not around in Douglass’s time, or for that matter even in MLK’s time, have greatly increased the amount of injustice that people will quietly submit to – either by isolation and atomization, or by eliminating the very concept of “injustice” from the public mind altogether.

    If black slavery existed today, it would be very safe. The abolitionists would be ignored as just some fringe group. Even MLK, the SNCC, etc. would be totally ignored by the media today.

  5. Paul D says:

    A question: You wrote: “the world gini coefficient in 2005 was 0.68, significantly higher than in the 19th century but a bit lower than it had been in 1981.”

    So, are you stating that there was more income equality in the 19th century (the robber-baron, industrial revolution times) than today? I have trouble believing that. Is there an error here?

    • Greetings, Paul. I found that one hard to believe myself. I reported what is in the report under discussion, in which the authors made their own calculations based on multiple sources of data.

      If I had to make a guess (and that’s all I can do) I would imagine the lower gini co-efficient (if it really was lower) was due to the almost universal poverty of that time — most of the world’s people in the 19th century would have been subsistence farmers. Robber barons would have been found in only a handful of countries in those days, making for a very high gini in those countries. But elsewhere, with little money income, the gini might have been low since nobody had much money.

      So a lower gini co-efficient in the 19th century, now that I have been prompted to think about it, probably isn’t comparable to that metric today because the world has been conquered by capitalism while capitalism had penetrated only small parts of the world then. A world gini co-efficient measures inequality everywhere, while a national gini co-efficient measures it in only a single country, and because we live in a world very different than then, perhaps it was not useful for me to have noted that.

      On the other hand, I did find it merited mention simply because, if inequality really is worse today than in 19th century, that is an extraordinary finding. But perhaps, for the reasons I just mentioned, it really wasn’t. An exploration of the gini co-efficient then and now in countries like the U.S. or Britain probably would be more useful.

      • Paul D says:

        Thanks for the response! I found you blog via Znet’s republishing of your article. For some reason, the article discussion utility is almost never used there.

  6. The Gini coefficient seems an extremely blunt instrument for analysing something as complex as the rather sudden (in historical terms) lurch to inequality over the past few decades. I appreciate Thomas Picketty, Anthony Armstrong etc. for the tough work of number crunching they’ve undertaken, but I don’t see anything explanatory. Where is the analysis to compare with Veblen’s “Theory of the Leisure Class” of 1899?

    Paul D’s question on relative inequality now and in the days of the 19th century robber barons points us in the right direction. No comparative statistics can measure the differences in potential pleasure (or “advantage” if you want to stick to economic jargon) between then and now caused by technological and cultural advance. The robber baron in his private railway carriage travelled at the same speed as the hobo on the freight trucks. His Atlantic crossing in First Class to buy up European works of art took the same time as the Irish or Italian immigrant’s passage in Third coming the other way. Now a few million, let alone a billion, suffice to isolate the wealthy from the rest of us.

    Has any modern social scientist studied this phenomenon? I’d really like to know.

    • Greetings, Geoff. Good questions you ask, and I would agree that a blunt metric like the gini coefficient has difficulty quantifying very different times. I would suggest, however, that the “lurch to inequality” really isn’t new or even a “lurch,” but rather part of the cyclical nature of inequality under capitalism.

      Inequality rose into the 20th century, when social movements were able to reverse the trend for decades. With the withering of social protest, and the renewed offensive by capitalists as the brief period of mid-20th century Keynesianism faded (for them), inequality is increasing again. That will be so until we’re organized enough to reverse it; but if we maintain capitalism, eventually the reforms will be taken away again.

      Capitalists have always wished to separate themselves from everyone else and build a high enough wall to keep the rest of the world at bay. Now they seem more technically able to do so, but that is an illusion. Maybe some even think they can escape Earth altogether and build themselves a utopian space station, like in the movie Elysium. But they can’t, in the long run. As the Native American saying goes, when there is no more clean air and no more clean water, you’ll find you can’t eat money.

  7. troutsky says:

    The reason inequality is a problematic metric for injustice is because it occurs all along a vast continuum. This is why the 99% vs 1% meme doesn’t really tell us anything about capitalism. It leaves everyone wondering which income percentile they sit at, how it relates to “merit” and who “earns” what. The question isn’t whether the capitalist should exploit 10 times my wages or 50, right? My manager gets more than I do and his manager gets more than he does and I get way more than a beggar in Sudan so it’s all a fucked up mess.

    As for Paul’s suggestion that modern entertainment somehow “eliminates injustice from the public mind”, I actually think the paradox is that entertainment from the New Testament to Dickens to Wolf of Wall Street has always been about hating the rich. A deeper look into the psychology of representation is needed. Some other time.

    • I would agree that modern entertainment does not eliminate injustice from the public mind. Rather, our entertainment complex facilitates injustice in that it normalizes and glamorizes the excesses of the wealthy. Maybe sometimes it is about “hating the rich,” but more often it is showing the wealthy as examples to emulate. But the bigger function is simply to stultify minds. If people are running around worrying about what Kardashian sister’s relationship is in trouble, they aren’t thinking about how screwed they are. I’m always dumbfounded when I see a magazine rack — endless titles providing celebrity gossip, though which so many sadly live vicariously.

  8. Troutsky
    “…the paradox is that entertainment from the New Testament to Dickens to Wolf of Wall Street has always been about hating the rich.”

    That’s a nice paradox, amusingly put. More generally, culture, when it’s interesting, is about questioning the society which it depicts, which must sometimes mean questioning the distribution of wealth.

    We’ve all been dumbfounded by what we see on magazine racks, but how do you express that without turning into a pharisaic snob?

    As I said above, I’m astonished that I’ve seen nothing like an analysis of the meaning, the sense, of economic inequality since Veblen. Surely it must exist? Of course, there’s a huge literature on poverty and its elimination, but nothing scientifically interesting on what it means to be unimaginably wealthy.

    My own interest is in the Green Blob – the multi-billion dollar environmental movement, largely financed by the Foundations of American millionaires (Rockefeller, Hewlett, Packard etc.) We Europeans can only feel admiration for a Bill Gates who is spending some of his billions on eradicating malaria from countries left impoverished after centuries of French and British rule. But much of the charity pouring into the environmental movement is going on schemes to keep Africans poor and dependent, with a solar panel on the roof of their hut to recharge their mobile phones, but no cheap fossil fuels to power factories and hospitals – see e.g. my article at
    https://cliscep.com/2015/11/22/can-of-worms-2-tellus-mater/

    What bothers me is what happens when the Green Bubble bursts, and millionaires start looking around for other causes to throw money at in order to assuage their guilt. It might be a lot nastier than the current micro-schemes to keep Africans poor and sustainable.

  9. Paul D says:

    I just did a search of the term “Green Blob” and the only mention of it was on some rather right-wing sites like “Breitbart.com”. The phrase “Green Blob” seems to be similar to “George Soros” – a meme for a conspiracy theory involving wealthy people lavishly funding leftist activism.

    At any rate, you need to provide some examples of this “Green Blob”. All the environmental groups I’m involved here in the US (350.org, Coal River Mountain Watch, Climate Science Legal Defense Fund, the Standing Rock Sioux…etc struggle on small donations….

  10. 350.org has 119 paid staff in 25 countries and 13 positions vacant. Their 2015 annual report lists 144 foundations who provide financial support, from the Rockefellers Brothers to the Franciscan Sisters of Mary. Their FY15 income is given as $11.3 million, 69% of which is from foundations. That’s hardly “struggling on small donations.”

    One name I noticed was that of the Grantham Foundation for the Protection of the Environment. James Grantham is a British-born billionaire hedge fund manager known in Britain for having set up the Grantham Institute for Climate Change and the Grantham Research Institute on Climate Change and the Environment at two prestigious universities. From there his employees monitor the environmental comment in British media, issuing complaints to organisations like the Independent Press Standards Organisation (there’s no first amendment in Britain) in order to control coverage of climate change.

    This is the kind of things billionaires do; eradicate malaria, censor the press… What next?

    • Paul D says:

      I feel kind of embarrassed to point this out, but the money and assets in a charitable foundation established by a wealthy person or family (often long dead) has little or none of that rich person’s money in it. Its donors are people of a wide range of incomes and wealth. Charitable foundations are run by a board of trustees who are obligated by law to be independent of the founder in all matters beyond the founder’s guidelines on the the kinds of organizations the foundation sends money to.

      Or, in short, any funding to 350.org from the Rockefeller foundation is not, in any way, coming from the Rockefeller heirs! This is the same with the other foundations.

      And if you are global warming denialist spreading unfounded conspiracy theories, you need to step up and state it.

      This is my last rebuttal on this matter.

  11. PaulD
    You say: “All the environmental groups I’m involved here in the US… struggle on small donations” and mentioned 350.org. I pointed out that they report an income of $11.3 million (and outgoings of $8.9 million). Their net assets were $1.8million at the beginning of fiscal 2015 and $4.2 million at then end. (I’m reading a form 990 for the first time in my life so I may not have got the definitions quite right.) What’s clear is that they were much richer at the end of 2015 year than they were at the beginning. I think what they “struggle” to do is get enough small donations to count as a charity under US law.

    What they do with the money (less expenses) is “Climate change awareness raising through partner engagement, education, training, and events” on five continents. That is: they don’t actually do anything about climate change, but they tell other people what to do.

    You say:
    “… any funding to 350.org from the Rockefeller foundation is not, in any way, coming from the Rockefeller heirs! This is the same with the other foundations.”

    The Rockefeller Brothers Fund says of itself:
    “The Rockefeller Brothers Fund is a private, family foundation … created in 1940 by the sons of John D. Rockefeller, Jr… John D. Rockefeller, Jr. made a substantial gift to the Fund in 1951, and in 1960 the Fund received a major bequest from his estate. Together, these constitute the original endowment of the Fund.”

    Its total assets in 2015 were $859.5 million. Contributions for 2016 are estimated at $1 million. According to its 2014 form 990 (the latest available) Contributions, gifts, grants, etc, received accounted for $4.2 million out of a total revenue of $193.1 million, the vast majority of which came from investment income and sale of assets, so I think it’s safe to say that most of the money in there is Rockefeller money. I can’t somehow see them out on the street rattling a collection box.

  12. I finally got through the Rockefeller Brothers form 990. They gave $250,000 to 350.org in 2014, of which $75,000 was specifically for its work on the People’s Climate March. I wonder what the People would think about that if they knew? It’s odd for an organisation that calls itself a Grassroots Movement, don’t you think?

    Sierra Club got $425,000 and Friends of the Earth $170,000

    • I imagine most participants in the People’s Climate March were aware of the corporate money. Having been there myself, none of us failed to note, for example, the giant closed-circuit televisions at the starting point. Nobody in my more radical organization, Trade Justice New York Metro, were unaware.

      We were quite aware of the corporate money and quite critical of the march. I wrote about it critically afterward. We participated without hesitation anyway. The issue is what matters, not our opinions regarding a sponsoring organization. Many grassroots participants in groups like the Sierra Club, and even some who hold local leadership positions, are out doing good work and readily work with grassroots, radical groups.

      Yes, those who take corporate money aren’t going to critique the system that creates the problem. That’s our task. If we create enough pressure from below, then institutions will have to respond. In the meantime, groups like the Sierra Club and 350.org do positive work, even if we have our disagreements with them. Given the megaphones global-warming denialists possess, on balance I’m glad to have those big environmental organizations sounding at least some alarms.

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