Wealth Disparity and Gini Coefficients

If you don't know what a Gini coefficient is, you really should.

"The Gini coefficient is a measure of the inequality of a distribution...usually defined mathematically based on the Lorenz curve, which plots the proportion of the total income of the population (y axis) that is cumulatively earned by the bottom x% of the population."

Here's a plot of major nations' Gini coefficients over the past six or so decades


Looking at that graph, you'll notice some interesting things:

1) The only country in that graph with a substantially higher Gini coefficient than the US has (i.e., greater wealth inequality) is Brazil, a country famous for its slums (among other things much more pleasant).That's where the US is heading pretty quickly if you extrapolate the curve that started around 1980.

2) The other two countries near the US are Mexico and China...two nations not exactly known for having high standards of living. Sure, some live very well...but that's the point: the higher the Gini coefficient of a nation, the wider the divide between the haves and the have-nots.

3) Most countries that are generally considered to have the highest standard of living / quality of life have Gini coefficients in the 25-35 range. The US's was almost 45 in 2007, and is even higher today.

So, if you're poor in the US today, you're going to get poorer. If you're middle-class in the US today, the chances that you'll slip out of the middle class and into poverty are much, much higher than the chance that you'll move up out of the middle class. And if you're in the top 1% in the US today, chances are you'll accumulate wealth faster than any previous generation of Americans were able to (except for maybe white plantation owners in the pre-Civil War South).