“Putting The ‘Gini’ Back In The Bottle”

Dolors & Sense

by Sanford Rose

KISSIMMEE, FL—(Weekly Hubris)—4/12/10—The country’s Gini has gotten too big for its britches. The Gini coefficient, a measure of the inequality of income distribution, has risen from around .35 in the mid-1960’s to closer to .45 today. This means that the country was only 35 percent of the way toward perfect inequality (one person has all the income) then, but is 45 percent of the way now.

No progress here.

The effects of the retrogression are covered in a dandy new book, entitled The Spirit Level. This volume details the health consequences of the growing skewness of incomes in the USA by linking selected health and social outcomes to income distributions both within the country, by state, and internationally.

Those US states in which income is distributed more unequally fare much worse than their more egalitarian counterparts. They have lower life expectancies, higher homicide and imprisonment rates, more teen-age pregnancies and births, more mental illness, lower educational achievements, less trust and, yes, more obesity. Ditto when the comparison goes international.

Thus people in New Hampshire and Utah, among the most egalitarian states, tend to be longer-lived, leaner, less violent, better educated, less neurotic, and more trusting than those living in states like Louisiana and Mississippi.

And the Japanese and Norwegians score much better on most components of a health index than do the US and the UK.

It must be emphasized that we are talking about the consequences of relative rather than absolute poverty. The poor have problems everywhere, but the poor in states and countries with a more equal distribution of income have fewer health problems than the poor in places where income is more skewed.

What counts is not what you have but the fact that you have much less than the couple across town.

As it grows, that disparity creates identifiable stressors that undermine both health and social cohesion.

This is nowhere more evident than in the case of obesity, which has now become a reverse status symbol. Rich people are thin; the poor are fat. White women are concerned with diet; black women, like black school children, won’t play “whitey’s game.” They almost revel in being overweight.

To be sure, causation could go the other way: Rather than income inequality and its sequelae causing obesity, obesity could promote income inequality. Fat people unquestionably find it tougher to get most good-paying jobs.

The authors marshal compelling evidence that, while there are feedback loops, causation mostly moves from the income to the health area. True, obesity may exacerbate income inequalities but it is hard to see how homicide rates could do the same, especially since, as the authors note, the data exclude the institutionalized population.

No, the problem is the widening gap between haves and have-nots. It is this gap that not only adversely affects health and social cohesion; it also helped to precipitate the recession and the financial crisis.

While mean income went up during the past decade, reflecting the outsize gains of the top 1 percent to 5 percent of income recipients, median income stagnated. In other words, most lower- to middle-income people felt left out, uninvited to the party and disconnected from the American dream of economic betterment.

But these people could borrow, thanks to a new-found financial permissiveness. And so they did.

The task of government is not to level the borrowing but rather the earning field. The bottom 10 percent to 20 percent of earners need to qualify for a bigger piece of the income pie. Only then will that pie grow at an acceptable rate.