Evil Gini

[imomus]

Well, it's 8am, the time I normally get down to writing my Click Opera entry for the day. I'd intended to write a piece about Gini coefficients, a complex subject requiring lots of research, references, figures, quotes, pastes. But since my internet service is down right now (if you're reading this it's either come back up or I've hacked into someone's wifi on the street) I've decided to make a virtue of necessity. I've decided to give you an account of the research I did yesterday into the Gini coefficient from memory. A bit like Nicholson Baker, who wrote his book about John Updike, U and I, without consulting any Updike books; he was interested in measuring the impact Updike's work had made on him over the years, not demonstrating what a good researcher he was. The really important Updike lines and scenes would be the ones imprinted on his memory, he figured, not incidental stuff he stumbled on looking through the books.

The piece I had in mind wasn't just going to be a dry exposition of Gini coefficients as a statistical measure of the gap between the rich and the poor (which is what they are). It was going to be about how Gini is an objective measure of something you're very much aware of subjectively when you visit a country, and how Gini might be seen as a measure of evil, social evil.

Gini was an Italian statistician who invented a very simple way to rate the relationship between the richest and poorest ten per cent of the population in any given country. A rating of zero in his coefficient means that there's no inequality: everyone in the land has exactly the same income. (Obviously nowhere like this actually exists.) A rating of one means that one individual is hogging the entire wealth of the land. (Some African states are a bit like this, with one gigantic palace for the president and a starving population.) If you'll allow me to play on words, think of inequality as a genie. A Gini rating of zero means this genie is absent, and a rating of 1 means the genie is there, squatting over the land like a malevolent monster. Because, yes, this genie is evil. Rather than giving you three wishes, he's going to take all your happiness away and replace it with envy, bitterness, insecurity and resentment. Unless, that is, you're already unusually rich.

Okay, here's the general picture, as I recall it from my readings yesterday. In all but a handful of countries (liberal democratic places like Sweden, Germany, Canada) the Gini rating is currently rising. The gap between the richest and poorest is increasing. The worldwide Gini rating is about 0.5. Half a genie. That's high, about the same as Brazil's rating, and Brazil is one of the most unequal countries in the world. So if you want to know, from your experience in a single country, what global inequality feels like, visit Brazil. Anecdote: I remember talking to Francoise Cactus about Stereo Total's trip to Brazil a couple of years ago. She said it was terrifying. She was taking an afternoon nap in her hotel room and woke up to find a man in the room. He was in the process of stealing all her valuables. When he saw she was awake he hurled himself through the window and splashed down in the swimming pool three floors below, swam to the edge, and ran off.

What does that man have to do with Gini coefficients? Everything. In lands where the genie of inequality squats over the population there's obviously a lot of envy and desperation. Some are very rich, others very poor. The rich are probably corrupt, maintaining their privilege by bribing politicians not to change anything. The poor know this and, questioning the legitimacy of the whole system, turn to crime. Nobody trusts anybody else. It's a recipe for hellish experiences. You don't have to spend much time in a genie country to have one, or hear about one.

There's a worldwide ranking of countries by Gini rating here. The most highly unequal country is Sierra Leone (.62 of a genie), the most equal country Belarus (.21 of a genie). Japan is fourth lowest of the nations ranked in this table (dated 2004) at .24 of a genie. Gini is high in the US, about .4 and rising. (In the table, as soon as you go higher than the US you mostly see incredibly corrupt African countries.) The moments you're most aware of America's high Gini are when you're, for instance, passing through the poor parts of Brooklyn on your way to the rich parts of Manhattan, or when you're walking down a street in LA and see that every house has a sign planted in the lawn where a bush should be, a hard-ass sign saying that if you intrude a rapid response SWAT team will be dispatched to fucking fix you. You're aware of it when you see lots of private security guys, or when you're told that X district is safe but Y district is dangerous. People have a tendency to think that these are givens and that they apply anywhere in the world ("you've got to keep your wits about you, know the score, stay safe"). But in fact they're only issues in high Gini places. They're something we organize structurally, and something we can repair politically. The genie can be banished... if you want it.

Let's look at times when the Gini rate of a nation changed rapidly. Well, Russia and China, as they've abandoned communism, have seen their Gini rates double in a decade or so. Did I tell you that when I went to Moscow my concert agent told me about how some Chechens had carjacked a BMW she'd bought from casino winnings, tied her up and left her in a forest, and how the police hadn't been able to do a thing about it? Well, that's a typical high Gini story. I was appalled. I've probably mentioned before that Russian life expectancy is falling and has been since communism ended, right? That's also a result of the genie. Sure, some people are getting richer, but other people are getting poorer than they ever were, poorer and more depressed. Suddenly, they don't have a medical service any more. In high Gini societies there are winners and losers. You know who you are.

There was a time after World War II when Gini levels were falling all over the world. Countries like Britain had Keynesian economics, welfare states were established, programs of nationalisation were fashionable, putting important resources into the hands of the people instead of private owners. You spoke about "the classless 60s". Of course it wasn't classless, but that was the general direction. It also spilled over into culture: in the low Gini 60s working class culture like the music of The Beatles could become respectable. Postmodernism began to demolish the distinction between high and low art. Even in America, where they don't see the genie as particularly malevolent, Gini was falling. The all-time high Gini gap was in the 1920s, when the US was basically a few Rockerfeller-type millionaires, some gangsters, and millions of poor people. By the late 1960s, the US was a much more equitable place, but the trend, here and elsewhere in the world, began to reverse in the early 70s. Gini levels began to rise again, and sharply, as people like Thatcher and Reagan privatised industries and organised their politics around incentivising entrepreneurs. Suddenly a minority was doing really well, but the majority was slipping. The genie was back. Well, the US is now back up to the Gini levels it saw in the 1920s. And it doesn't look as if the trend is going to be reversed any time soon. There just isn't the political will to do it, in the people or in the programs of political parties.

When I started reading about the genie I felt like I knew him already. There was anti-genie sentiment built into my aesthetics. I'm a tender-minded person, and I like tender-minded places. I don't want to spend time in places where it's like some sort of violent Darwinian jungle. The relative presence or absence of the evil genie of inequality explains why I like Berlin but not London, why I like Tokyo but not Hong Kong. If I go to a city that feels like it's a volatile mix of extreme wealth and poverty, I feel at once that something is wrong, and that I'm in danger. I know that violence of various kinds is likely. I know that the sense of legitimacy will be weak (even if police presence is strong — they're absolutely not the same thing) and that I'll be moving through scenes of appalling degradation and decadence. It's perfectly normal to see, in a high Gini city, a mutilated beggar sitting on the sidewalk next to a uniformed hotel commissionaire, next to a policeman with a machine gun. If peace reigns there, it reigns because someone is pointing a weapon at any sources of potential conflict. It certainly doesn't reign because people love each other, or all feel like they belong, or feel they're all on the same side. In a high genie society everyone is tough-minded and realistic. Realistic and wrong.

It doesn't have to be this way. Feelings of belonging, of the basic legitimacy and trustworthiness of the system you're part of, are tremendously important. I do feel them in Japan, and I do feel them in Germany. Those are both rich countries, but I think I might also feel the same thing in a poor country which didn't have extremes of wealth and inequality: Bhutan, perhaps. The sad thing is that fewer and fewer countries are proving able to banish the genie of inequality, or even to formulate in public the idea that he's evil. Right now, the genie is winning. So let's buy shares in barbed wire and machine guns, or let's battle him back down into his stinky little bottle.

Comments

[godfreygoode.livejournal.com]

Because welfare states instill a sense of victimhood and entitlement in poor people, feelings of resentment are created for people with money and for the system itself. You have now created a group of people who feel as if there's no reason to work, and that stealing is justified because the government is TELLING THEM, by creating the welfare state, that they are victims and cannot move up on their own.

The extreme mixture of poverty and wealth in New York is due to the New Deal-era policy of rent control. Landlords are getting tiny revenues from rents, relative to property taxes and what the land is actually worth. Because tenants living under rent control have such a great deal and not likely to move, they are at the mercy of the landlord. Thus, landlords have no incentive to do anything but the bare minimum maintenance. The result is a dilapidated Brooklyn. So you see how a policy which had very noble intentions actually ends up hurting everyone.

When everything is owned by the state there is no incentive to make anything efficient. In Cold War Germany, the farms in the West produced 600x what the East did. With socialism, there is no gap between the rich and the poor: instead, everyone is made poor.

[jermynsavile.livejournal.com]

I could quite happily argue that the American-style capitalist model instils "a sense of victimhood" and our current talent-free culture of celebrity creates a sense of "entitlement in poor people". Don't necessarily blame it on a welfare state. I live in a country with a parasite monarchy and class system, what is that telling me about the need to work? I don't steal and I still work. I think that the attitudes you describe owe more to cultural messages than economic systems.

As for 'The extreme mixture of poverty and wealth in New York is due to the New Deal-era policy of rent control.' Are there really no other reasons? How to explain the great disparities of wealth across the rest of the world? Apparently the New Deal has a lot to answer for.

[cerulicante.livejournal.com]

You could quite happily be wrong while arguing, but I don't think it would bother you.

And, it's a well-known fact that what one person thinks is indicative of what an entire country thinks. Because you don't feel the need to steal and live off of welfare, we can automatically assume, with 100% accuracy, that none of the other millions in your country feel that need, either.



IT'S SO SIMPLE ONCE YOU REMOVE THE COMMON SENSE! How easy this arguing stuff is!

[aberrantangels]

You could quite happily be wrong while arguing, but I don't think it would bother you....

IT'S SO SIMPLE ONCE YOU REMOVE THE COMMON SENSE! How easy this arguing stuff is!

But enough crowing about your own debating style; you might want to talk about the arguing techniques your opponents employ. 8-P

[jermynsavile.livejournal.com]

My point was that attributing a whole raft of effects to one set of policies was absurd and lacked common sense, as does your answer.

How easy this ill-thought out and abusive stuff is!

[theopsys.livejournal.com]

Because welfare states instill a sense of victimhood and entitlement in poor people, feelings of resentment are created for people with money and for the system itself. You have now created a group of people who feel as if there's no reason to work, and that stealing is justified because the government is TELLING THEM, by creating the welfare state, that they are victims and cannot move up on their own.

General Motors announced this week that, by 2008, they will cut 25,000 manufacturing jobs here in the U.S. According to all the articles I've read, GM's first-quarter losses of 1.1 BILLION DOLLARS have absolutely nothing to do with its manufacturing and everything to do with GM having designed and marketed a product that consumers consider inferior to Japanese and German automobiles. People on the assembly lines do what they're supposed to: put the cars together. That's it. So why is it that when the company's failure is a result of things done (or not done) by the higher-ups, it's the people least responsible who end up being held accountable by losing their jobs and/or having their health benefits taken away? And you wonder why people who end up on welfare feel victimized (by their former employer), have a sense of entitlement (to a job), and end up resenting people with money (e.g., GM CEO Rick Wagoner, who received a modest $4.6 million paycheck last year, not including stock options).

Saying that people on welfare are 'playing the victim' is about as credible as saying that rich people 'earn' all their money.

[godfreygoode.livejournal.com]

If the people of America truly *thought* GM's cars were inferior, they wouldn't buy GM's cars, and GM wouldn't be the #1 seller of cars in the country.

GM is falling apart because GM spends $6 BILLION a year on healthcare. They can't get rid of that burden because the unions won't let them. The unions also make them pay $40k salaries to people on assembly lines when the same work could be done for fractions of that elsewhere. In fact, other companies like Toyota do that and save big time. The people in Washington, in order to protect our home industry, put tariffs of about 15% (about $2,000 a vehicle) on all imported vehicles.

The end result? Everyone in America pays $2,000 or more extra than they should be paying when they buy a car.

You say these workers feel victimized by their employer. They probably do. But the reality is that they have skills that are only worth a certain amount of money. The union that they joined is forcing the company to pay them great multiples of what they're actually worth, thus robbing all American car buyers of $2,000 and eventually leading to the loss of their own jobs. Irony.

[theopsys.livejournal.com]

You say these workers feel victimized by their employer. They probably do. But the reality is that they have skills that are only worth a certain amount of money. The union that they joined is forcing the company to pay them great multiples of what they're actually worth...

Yeah, what a shame it is that GM actually has to pay its workers a living wage! And God forbid they get health benefits! I mean, I'm sure they'd be way more productive if they got sick and couldn't afford to see a doctor! Which raises another question: if the companies aren't going to provide healthcare, then who will? Are you suggesting that (gasp!)the government provide the citizens with healthcare instead? No, of course you're not suggesting that, because in your world, it's every man for himself.

Oh, and unless the engineers and managers and CEOs at GM are going to build the cars themselves, then I'd say these factory workers who're being paid "great multiples of what they're actually worth" are, actually, pretty damn essential to GM's bottom line. If Rick Wagoner quit today, GM could and would still make cars (and save $4.6 million in salary); if GM's remaining workforce decided they were tired of making 100 times less than Mr. Wagoner and quit, GM would be completely worthless.

[godfreygoode.livejournal.com]

Why should workers be paid more than they're worth? They need to update their skillset. These people are not stuck at birth being car engineers or asemblymen. In the 19th century something like 90% of the workforce was on farms. Now it's something like 1%. Does that mean 89% of the population has been unemployed since then? No, they updated their skills and took better jobs. This sort of this is _good_ for the country as a whole. It will also mean cheaper cars for everyone. And that $2,000 could goto healthcare!

No question some CEOs take home silly amounts of pay. But what is $4.6 million spread out among their 200,000 employees? $23 extra a year per person. Problem solved!

[uberdionysus.livejournal.com]

Classic libertarian bullshit.

The same "sense of victimhood and entitlement in poor people" happened after the industrialization of England, and after the robber-baron/masters-of-industry lassiez faire free-for-all in fin de sicle U.S. And the same problems (which are ultimately born out of wealth disparity) have happened over and over through out history, long before ANY IDEA OF A WELFARE STATES.

And your "analysis" of NY rent problems is more classic bullshit. There is some element of truth, but rent stabilization/control is RAMPANT in Manhattan (way more than in any other borough), yet Manhattan is quickly becoming a place where only the very rich can live, despite rent stabilization/control. The problem isn't JUST rent stabilization/control, but also the scarcity of land available (just like in Tokyo). In fact, Tokyo has many of the same problems and rent control laws as NYC, yet hardly any of the problems of wealth disparity.

Remove your ideological spectacles and realize that the problems are much, MUCH more complicated than your simplistic view of the world. You're as bad as a communist: all ideology, no reality.

Read some economists who aren't coming out of Hayek, or philosophers who aren't Ayn Rand.

[docscarabus.livejournal.com]

Any suggestions for econonmists that aren't coming out of hayek?

[uberdionysus.livejournal.com]

Taking up a 4 year old thread? More power to you.

In all seriousness, Hayek contributed greatly to mainstream economics. I was flippantly thumbing my nose at the so-called "Austrian school" that Hayek was part of, and which is extremely fringe (about as fringe as Marxist economics, which of course still has a presence in academia, just as the Austrians have a massive presence online).

But if you're really asking, then I'd say read the neo-Keynesians, like Paul Krugman, Joesph Steiglitz, Nicholas Roubini, Brad Delong, etc. They're still influenced by Hayek, but they're pretty far from any sort of Austrian school orthodoxy.

Balance

[dendriva.livejournal.com]

While I agree that a welfare state can become excessive, engendering complacency, the lack of a welfare state also harms the unfortunate. The solution is knowing where to draw the line, as well as trying to encourage achievement.