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“Maybe we should change the system”

from David Ruccio

US-gini-color

On behalf of millions of young people striking on behalf of climate justice, 15-year-old Greta Thunberg excoriated world leaders for “moving forward with the same bad ideas that got us into this mess.”

Our civilization is being sacrificed for the opportunity of a very small number of people to continue making enormous amounts of money. . .

Until you start focusing on what needs to be done rather than what is politically possible, there is no hope. We cannot solve a crisis without treating it as a crisis.

We need to keep the fossil fuels in the ground, and we need to focus on equity. And if solutions within the system are so impossible to find, maybe we should change the system itself.

Much the same applies, of course, to the economic system that generates such grotesque levels of inequality. At the same time that Thunberg was making headlines in the United States and around the world, the U.S. Census Bureau reported that inequality—as measured by the Gini index for income—hit its highest level since the Census Bureau started tracking it more than five decades ago.

I’ve compiled the numbers in the chart at the top of the post. In 1967, the Gini index stood at 0.397; as of last year, it had risen to 0.486. In other words, income inequality had grown by more than 22 percent during that period.

As I warned back in 2014, Gini coefficients should be used with more than a few grains of salt. First, they should never be used to compare degrees of inequality across countries. Second, because the Gini boils down the overall distribution of income to a single number, it loses some detail. For example, if the Gini coefficient has gone up, it doesn’t tell us whether this is because the share going to the bottom 90 percent went down or the top 1 percent (or, for that matter, the top 0.1 percent or the top 0.01 percent) went up.

Shares

So, we need to look at the actual income shares for various percentiles of the U.S. population to find out why inequality has grown so spectacularly since the late 1960s.

As is clear from the chart above (which, given the availability of data, ends in 2014), while the share of income going to the middle 40 percent (the orange line) did in fact decline (from 0.44 to 0.40), those in the bottom 50 percent (dark blue) were the real losers (as their share declined from an already low 0.20 to just 0.13). And at the top? The shares of the surplus captured by all of them—the top 1 percent (green, from 0.12 to .20), the top 0.1 percent (yellow, from 0.04 to 0.09), and the top 0.01 percent (light blue, from 0.02 to 0.04)—increased in what can only be described as an obscene manner.

The conclusion is therefore obvious: the rise in the Gini coefficient in the United States does reveal a long-term shift in the distribution of income from those at the bottom to a tiny group at the top.

And, yes, as Thunberg has correctly noted, if solutions within the system are so impossible to find, it’s time to change the system itself.

  1. Gerald Holtham
    October 1, 2019 at 2:07 pm

    Clearly substantial changes are needed. I am not sure it is helpful though to conflate two different issues: the climate emergency and the growth of inequality in the system. Both require radical change but it is far from clear that they require the same radical changes. If we look at the 20th century the first three quarters were by and large a period of increasing equality in Western developed economies but it was also a period of rising carbon emissions. Inequality which began to rise in the 1980s seems to be a function of technical change and political choices. The technical change needed to move to zero carbon will have an indeterminate effect on equality which means vigorous political action may well be required. Whether that will be made easier or more difficult by the shift to zero carbon is again unclear. The hard work of shaping concrete, compatible policies and mobilising political support is what we need.

  2. Ken Zimmerman
    October 7, 2019 at 4:09 pm

    Change a system that literally benefits 1% of the world’s population and deliberately murders, quickly if they’re lucky many of the other 99%, that squanders our physical environment (the thing that allows our species to survive), and with enjoyment destroys democracy and democratic government. None of these events are unknown. Most of the world’s population knows they’re happening. Yet, humans seem unable to prevent them beforehand or stop them after they’ve begun. If humans are this inept and unconcerned with preserving their species, then our species no longer can claim a right to survive. Perhaps the next apex species on Earth will do better.

  3. Gerald Holtham
    October 14, 2019 at 4:46 pm

    Perhaps. If so they’ll think how to solve real problems with concrete proposals rather than hand-wring over “the system”

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