Income Inequality: 'The Defining Challenge of Our Time'

We are in for three more years of increasingly shrill lectures from the president and his surrogates regarding the direst condition facing America today: income inequality. At the Center for American Progress, a very friendly venue for him, Mr. Obama declared, "I believe this is the defining challenge of our time."

Others might be tempted to suggest that "fixing" ObamaCare or containing the Islamic Republic of Iran's nuclear ambitions should be "the defining challenge of our time," but rather than focus on the president's mere words, let's look at some numbers.

As a rough measure of income inequality, the UN and World Bank and other entities rely on the Gini coefficient. You can read all about it here, but in a nutshell, a Gini ratio of 0 would mean there is a perfect equality of income, while 100% would mean one person in a society had all the wealth. As with anything else statistical, there are numerous ways to calculate Gini coefficients, but let's use the World Bank's numbers for a few countries:

Bangladesh: 32
Germany: 28
Mali: 33
Tanzania: 38
U.S.: 45

Keep in mind that the smaller the Gini coefficient, the more "economic justice" a society manifests, so lower is good. If, then, we focus just on inequality of income, Mali and Tanzania and Bangladesh are far better places to live than the U.S. I mean, ignoring such trifles as the honor killing of women and child labor (actually, the children who work are the lucky ones: the others starve). But looking solely at income inequality, the Mali economy awards "social justice" or "economic justice" far better than does the U.S. In fact, Malian income disparities approach Germanic or Scandinavian levels.

At this point, the attentive reader may, just may, have doubts about income inequality. After all, isn't the relevant measure of well being the absolute amount of income those at the bottom have? In the U.S. for 2012 the official threshold for being in poverty is $5,762.50 per person per year, or $23,050 for a family of four. Those figures do not count government assistance in the form of food stamps, rent subsidies, WIC, heating assistance, Obamaphones, and so on. In fact, by world standards, American poor are not doing too badly. According to a Heritage Foundation study, "Poverty is a Car, DVD Player and Xbox":

in 2005, the average household defined as poor by the government lived in a house or apartment equipped with air conditioning and cable TV. The family had a car... two color televisions, a DVD player, and a VCR... a microwave, refrigerator, and an oven and stove... a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.

For Third World countries, the threshold is set somewhat lower, $1.25 per person per day, according to the World Bank. Again, there are numerous ways to generate the numbers, but one of the most widely used methods is PPP (Purchasing Power Parity), where incomes have been normalized to account for differences in currency exchange rates. And just as $5,762.50 per person per year in the U.S. does not include such things as Obamaphones, $1.25 in the Third World does not include noncash assets, such as crops and livestock. Still, most would agree that $1.25 per day is quite modest.

To revisit the five countries listed above, what percent of the population is living on less than $1.25 a day? The figures for Germany and the US are not available, but we can safely assume them to be negligible. Here are the numbers for the other three countries, again, taken from World Bank data:

Bangladesh: 45%
Germany: NA
Mali: 48%
Tanzania: 70%
U.S.: NA

Who among the poor in this country would opt for the greater "economic justice" of Tanzania, where over two-thirds of the population is living on less than $500 per year? It is obscene to even suggest such a tradeoff. And yet for President Obama, income equality "is the defining challenge of our time." God help us.

Henry Percy is the nom de guerre of a writer in Arizona. He may be reached at saler.50d[at]gmail.com.

We are in for three more years of increasingly shrill lectures from the president and his surrogates regarding the direst condition facing America today: income inequality. At the Center for American Progress, a very friendly venue for him, Mr. Obama declared, "I believe this is the defining challenge of our time."

Others might be tempted to suggest that "fixing" ObamaCare or containing the Islamic Republic of Iran's nuclear ambitions should be "the defining challenge of our time," but rather than focus on the president's mere words, let's look at some numbers.

As a rough measure of income inequality, the UN and World Bank and other entities rely on the Gini coefficient. You can read all about it here, but in a nutshell, a Gini ratio of 0 would mean there is a perfect equality of income, while 100% would mean one person in a society had all the wealth. As with anything else statistical, there are numerous ways to calculate Gini coefficients, but let's use the World Bank's numbers for a few countries:

Bangladesh: 32
Germany: 28
Mali: 33
Tanzania: 38
U.S.: 45

Keep in mind that the smaller the Gini coefficient, the more "economic justice" a society manifests, so lower is good. If, then, we focus just on inequality of income, Mali and Tanzania and Bangladesh are far better places to live than the U.S. I mean, ignoring such trifles as the honor killing of women and child labor (actually, the children who work are the lucky ones: the others starve). But looking solely at income inequality, the Mali economy awards "social justice" or "economic justice" far better than does the U.S. In fact, Malian income disparities approach Germanic or Scandinavian levels.

At this point, the attentive reader may, just may, have doubts about income inequality. After all, isn't the relevant measure of well being the absolute amount of income those at the bottom have? In the U.S. for 2012 the official threshold for being in poverty is $5,762.50 per person per year, or $23,050 for a family of four. Those figures do not count government assistance in the form of food stamps, rent subsidies, WIC, heating assistance, Obamaphones, and so on. In fact, by world standards, American poor are not doing too badly. According to a Heritage Foundation study, "Poverty is a Car, DVD Player and Xbox":

in 2005, the average household defined as poor by the government lived in a house or apartment equipped with air conditioning and cable TV. The family had a car... two color televisions, a DVD player, and a VCR... a microwave, refrigerator, and an oven and stove... a clothes washer, clothes dryer, ceiling fans, a cordless phone, and a coffee maker.

For Third World countries, the threshold is set somewhat lower, $1.25 per person per day, according to the World Bank. Again, there are numerous ways to generate the numbers, but one of the most widely used methods is PPP (Purchasing Power Parity), where incomes have been normalized to account for differences in currency exchange rates. And just as $5,762.50 per person per year in the U.S. does not include such things as Obamaphones, $1.25 in the Third World does not include noncash assets, such as crops and livestock. Still, most would agree that $1.25 per day is quite modest.

To revisit the five countries listed above, what percent of the population is living on less than $1.25 a day? The figures for Germany and the US are not available, but we can safely assume them to be negligible. Here are the numbers for the other three countries, again, taken from World Bank data:

Bangladesh: 45%
Germany: NA
Mali: 48%
Tanzania: 70%
U.S.: NA

Who among the poor in this country would opt for the greater "economic justice" of Tanzania, where over two-thirds of the population is living on less than $500 per year? It is obscene to even suggest such a tradeoff. And yet for President Obama, income equality "is the defining challenge of our time." God help us.

Henry Percy is the nom de guerre of a writer in Arizona. He may be reached at saler.50d[at]gmail.com.

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