Where would you have to jump on a plane to in order to be able to see the most egalitarian country in the world? Where exactly would you need to go and could you take it living surrounded half the year with snow, or with a volcano ready to erupt? But, you might just put up with all of that just so long as the people had a greater and more even distribution of wealth between them.
It’s time that the rich stopped getting richer and the poor stopped having to slave away, isn’t it? If you did want that, then you would have to go to Iceland.
The last time Iceland was in the news it was in 2008 when the Icelandic Financial Crisis started. It was the largest banking collapse experienced by any country in the world, relative to its economy. Perhaps though there are great lessons to be learnt from what happened to them. At least the Icelandic people came out of it with a greater spread of wealth in the country. What did the USA get out of the financial crisis? Just richer banks and wealthier 1%-ers. Perhaps now is the time to start learning from others rather than believing that we, the Americans, have done it, been there, seen it and heard it all before.
Gini Index
The Gini Index is a measurement of equality of wealth in a country and it has a base rate of zero, at which everybody has perfectly the same amount of wealth in society. A score of one (100%) means that there is extreme inequality in a country. Maximum inequality of 1 means that only one person possesses all income and means of consumption in a country. The Gini Index or the Gini Ratio was developed by an Italian statistician called Corrado Gini in 1912. The Index can be used to valuate also the before and tax distribution of wealth in a country. The USA comes out looking pretty dismally in the Index as it does very little to reduce inequality in the country between people.
In 2010, the then Managing Director of the International Monetary Fund, Dominique Strauss-Kahn stated in a speech: “But globalization also had a dark side. Lurking behind it was a large and growing chasm between rich and poor—especially within countries. An inequitable distribution of wealth can wear down the social fabric. More unequal countries have worse social indicators, a poorer human development record, and higher degrees of economic insecurity and anxiety. In too many countries, inequality increased and real wages stagnated—failing to keep up with productivity—over the past few decades. Ominously, inequality in the United States was back at its pre-Great Depression levels on the eve of the crisis.”
Inequality stops economic growth. Inequality prevents poor people from accessing the social fabric and it also diverts those people into other activities that are unproductive or illegal. Without sharing of economic growth within and without of a country, there will be a backlash one day from those that are not able to participate actively in the accumulation of the wealth.
So, where are the countries that are doing little to redistribute anything amongst the majority of people? Not as far from home as you may think! The following figures are taken from the study carried out on Organisation for Economic Co-operation and Development (OECD) countries.
Greatest Uneven Distribution of Wealth
10. Japan
Japan has a Gini Index (after tax and transfer) that stands at 0.336. It is therefore the 10th country with the largest unequal distribution of wealth in society. But, it’s way ahead of the USA, in 4th position as one of the worst countries in the world.
9. Greece
The Gini Index for this ailing economic country stands at 0.337 (post tax and transfers). Without taking taxes and transfers into account Greece would have had the 4th highest inequality of wealth in the OECD world. Many are prone to criticize the bad economics and finances of the country, but few are willing to look at their own country’s plight.
8. Spain
The Gini Index for Spain amounts to 0.338 (post tax and transfers) and so it is the 8th worst unequal country in the OECD world. Is the unequal distribution of wealth due to the relatively low rates of education (54% of Spaniards only aged 25 to 64 years old possess upper secondary education)? Spain has an unemployment rate that is still at 23.78% today.
7. United Kingdom
The distribution of wealth in the UK is the 7th worst in OECD countries, with a Gini Index (post tax and transfers) standing at 0.341. However, if we take into account pre-tax and transfers, then it has the 3rd worst unequal distribution of wealth. Will the UK’s position see a drastic change when the newly elected government of David Cameron decides to implement further cuts in allowances and family financial support that was announced during the election campaign? David Cameron was elected on making £12 billion in savings on the Welfare State. So far, they have only been able to account for where £2 billion is going to come from.
6. Portugal
This country has the 6th position and has a Gini (post tax and transfers) Index of 0.344 just ahead of the UK. Portugal has the lowest number of residents in an OECD country that has a tertiary degree (17.3%) and unemployment still stands at 13.7% in May 2015.
5. Israel
The Gini index (post tax and transfers) stands at 0.376 just behind the USA. It has the 4th lowest percentage of social spending to GDP ratio (15.8%). Unemployment in Israel, however, only stands at 5.3% today.
4. United States
The USA’s Gini (post tax and transfers) index stands at 0.38 and is one of the worst in the world (OECD). It has the 11th lowest social sending as a percentage of GDP (20%). It has the 3rd highest GDP per capita in the OECD. 42% of people aged between 25 and 64 have a tertiary degree . But, despite this, there is still great inequality in the country between the rich and the poor.
3. Turkey
The Gini (post tax and transfers) Index here stands at 0.411 and it is the 3rd worst country in the world. Only 14% of the population have a tertiary degree (ages 25 to 64). This is the lowest level of tertiary education in the OECD world.
2. Mexico
This country has a Gini (post tax and transfers) Index of 0.466 and it is the 2nd worst country for inequality in the world. It only spends 7.4% of GDP on social areas to try to reduce that inequality.
1. Chile
This country is the worst in the world for inequality amongst OECD countries. It has a Gini (post tax and transfers) Index that stands at 0.501 and its social spending as a percentage of GDP stands at 10.2% (the 3rd lowest in the world). It currently has a GDP growth rate of 1.04% and yet it has great inequality in the country. The greatest.
Iceland
It’s not surprising perhaps that Iceland is the country with the lowest gap between the rich and the poor. This is, after all, the country where the people in the wake of the financial crisis and the meltdown marched on their Parliament and demanded the resignation of the government. The protest came to be known as the Kitchenware Revolution or the Kitchen Implement Revolution because the people marched on the seat of the Icelandic government in Reykjavik on January 20th 2009 and banged on pots, pans and kitchenware until the government resigned. Then, a new government formed following an election and for the first time in the history of the country and in fact in the world 25 people with nothing to do with the political world whatsoever were elected from the people directly and formed a Constitutional Assembly that would see the writing of a new Constitution, this time one that came from the real people.
Who’s for marching on the Capitol with their baking tins?
Are you prepared to allow the USA still to have the 4th most uneven distribution of wealth between the rich and the poor? Wasn’t this the land of opportunity at one time, many eons ago?
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