Extract from Mythic Dreams – why modern capitalism’s pursuit of growth is a sin

Ch 2:  A Haves and Have Nots World

A much greater hunger

In 1800, the world’s population was about 1.36 billion. If we are to believe statistical analysis, most people lived, in income terms, relatively similar lives.  According to Gapminder statistical analysis (admittedly conjectural, given that data before 1900 is ‘highly uncertain’) the world’s poorest countries in 1800 (most of them in Africa) had average incomes around $US 340 (Cape Verde) to $US 800 (Mauritius) a year, while the world’s two richest nations were the United Kingdom ($US 2,717 per capita) and the Netherlands ($US 2412 per capita). Both of these are of course in Western Europe. The US (the world’s third richest country at the time) had an average income of $US 1913. These statistics (all dollar figures are adjusted for inflation to 2005 purchasing power figures)  indicate that a person in the poorest country (Cape Verde) is 7.99 times poorer – on average – than a person in the richest, the United Kingdom. A gap exists but it is not that statistically significant. Most of the world’s wealthier countries are in Europe. Japan has an average income of $US 1055, China’s average income is $US 986 (2.75 times poorer on average than a British citizen), Australia’s is lower at $671 (4.05 times poorer on average than a British citizen), while India’s is $US 563 (4.83 times poorer on average than a British citizen)…

In 2010 (world population just under 7 billion), a person in the world’s richest country (Qatar – ah, the joys of oil wealth) had an average income of $US 93,818, while a citizen of the Democratic Republic of The Congo, the world’s poorest country, had an average income of $US 387. As such, a citizen in the Congo is 242.42 times poorer than a citizen of Qatar (and 80.95 times poorer than an average citizen in the UK, where the average income in 2010 was $US 31,330). The average Chinese person – in a nation which has now undergone its own ’industrial revolution’ –  is 3.35 times poorer on average than a British citizen but 9.94 times poorer on average than a Qatari citizen, who has not suffered the economic austerity of a post GFC world, as has the average Brit. The gap between rich and poor, between the ‘haves’ and the ‘have nots’ has become much more statistically significant. (See Gapminder’s interactive graph Wealth and Health of nations at http://www.gapminder.org/world/ for a visualisation of the statistical development of this haves and have nots world.) Nor is the answer to this problem industrial development of a western nature. Despite China’s apparent growth the real story of its development is very different if we examine the actual gap between rich and poor within the Chinese nation.

National gaps

This disparity between rich and poor has not merely grown internationally; it has also increased within nations. Chrystia Freeland notes in her book, Plutocrats, The rise of the new global super rich (cited in the New Internationalist # 459, January February 2013, p. 23) that the average 1980 CEO in the US had a wage 42 times the average income in the country; by 2012, the multiple was 380. According to the UK’s Guardian (cited in the New Internationalist # 459, January February 2013, p. 23), there has been a 117% increase in wages for the wealthiest 1% of Brits (in real terms) since 1986, compared with an average wage increase of 47% for the rest of the population. The Poverty program [http://www.povertyprogram.com/statistics.php] estimated that, in 2011, 1 in 7 people in the European Union lived in poverty, while the ratio was 1 in 6 in the US.

One of the measures that can be used to assess equality of income distribution is the GINI coefficient. Multiplied by 100 it yields a figure which allows a ranking: the GINI index. The GINI index measures the extent to which the distribution of income or consumption expenditure among individuals or households within an economy deviates from a perfectly equal distribution; countries are given a rating from zero (perfect income equality) to 100 (perfect inequality) [World Bank; http://data.worldbank.org/indicator/SI.POV.GINI]. The Central Intelligence Agency publishes a ranking list of the GINI index which may be accessed at https://www.cia.gov/library/publications/the-world-factbook/rankorder/2172rank.html. China has relatively high levels of income distribution inequality, with a GINI index figure of 42.48 (2005) or 48.00 in 2009. (Figures are from, for 2005, Global Finance [see Global Finance; Wealth Distribution and Income Inequality by Country] and from the CIA’s world fact book, for 2009.) The USA’s GINI index, by comparison, was 45.00 (2007 – CIA figure), the United Kingdom’s was 34.00 in 2005 and Australia’s was 30.5 in 2006 (CIA figures). The GINI index lists Namibia as the world’s most unequal income distributor (70.7 in 2003) and Sweden as the most equitable (23.0 in 2005). In general, the GINI coefficient is larger when calculated before tax than when calculated after tax, indicating that the government has a role in most nations in income redistribution away from the very wealthy. It is probable that the difference between pre-tax and after-tax GINI coefficients is shrinking in our modern world, as governments allow more tax ‘freedoms’ to the super wealthy or as the super wealthy learn new ways of avoiding tax.

F. Scott Fitzgerald was fascinated by the rich. Below is a paragraph from his 1925 short story, The Rich Boy.
‘…Let me tell you about the very rich. They are different from you and me. They possess and enjoy early, and it does something to them, makes them soft where we are hard, and cynical where we are trustful, in a way that, unless you were born rich, it is very difficult to understand. They think, deep in their hearts, that they are better than we are because we had to discover the compensations and refuges of life for ourselves. Even when they enter deep into our world or sink below us, they still think that they are better than we are. They are different. The only way I can describe young Anson Hunter is to approach him as if he were a foreigner and cling stubbornly to my point of view. If I accept his for a moment I am lost — I have nothing to show but a preposterous movie.’
Fitzgerald, F. S., (1925), The Rich Boy, retrieved from http://ebooks.adelaide.edu.au/f/fitzgerald/f_scott/short/chapter9.html

Interestingly, 2011 studies done by Michael Kraus, Paul Piff and Dacher Keltner (see New Internationalist no. 459, p. 24) seem to accord with Fitzgerald’s idea that the rich are indeed ‘different from you and me’: in 12 separate studies measuring empathy, ethical behaviour and social awareness the rich performed more poorly than those without their capital. Studies included tests for deciphering emotions, willingness to let other drivers in, and resistance to temptation (could secretly observed participants forego a jar of sweets left out for children?).

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