Gini Coefficient

The Gini Coefficient is a mathematical formula invented by an eponymous Italian mathematician in 1912. It is a tool favored by economists to figure out wealth distribution. The map above comes from our friends at Leon Panetta's agency (the current head of the CIA used to be my Congressman years ago. I rate him a Good Guy). I honestly don't understand Corrado Gini's work except through a foggy veil of half understood misunderstandings, but let it be sufficient to note that economists do and they love his graph. We the people need to love the Gini Index as well because it tells us how poor we are. It does it with no regards to politics, the size of the economy or anything else. It's just a bunch of very revealing numbers. The fact that the Gini Index isn't in popular circulation may give you a hint of the irrefutably nasty news it contains.

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If you look at the Mercator projection of the world shown up, and without enlarging the picture note the colors. Yellow indicates a lower Gini Coefficient, places where income is evenly distributed. Gray indicates places with such basket case economies it can't be measured, which is another way of indicating extreme inequality. Blues are more unequal than greens but purples trump everybody else.

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Obviously Southern Africa and Brazil lead the way with China, Latin America and...the US in the same upper regions of peasant inequality. Europe and Canada show the fairest distribution of wealth. Obviously it's important to understand that with these statistics in use comparing the US, minorities will be disproportionately represented in the ladder of wealth, and white middle class people will be bunched further up the curve. However the news gets worse.

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The rate of change in the Gini Coefficient in the US is accelerating. More people are accumulating more wealth at the expense of the many. The white middle class huddling in a corner hoping for relief and the return of the American Dream are being picked off and dumped into tent cities alongside the poor blacks and browns that always live on the margins of our economy.

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Economics is a zero sum game and it's time to accept that. In other words there is only so much wealth to go around. So for every billion accumulated by a CEO on Wall Street there is one less billion to be shared by the rest. Republican supply side economists will try to tell you that wealth is infinite even though common sense should tell you that nothing in life is infinite. They will also tell you that a rising tide raises all boats, such that if corporations make more money, more cash flows to the workers. Not so. Average income levels mean nothing if you have ten people in a company and one makes a million bucks and the rest make a dollar each. The "average wage" would be somewhere around 100,000 dollars each, and obviously in my simplified example that simply isn't the case.

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Even if you believe a rising tide raises all boats ask yourself why your parents could raise a family on one income a generation ago and now even two incomes struggle to do the same. There should be no doubt in anyone's mind that there is something seriously messed up in a system that sees greater and greater income inequality, less purchasing power and increasing insecurity. This isn't just unfair, this is a situation that leads to instability, and ultimately social collapse. And history shows that this is inevitably what happens when income inequality gets out of hand.