Thursday, April 21, 2016

Cutting the Pie

There is a lot of talk during this Presidential campaign about how the "rich" receive an inordinate amount of the income and wealth of the United States.

Bernie Sanders and his fellow Socialists lead this chorus but we hear that we need to "level the playing field" in the United States from any number of politicians.

What follows is usually a call to "tax the rich" and arguments that capitalism is "unfair" and lacks "morality" and that the federal government has an obligation to right this wrong through some type of redistributive scheme

From hearing all of this you would think that the United States is unique in the world for the share of income that the rich earn.

What are the facts? Where does the United States of America actually stand on that measure compared to other countries around the world?

You never see these statistics in the media as they relate to other countries.  I was curious how the U.S. compared to other nations.  After all, in any society ever known to mankind there have been rich and poor people.  It was true in Babylon, Athens and Rome as well as in Moscow and Havana today. A quick Google search supplied the answer.

The United States actually ranks 73rd in the world (out of 156 countries, right in the middle of the pack) on the income share that the top 10% earns as a percent of all national income according to the most recent world data. The top 10% earn 30.2% of all income in the U.S.

To put that in context, in Communist China the top 10% earn 30.0%---almost exactly the same as in the United States. In Venezuela's socialist economy the top 10% earn 34.1%. In Russia, the top 10% earn 32.2% of the total. In other words, the rich have a smaller piece of the income pie in the United States than in Venezuela and Russia. How does that fit the Bernie Sanders narrative?

In addition, all of these countries in the Western Hemisphere have higher concentrations of income in the top 10% than in the U.S.---Haiti (4th), Columbia (12th), Guatemala (13th), Brazil (14th), Honduras (15th), Chile (16th), Panama (19th), Mexico (20th), Paraguay (22nd),  Dominican Republic (24th), Costa Rica (25th), Ecuador (29th), Jamaica (30th), Bolivia (32nd), Nicaragua (33rd), El Salvador (40th), Venezuela (43rd), Peru (47th), Uruguay (66th) and Argentina (70th).

If you are keeping track, almost every country in the Western Hemisphere has the rich with a higher share of national income than is the case in the Unites States. The only exceptions are Trinidad and Tobago (78th) and Canada (118th).

Cuba did not even make the list of 156 countries. It likely does not have reliable data anyway. It is also clear they don't have much income to spread around and what they do have undoubtedly ends up in the pockets of the communist party elite.

Of course, there is another important fact to keep in mind in all of this. If you are considering the well-being and welfare of the masses, it is perhaps more important to consider how big the national economic pie is before you get carried away with how the pie is cut.

The United States generates almost 17% of the world's income for a population that represents only about 4% of the world's population. To put that in perspective, China is now about on par with the United State on gross national income. However, China has over four times the population as the United States.

The country with the greatest equality of income in the world is Azerbaijan. The GDP per capita in Azerbaijan is about $3,250 per capita. That is about 1/15 of what it is in the United States. The people of Azerbaijan are almost all equally poor. Is that fair?

The Democrats like to talk about how "unfair" our economic system is and why we need to "level the playing field."

However, if it is so "unfair" why do so many people around the world keep pouring over our borders?

The numbers above give you a pretty good idea of why that that is.

1 comment:

  1. Are Mexico and Venezuela the right peer group for comparison>