AEIdeas

The public policy blog of the American Enterprise Institute

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Discussion: (23 comments)

  1. It’s within inequality that counts. It is what tears social fabric apart. Mixing it with stats between countries is just trying to hide it.

    1. Terrydarc

      Agreed! It’s the “China Effect” that the other curves are showing but just averaging countries wealth together makes little sense. That poor countries are closer to the developed world has more to do with the internationalization of industry than a more equal world

      Certainly within the US, income inequality is increasing and greater than in the last 50 years: cf. Joseph Stieglitz.

  2. Yes, but within the U.S…. it is clearly on the rise. Ergo, Mr. Douthat, you cannot deny why conservativism has wrought. Over thirty years of cutting taxes and cutting spending has done what again? Say it with me. INCREASED INCOME AND WEALTH DISPARITY. Not to mention a crumbling (literally) infrastructure, failing schools, underfunded and undermanned police and fire departments, and the worst health care system in the developed world.

  3. Hugh Clark

    A startling conclusion about inequality in Mr Douthat’s article! The very data he cites shows a dramatic upward curve in “within” inequality. Summing the apples of “between” and the oranges of “within” to conclude that overall inequality is flat or in decline makes absolutely no sense. If that were true, if every nation had one zillionaire and all others in every nation had nothing, there would be perfect equality. Too bad. I rather like Mr Douthat’s arguments usually. They keep my liberal mind alert.

  4. Alan Hoffner

    Wrong. And wrong again. First, your model only works when you leave out significant variables (China). Second, people don’t live globally, they live and experience within their own countries. Finally, your efforts to demonstrate inequality is low at least acknowledges that it is a bad thing. So, now that you have failed to prove your first point, can you now redirect your efforts to a solution?

  5. Your blog post distorts the finding of the economist. Look at the PDF of the working paper where the graph comes from: “world inequality remains high by any standard.”

  6. Ed Finnegan

    Might another interpretation be that the income inequality that was for so long the sign of underdeveloped countries has now reached developed countries? A small percent of the population owning the greatest percentage of the wealth is no longer just a description of Latin American dictatorships.

  7. Jargon like “between inequality” is just another way to lie with statistics. In the old days we used to refer to the “developing world”. What you are really saying is that we have become increasingly like the developing world. Forgive me for not popping the champagne.

  8. Sibyl Buck

    This is such a gross attempt to distort the truth. Shame on you. That our model of economics is spreading to other countries doesn’t make less inequality, it just means that our oppressive “within inequality” is being replicated. So that there are more greedy rich people getting richer by exploiting more poor people and making them poorer. The real information to take away from your chart is that the inequality between rich and poor is exploding, partially because rich people in developing countries are becoming more like rich people here.

  9. Matt, how can you say that spending has decreased when it has more than trebled under George W. Bush and Barach Obama? The crumbling infrastructure and schools are related to excessive spending on entitlements, as well as a destruction of two-parent families by such policies as Aid to Dependent Children and other “Great Society” programs.

  10. If there is little inequality then my eyes,ears and brain are deceiving me.

  11. Robert Lacey

    Perhaps more important than the debate about equality is the evidence that 20 years of rabid capitalism and globalization have (despite the worst recession since the 1930s) produced a dramatic fall in absolute poverty. Between 1990 and 2010 the percentage of the population of developing countries living in absolute poverty fell from 43% to 21%. The fall in absolute numbers was from 1.9 to 1.2 billion.

    1. The comment that capitalism has produced a dramatic drop in absolute poverty depends a lot on what happened to China and India in the last 20 years, which in turn depends on the accuracy of their censuses ( Reddy & Miniou (September 2007). “HAS WORLD POVERTY REALLY FALLEN?”. Review of Income and Wealth 53 (3).) It’s more an article of faith than anything else for those who love capitalism. Capitalism doesn’t seem to have improved the lot of the poor in these United States in the past 20 years.

      1. Robert Hill

        The “poor” in first world countries need to stop spending their resources on consumer goods and invest in themselves. This takes will power, unfortunately. If you are poor in the U.S., you (or, for children, your parents) either want to be poor (i.e., you do not have the willpower to hold off on current consumption in favor of long-term financial health), are sick, or you are on drugs.

        1. That’s a statement supported by ideology, not evidence. Citation, please? People ‘want to be poor’?

          Oh…you really mean option 2: ‘the willpower to hold off on current consumption.’ This tells us more about you than about the economic conditions of the poor and working poor—many or most scrape by month to month, and with current expenses in US society, it’s EXCEEDINGLY difficult to save in order to invest in some way; moreover, you ignore the basic fact that there aren’t enough jobs, and unemployment (and thus poverty) falls disproportionately on those at the bottom of the economic ladder in this (as in many) recessions. So, basically: no. You are spouting myth, Robert. …Oh, right—just caught the bit where you suggested they’re all on drugs. Stay classy. I’m sure drugs are the correct explanation for why millions of people can’t get jobs in a market which has 1 opening or every 4 applicants (averaged across local markets). That’s quality, rigorous thinking, Robert.

  12. “When you combine the two overall inequality is going down”. What kind of critical thinking is that? Talk about a senseless reification of a mathematical construct. To be concrete, consider this: data on treating a headache with ibuprofen and data on treating it with a sharp blow to the head when averaged over the two conditions reveals no ill effects. So consider purchasing an ice pick the next time you have a headache. Who would give such a statement any credibility except the ice pick makers of America? The AEI can do better than this.

  13. Scott Spinola

    If every human being received a 25% increase in wealth every year of their lives, material inequality would increase every year ad infinitum.

    It’s not an indictment of capitalism. It’s math.

    1. Robert Hill

      Well, not proportionally. We’re looking at proportional inequality.

      Be this as it may, there is a lot of opportunity in the U.S. and other first world countries. And people should not fall prey to envy. The scenery is free. And many rich people get that way at the expense of their leisure time, friends, and health. If you want to snooze late and spend your money as soon as (or before) you earn it, you should not complain that others get ahead.

      The real issue as I see it are laws and regulations that allow a subset of people to impose negative externalities on others or to get favorable treatment in the courts and in the halls of power. (The only reason OJ is in jail is ’cause his money ran out.) This is especially bad in other countries (e.g., China, where money gets you out of forced abortion; in Bangladesh, where capitalism has children disassembling toxic junk; and in Nigeria, where human eggs are for sale). And the Pope is speaking to the whole world, not specifically to the U.S.

      1. And why are we looking at proportional inequality? People don’t starve because they don’t get PROPORTIONALLY enough food. They starve because they don’t get enough food in absolute terms. Once you breach that minimum, they aren’t starving anymore, even if they ARE proportionally less like to be eating steak or caviar.

        So, yeah, Scott Spinola is correct.

        But if you read the papal exhortation, his riff isn’t about MONEY, it’s about DIGNITY: an inequality of DIGNITY.

  14. There’s another interesting analysis here: http://www.forbes.com/sites/timworstall/2013/11/26/in-which-a-good-catholic-boy-starts-shouting-at-the-pope/. Feel free to debate the merits.

  15. David Zavaleta

    The last sentence of the abstract of the cited study –
    http://onlinelibrary.wiley.com/doi/10.1111/roiw.12088/abstract
    says very clearly:

    “As a result, world inequality remains high by any standard.”

  16. What a shock that the American Enterprise Institute would massage figures to shoo away a terrible problem that their own advocacy has helped wrought.

    This article is completely disingenuous. How can you look at yourself in the mirror, Mr. Pethokoukis? With the same mental gymnastics and denial you’re using to write articles like these?

  17. Everyone pretty much hit the nail on the head, but I just wanted to note that your claim that “inequality was on the rise since the 70’s” isn’t supported by the graph you give. What the graph shows is an overall slight downward trend from 1970 to about 1980 (the uptick around 75 is temporary and is probably just the result of the oil crisis). If anything the graph given shows that income inequality has become a larger and larger problem since the advent of Reaganomics.

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