If a Tea Partyer tries to tell you that America is heading toward socialism, you can answer them with two words: “Gini index.”
Source: U.S. Census Bureau (PDF) [Note: the 2-point jump in 1992 was due to a change in how the index is calculated]
The Gini coefficient is a measure of statistical dispersion developed by Corrado Gini, an Italian statistician, in 1912. Income equality is often measured by the national Gini index (the Gini coefficient multiplied by 100). The Gini index is a number between 0 and 100, where 0 represents perfect equality (where everyone has the same income) and 100 represents perfect inequality (where one person has all the income, and everyone else has zero income).
The Gini index for the United States has trended upward since 1968, from 38.6 to 46.6 (for 2008, the latest figure available). If the current trend continues, the United States will likely reach a Gini index of 54.6 by 2043. This is equivalent to Mexico in the year 2000. Mexico is not known for having a large, prosperous middle class.
If this trend continues, the American middle class will be a thing of the past – within the lifetime of most Americans living today. Many of the younger Boomer generation, for example, those born between 1960 and 1964, will still be around.
Income inequality varies by state. Interestingly enough New York (49.5) scores about the same as Costa Rica, while Utah (41.0) is equivalent to Russia.
Why don’t Americans pay more attention to growing income disparity? One reason may be our enduring belief in social mobility. Economic inequality is less troubling if you live in a country where any child, no matter how humble his or her origins, can grow up to be president. In a survey of 27 nations conducted from 1998 to 2001, the country where the highest proportion agreed with the statement “people are rewarded for intelligence and skill” was, of course, the United States. (69 percent). But when it comes to real as opposed to imagined social mobility, surveys find less in the United States than in much of (what we consider) the class-bound Old World. France, Germany, Sweden, Denmark, Spain—not to mention some newer nations like Canada and Australia—are all places where your chances of rising from the bottom are better…
All my life I’ve heard Latin America described as a failed society (or collection of failed societies) because of its grotesque maldistribution of wealth. Peasants in rags beg for food outside the high walls of opulent villas, and so on. But according to the Central Intelligence Agency (whose patriotism I hesitate to question), income distribution in the United States is more unequal than in Guyana, Nicaragua, and Venezuela, and roughly on par with Uruguay, Argentina, and Ecuador. Income inequality is actually declining in Latin America even as it continues to increase in the United States. Economically speaking, the richest nation on earth is starting to resemble a banana republic.