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

[polocrunch.livejournal.com]

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.

Surely having a Gini coefficient equal to the world average would make Brazil an averagely unequal country, not one of the most unequal in the world?

[(Anonymous)]

Momus! This is really insightful... Having just moved back to Britain from Japan, I can see exactly where you're coming from. What a great post.

So, any plans to move to Belarus (or the Slovak Republic which has a gini of 19.5)?

There are some interesting discrepancies though - Rwanda is apparently the 16th most equal...

Rob.

[beingjdc.livejournal.com]

If you have Powerpoint and some spare time, there's some fascinating work on these issues in this presentation

http://www.scrsj.ac.uk/ESRCseminars/JohnHillspp.pdf

[jermynsavile.livejournal.com]

Share with you a distaste for travelling in places where the disparity between rich & poor is too great.

I lived near Oxford Street in the 80s during the first years of the Thatcher experiment and was first shocked, then saddened and then, finally, pretty indifferent to the sight of the expanding number of homeless men and women huddled overnight with their belongings in the doorways of the big luxury stores. It is disappointing how quickly one can become immune to the misery of others. If I'm honest it was only when I moved away and it became a less familiar sight that I became able to 'see' it again.

[boof-boy.livejournal.com]

You manage to write so much ... do you touch-type? How many wpm?

[33mhz.livejournal.com]

I bet those would probably smooth out if you did some sort of weighted average based on relative gdp. Comfort + equality = peace, usually.

[33mhz.livejournal.com]

Not necessarily. A few especially high countries could pull up the average so that while Brazil may sit at the mean value, it is still above the median value.

[georgesdelatour.livejournal.com]

This is brilliant. Thank's a lot, Momus!

I remember reading about some study done by two French economists - maybe someone reading this can tell me what it was. Basically, they were disproving the idea that the very rich must be rich because of skill or talent. They showed that even if you select some people completely at random and give them some significant bonus capital, the capitalist system will tend to multiply the value of their bonus wealth massively compared with the remainder. Only people who already have large amounts of wealth they are at liberty to risk can opt for the more speculative types of investment which actually bring in the most return. The point is, there's no merit about it.

gene genie?

[(Anonymous)]

Hey Momus, I'm kinda surprised that what with your ideas about what-comes-after-postmodernism, penchant for convoluted metaphors and, not least, your Dave Bowie love you didn't jump on the opportunity to tie them up into a awkward synthesis. The 'gene genie' index, for example (if you'll allow me to play on words). Something about how, in the future, the gini index will take on a startling new manifestation as wealthy elites pay to cherry pick enhanced genetic atributes for themselves thus ushering in an age where a tiny oligarchy control nearly all the world's resources and maintain gross innequalities by using their genetically enhanced strength, beauty and charisma to oppress masses of poverty stricken, weak, ugly people. But at the same time it remains a society which is comfortable enough about reappropriating the past to listen to old david bowie lps. Or something...
Come on Nick, keep up.
Nice blog by the way.

[(Anonymous)]

Nice job. You managed to make an extremely dry subject mildly interesting. I bet you could have even used the word "aggregate" in a totally hip way.

A small doubt: as much as I dislike Reagan and his awful stepchild Bush II's tax cuts, I don't think anyone has proven that increases in inequality are 100% related to changes in the tax code. Post-industrial economies generally reward those who already have accumulated capital or those with complex skills (education capital), which tends to make the gap widen without direct government influence. So we're all kind of doomed to more inequality even if the Republicans lose the next U.S. presidential election.

Japan is starting its fall from a nice Gini position, so it has quite a bit of room before things go to U.S. levels.

Marxy

[(Anonymous)]

If that theory of capital accumulation leading to greater capital accumulation is true, it explains why Japan has low income inequality. The wealthy classes' capital got wiped out in WWII (invested in the colonies and the infrastructure), and the Occupation's land reform got rid of rural landlordism. Japan families started the post-war period with little capital with which to make more capital, and without a real financial market, making money off interest is difficult.

Marxy

[del-c.livejournal.com]

Surely having a Gini coefficient equal to the world average would make Brazil an averagely unequal country, not one of the most unequal in the world?

No, because the world could have a high Gini coefficient even if all the individual countries had a low one. Consider a planet with only two countries, Richia and Pooria. They're both very egalitarion countries, with Gini coefficients of 0.2. But put them together and the planet has a Gini coefficient of 0.7. Why? Because Richia is richer and Pooria is poorer.

So what does it mean for Brazil that it has a Gini coefficient as high as the world Gini coefficient? It means that living in Brazil is like having the USA and Ethiopia in the same country. That's how bad it is. It's much worse in inequality terms than living in most countries, whether they be rich or poor ones.

[bluedevi.livejournal.com]

This was an excellent article, lucid and readable. It was the best explanation of the issue I've seen so far. And you did it from memory? Good lord. How would you feel about me printing it out and distributing it to my A-level sociology class for discussion?

By the way, your journal is great - informative and entertaining on such a wide variety of subjects, from economics to Michael Jackson to art to girl-talk. Thank you.

(/shameless sycophancy)

[dzima.livejournal.com]

Oh, I expected Canada to do better than this. It's only noticeably better than America when it comes to health care and number of homicides.

commonism

[(Anonymous)]

If knowledge economies reward those with cultural/intellectual capital exponentially, then all that stuff that Negri/Hardt talk about in Multitude and Empire seems like an inevitable politics. Network socialism, or something. Led by hackers and artists. 'Singularities' within the 'multitude'.

God we *really* need a new Marx do we not...

pat kane

[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.

[aberrantangels]

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.

In the US at least, this is in fact something that was deliberately done by creating a media atmosphere in which state capitalism was labelled "the free market" and opposition to its inequities was identified with support for bread lines and five-year plans. (I call this the "Adam Smith said it, I believe it, that settles it" school of economics, though to be fair, it really has less to do with Smith than with that corpsefucker Herbert Spencer.) How well it worked can be inferred from comments like godfreygoode's.

[transient-poet.livejournal.com]

Do you think there is any offset due to the increasil}ngly cheap manufacture of technology? For example I am right now in a tropical rainforest, surfing the internet. Production becomes cheaper and thus more accessable. Of course at the same time median wages most likely drop. Still many poor today are better off in a number of ways than Roman Emporers were. Running water and anti-biotics. Yet the gaps are even wider. And of course the poorest of the poor live virtually indifferently through all of civilization. On the street, diseased, begging for scraps.
Your description of LA reminds me of Neal Stephenson´s Snow Crash.

poorer and more depressed

[reflejos.livejournal.com]

To be depressed is a phenomenon mostly of rich people. I would say more that poor people tend to get desperate. But also they have a capacity of joy that you don't see in any rich people.

I see it here, living in a high, maybe one of the highest genie countries (Colombia). Your description is fairly good, but it doesnt escape of beeing typical of someone who looks at it from very far away.

I think its cruel, but many of the most interesting things happen in the high genie countries (the main examples should be Brasil and Mexico). You are not allowed to desire it for any country, but you should really visit and live in one of them. There is a lot of life in this countries you don't see in the others. Germany and Japan look tremendously dull from there.

But one issue is clear. In Colombia many people, most of the rich ones (including me) tend to overlook the whole picture. Its terrible, maybe thats one of the reasons. But it has a lot to be with habitus too. It is a question each Colombian does to himself frecuently (even more when living outside of the country).

[Maybe this is the main issue, you see the things SO DIFFERENTLY when you are outside than inside, even beeing a Colombian]

What I mean, your view is interesting and points out things one should not omit, but it has a naiveté that is strange for Momus.

[But you get to the point, the most important problem to be attacked here is the distribution of the wealth]

[Another question here is: ¿What if the few people who can make a difference vote with their feet?]

[jermynsavile.livejournal.com]

Thanks for making my point rather better than I did!

[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!

[cerulicante.livejournal.com]

Since we're the US, we obviously got where we are by grinding babies into powder to fuel our SUVs; there's no way that hard work and innovation had anything to do with it, right?

And, since when does a country NOT take its own best interests into account? I'd say that Europe is the biggest hypocrit of them all, since they have this penchant for not liquidating their entire continent and giving that money to the poor people so that billions in Africa and billions in Europe can all eat sticks and mud and be dirt poor together. That will make everyone happy! It's a shame that the European countries are so obsessed with "not dissolving and giving all their wealth to the needy" that they have these ultra-nationalistic laws that protect the integrity of their financial markets.


Very selfish and shameful, I'd say. We're idiot Americans, of course we want money and power. But you ENLIGHTENED Europeans that know better should be leading by example and allowing poor people to have free and unfettered access to your personal wealth. Your children can grow up uneducated, in dirt huts, with terrible diseases...and think of how good they'll feel when you tell them their fatal dysentery is helping to fund schools in a country they'll never live to visit! How wonderful that will be!

[(Anonymous)]

In fact, looking at Momus's link to the ranked index (courtesy of the CIA! Well, I guess they'd know), Brazil's Gini rating is 0.607. I'm not sure that's close enough to 0.5 to call it about the same. It's at least as big as the difference between the UK and Germany.

Nic Barnard

[maybeimdead.livejournal.com]

I really enjoyed this piece of pop economics! It would be interesting to look at low Gini countries and see how much spare time people have, and what they do with that spare time. Under the right conditions (public education, affordable housing, universal healthcare) I suspect the low Gini ones could also end up being the more sustainable ones? It just sucks that some people have to work long hours just to pay off that huge mortgage in a gated community in the middle of nowhere. People need enough time to think about what they're doing and avoid the distracting game of "upward mobility".

Have you read any works by Jane Jacobs?