Wednesday, January 23, 2013

Am I Reading this Right?

That Denmark, with the world's lowest Gini index measured by income, also has the  third highest measured by wealth?  Different years. but still.  For income use the World Bank number.  And kudos to plucky little Namibia, first in wealth inequality, third for income.

I see Wiki provides data on pre-tax income Ginis, but also pre- and post-tax for selected (first-world) countries (OECD data, a bit different from the World Bank stuff above).  Anyway, this one shows Denmark  Ginis of 0.416 pre- and 0.248 post; for the United States, the numbers are 0.486 pre- and 0.378 post.  These pencil out to a ratio of 1.66 for Denmark, 1.28 for the US.   Can we take this as a quick-and-dirty  index of the relative component of wealth transfer in the two tax regimes (i.e., much higher for Denmark than for US)?


Ken Houghton said...

Yes to the second 'graf, and doesn't that rather explain part of the first?

Think it through as follows: No one is going to get Filthy Rich. No one is going to die in poverty. Corollary: Legacy Wealth is fairly easy to maintain.

Hamlet is very old.

On a guess, Danish mobility between quintiles is probably fairly limited--though I might give you odds that it's not notably worse than the US. The rising tide lifts all boats--fewer capsize, fewer become hydrofoils.

(The difference you noted is also why concentrating on income inequality is not going to reduce wealth inequality much in a case such as the US, where "capital" is privileged over earned income, but that's a side issue.)

Jimbo said...

On Namibia, they are a young nation that came out of a long liberation war. There was literally no governance system below the previous national (previously colonial) government system. There are private white farms and black communal lands oriented around livestock. An intervention in the early '90s helped to create "conservancies" that created communal governance systems that also helped to conserve wildlife by enabling the conservancies to develop managed safari hunting businesses and other conservation-oriented systems that virtually created democratic local governance and more sustainable income streams. So this is a real success story but the initial starting point of an enormously wealthy white minority and an extremely poor majority guarantees a long journey towards a more equal society.

Ebenezer Scrooge said...

I think that Denmark is pretty typical of Europe, even if its numbers are a bit extreme. European tax systems whack consumption and earned income, but protect wealth. In contrast, American tax systems are--believe it or not--more progressive. (European progressivity comes on the spending side.)

European corporate law, with its fine disdain for minority rights and relatively rare public corporations, also protects industrial fiefs.