Monday, January 31, 2011

Global income inequality - an interesting perspective

The 5% poorest Americans have a standard of living higher than 68% of the world's population.  Indeed the bottom five have a standard of living comparable to most of the top five percent in India.  The good news?  Global income inequality has been falling rapidly with the rise of India, China, Indonesia and Brazil among others.

Please note:  no death taxes, inter-country taxation or other trans national policy caused this:  just nations reforming their economies and following the US towards the productivity horizon.  Perhaps if the US freed up the states to run their own economies we'd see similar results from the poorer ones as they chased the ones at the top.

The other thing to note:  The US curve is much flatter, meaning that US incomes are far more equal than these other mega-nations.  Yes, small European nations have less inequality but so do small US states.  Continental scale nations naturally have more inequality simply because of the incredible geographic and social diversity that they encompass.  And by the valid continental standard, the US does very well.

One other point:  the US income distribution is better mostly because our poor do so much better.  The difference between our richest ventile (5%) and these other countries is smaller than between the smallest 5%.  And even that overstates the difference in standard of living between the rich - those in very poor countries have access to far more personal services that all but the richest Americans.


Hat tip Carpe Deim

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