Could Be Worse. Could Be Raining.

Here’s one of today’s headlines from business news outlet CNBC: “Maybe US wealth inequality isn’t as bad as you thought.” For those who have followed the steady widening of income and wealth gaps in the United States over the past three decades, a headline like this might suggest some sort of radical revisionism, scrutinizing methodological errors or utilizing a new statistical metric. Instead, the article proceeds to confirm the dismal state of economic inequality in the U.S., noting that the richest 10% of Americans own 74.6% of the society’s wealth. Why, then, might our assumptions about wealth inequality might be wrong? Apparently, U.S. wealth inequality “isn’t as bad as you thought” only because the U.S. isn’t the most unequal country on the planet (a position held, based on these rankings, by Russia).

Consider, however, the other countries closely neighboring the U.S. on the list:

Rank    Country        Share of wealth held by richest 10%
1        Russia                 84.8%
2        Turkey                77.7%
3        Hong Kong        77.5%
4        Indonesia          77.2%
5        Philippines        76.0%
6        Thailand            75.0%
7        U.S.                     74.6%
8        India                  74.0%
9        Egypt                 73.3%
10      Brazil                 73.3%

Consider also the countries with the lowest levels of wealth inequality by this measure:

Rank    Country        Share of wealth held by richest 10%
1        Belgium             47.2%
2        Japan                48.5%
3        Australia           51.1%
4        Italy                   51.5%
5        France               53.1%
6        UK                     54.1%
7        Finland             54.5%
8        Netherlands    54.8%
9        Spain                55.6%
10      Greece              56.1%
11      Canada             57.0%
(Source: Credit Suisse Global Wealth Report 2014 )
Note: Spain and Greece may be outliers on the second list, placed there by the massive destruction of financial wealth in the banking crisis. TI have “gone to 11” including Canada as an additional reference point.

So, yes: it could be worse, it could be raining. Or rather, the U.S. could be Vladimir Putin’s Wild, Wild East. Then again, things could also be considerably better. During the famous Kitchen Debate, Richard Nixon and Nikita Khrushchev sparred over which economic system would ultimately produce the highest standard of living. It seems that after the demise of Soviet communism, the only thing American capitalism can aspire to is being slightly less brutal than the gritty, new Russian variety.

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