- Ivo Vegter
- 25 Jan 2011 06:43 (South Africa)
What is the most unequal country in the world, in terms of income distribution? This may come as a surprise, but it is neither the richest, nor the poorest, nor the biggest, nor the smallest, nor the most rapidly developing, nor the most stagnant, nor the most autocratic, nor the most free, nor the most violent, nor the most peaceful.
Hint: it's a neighbouring country.
Nope, sorry. It's not Zimbabwe. Botswana would have been a much better guess. The correct answer, by a long way, is Namibia.
South Africa's gini coefficient, the canonical measure of income inequality, is 57.8%, according to the United Nations Development Programme. The Global Peace Index, whatever that is, has a cute interactive map, if tables and spreadsheets aren't your thing.
Gini stands for "generalised inequality index". Here is how it's calculated. The theory is that a gini coefficient of one (or 100%) represents a situation in which one household earns all available income, while a gini coefficient of 0% means every household earns exactly the same.
The socialists and hippies of the world have had to turn to this curiously unintuitive measure of a country's welfare, because otherwise they'd have to concede a very inconvenient truth indeed: the poor aren't getting poorer; things aren't getting worse.
If you haven't seen the statistics that Hans Rosling combines with clever data visualisation tools to debunk some commonly held myths about the world, both rich and poor, do yourself a favour and download a few of his talks.
That the world isn't going to hell in a handbasket is, of course, a crisis for the left.
Authors and speakers who point this out, like Rosling or Bjørn Lomborg, routinely get vilified for doing so. Good news just doesn't fit a worldview in which the rich exploit the poor, capitalism is cold-hearted and brutal, free markets are infested with swindlers and thieves, globalisation threatens the serenity of both the noble savage his unspoilt wilderness, and money is the root of all evil.
It is hard to advocate more coercive, redistributionist "solutions to poverty", when poverty is making itself history all by itself. It's hard to claim that poverty is bad from a platform that says money is the root of all evil. It is hard to argue with countries who liberate their markets, when they find their socio-economic outlook improves.
Policies that promote trade, encourage private business, remove red tape and reduce corruption have lifted millions out of poverty already. China alone accounts for half a billion people who no longer live below a dollar a day.
Drastic measures are called for in the face of all this good news.
So, first, the do-gooders shifted the goalposts. The symbolic line of poverty used to be $1 a day, until there weren't enough people left below it. It has surreptitiously been doubled to $2 a day. This sleight of hand allows those whose heads are as soft as their hearts to continue to indulge their luxurious guilt complexes.
This still doesn't fix the larger marketing problem, which is that the prosperity trend is for the most part upwards. To counter this communications crisis, the handwringers latched onto the gini coefficient of income inequality to replace embarrassing measures of actual poverty.
A high gini coeffient, which signifies less equal income, is supposed to be bad. The lower it is, the more "fair" a society is. Actual poverty does not count as much as how big the gap is between the poor and the wealthy, so the argument goes.
But why? If you plot the gini coefficient of the countries ranked in the UN's Human Development Index (HDI), there appears to be only a weak correlation between HDI rank and income inequality.
What does it tell us that the United States (40.8%) is ranked 77th out of 142 countries? Why would New Zealand (36.2%), Uzbekistan (36.7%), the United Kingdom (36.0%) and India (36.8%) be almost inseparable in terms of income inequality, yet they are separated by 114 places in the HDI ranking of 182 countries?
Can Ethiopia (29.8%), Bangladesh (31%) or Laos (32.6%) celebrate that they are among the most equal countries in the world? Lesotho (52.5%) and Swaziland (50.7%) are both far more equal societies than South Africa (57.8%). Along with countries as different as Liberia (52.6%) and Chile (52.0%), they are right in the middle of the 5% bracket flanked at the winning end by Zimbabwe (50.1%) and the losing end by Brazil (55%). Confused yet?
The irony is that a reliable cause of a low gini coefficient is, quite simply, poverty. It is further true that a leading cause of the world's poverty has been communism. The now-collapsed communist bloc once explicitly aimed for a perfectly equal distribution of income. There's no more irony in the fact that much of the world's present economic malaise had its roots in the redistributionist policies of Western welfare states. See where America's attempts to promote "affordable housing" by encouraging (and even underwriting) cheap credit got them.
Winston Churchill was remarkably perceptive when he said capitalism is the unequal sharing of blessings, and communism is the equal sharing of misery. Looked at it this way, striving for income equality is at the very least dangerous.
To reduce a gini coefficient, it is not enough to make the poor richer. You also have to stop the rich from doing the same. This is unlikely to happen naturally, of course. If both were to become, say, 10% richer – in terms of actual purchasing power – you'd think that would be cause for celebration. No, sir. That would push the gini coefficient up, and the left would pretend something really bad just happened.
Many countries that differ greatly in all other respects share a similar gini coefficient. This suggests that inequality is a poor determinant of, well, anything.
What should matter is the degree of poverty of the poor, in real terms. Can people, in their own countries, afford at least the basic needs of a decent life, such as food, water, basic healthcare, a roof over their heads, sanitation, and perhaps some schooling?
Some dangerous communists among my correspondents, not convinced that it matters how poor the poor are, have argued that jealousy among the poor threatens social instability, which is why income equality is desirable. Frankly, this doesn't sound so much like an economic theory as a trite pop-psychology explanation for a counter-intuitive point of view.
That the gap between rich and poor is growing is an oft-repeated "fact". But is it true? That depends entirely upon whom you ask.
The statistic on which the claim is based could be very wrong. It compares GDP per capita on an exchange-rate basis that does not take into account purchasing power. If you do take into account purchasing power parity, global inequality appears to have declined steadily since 1970.
A thorough review of the literature (PDF) conducted by Sudhir Anand and Paul Segal of Oxford University finds it strewn with opaque methodologies that reach contradicting conclusions. If you can't even figure out whether income inequality is rising or declining, how can you hold forth about its injurious social impact?
A more plausible explanation for social discontent, where it exists, is the loss of hope.
If the poor do not believe a prosperous future is within their reach, they are more likely to consider violent means to change their fortunes.
Such a feeling of powerlessness depends on many factors. As Rosling points out in his talks, there are many dimensions to development. Some are objectives – such as human rights, a healthy environment, good health and fulfilling culture – and others are means to reach them – such as the rule of law, good governance, conditions for economic growth, and decent education. Only when the means of development are absent, do people lose hope in their ability to reach those goals. None of these means to development can be provided by punishing success, encouraging skilled people to leave, or redistributing insufficient resources.
Therefore, the New Growth Path proposed by the minister for economic development, Ebrahim Patel, is founded on a fundamental flaw: thinking that income inequality is a problem the government ought to address. Never mind how he proposes doing so. Salary caps and wage controls might be stupid in and of themselves, but even the reason for proposing them is wrong.
Income inequality is not a problem, even if it is growing. It's grown in most of the countries that have hauled so many millions of people out of poverty in the last few decades.
What's important is the real living standard of the poor. South Africa has made significant progress in addressing poverty, and the ANC can justifiably claim at least some credit for this. However, it should ask itself how these successes were achieved. That so many still do not have access to the basic necessities of a decent life cannot be obscured by a populist about-turn in economic policy. Only harm can come from blaming, badgering or bleeding the rich.
Patel and the ANC should not fall for the deceptive appeal of ginidiocy. DM
PS. Thanks to a regular reader I know only as @Hetairos_ on Twitter for the link to the eponymous mahogany yacht. Excuse me while I take a moment to quietly weep, and plot revolution!
- ‘The cheque is in the mail’
- WWF report proves the sustainability of growth
- WWF alarmism raises even green eyebrows
- Chernodeal: Shopping for discount nukes
- Star Trek, 50 years on: A study in sexism
- Let me mansplain statistics to you
- Free the hippies! Don’t ban their drugs!
- Which principle: precaution or progress?
- How to kill a baby, naturally!
- Miserere mei, the Ebocalypse is here!
- Advanced technology or magic?
- Tourism: Still doing okay? Let’s fix that!
- Green-left messiah desperately seeking spin-doctor
- The gun genie and its bottle
- On energy, environment, and regulatory independence
- South Africa’s schools of witchcraft and wizardry
- Grab shale gas opportunity, but avoid opportunism
- It’s about who you don’t vote for
- Free markets as a moderate position
- Voting: there’s still time to change your mind
- Green tech is cool, but not because it’s green
- How Mmusi Maimane swindled a vote out of me
- The case to elect Malema to Parliament
- The intellectual gnome, Chomsky
- If Malema isn’t Pol Pot, is he still dangerous?
- Do Malema's followers understand ‘agrarian reform’?
- Look ma, I'm defending Shell's record in Nigeria!
- Any weather is evidence for global warming
- U-turn prof finds his fracking fears are avoidable
- Ramphele et al: The world according to angry feminists
- On HIV/Aids and scary-big numbers
- Cherry-picking ‘grey literature’ on rhino horn
- 350,000 reasons to kill a black rhino
- Eight myths about libertarians
- New Year’s resolutions for other people
- All I want for Christmas is a fire pool
- In defence of Donald Trump
- My old South African flag
- Fearful Fukushima fiction fatigue
- Do we tolerate private sector corruption?
- In defence of a lion killer
- Save the rare wine and endangered craft beer
- Forever blowing bubbles: shale gas economics
- Promotion and Protection of Investment Bill: When “certainty” means “wait and see”
- This land is my land: a revolution
- The launch of SA's Libertarian Party: herding cats in time for 2014
- The African case against the ICC
- The fossil fuel subsidy myth
- Think of the little fishies!
- The hilariously misunderstood libertarian
- The sickly history of sweeteners
- Pants on fire, but they’re not mine
- The obstructionism of shale gas activists
- How mind-numbing numbers whip up fear
- Why pick on Khanyi Dhlomo?
- Half-measures will fail the rhino
- Malema’s righteous anger... and naïve confusion
- Lottery licence to go to one lucky winner
- Vaccinations: when the state stabs the people
- Do reusable shopping bags kill people?
- The long walk to serfdom
- The Karoo desperately needs development
- The trials of Samson Shuttleworth
- The girl who kicked the hornet’s nest
- Raping the discourse about rape
- Who is the reasonable man?
- Fracking: Debating a big deal
- Who needs the Queen’s English?
- Electric cars: Taking from the poor to give to the rich
- Business Licensing Bill: An indefensible defence
- Red-tape tourism
- The Big Business Bribery Bill
- On Thatcher and society, Vavi and the market
- Extinction: Let’s make up numbers and panic!
- Feeding the world is getting easier
- Stop talking shit: Build your own toilet
- Climate change is pseudo-science
- Anti-competitive competition law
- The Department of Less Government
- An open letter to President Zuma
- In defence of Kim Kardashian
- The world’s weirdest wildlife sanctuary
- Boycott calls are simple-minded
- In defence of vegans
- The population explosion implodes
- Environmental backpedalling picks up pace
- How Mangaung can help and hinder entrepreneurs
- The elusive libertarian enclave
- The Gathering: Ivo Vegter
- The hidden overemployment crisis
- The case for constructive environmentalism
- Privatise the Western Cape's shacks
- Tenders: Not open to employees or their families
- Hurricanes fuel climate sensationalism
- Next: Gross-out warnings on food
- No new deal: The failure of Zumanomics
- Benoni has a bright idea
- Was I wrong about acid rain?
- Public food gardens: Where dumb ideas thrive
- Rethinking the costly food label madness
- Give hunting a chance
- Fracking gets green light, but here's the risk
- Socialists, bless 'em, visit Cape Town
- Buy a 1Time ticket now
- Give the ANC credit where credit is due
- The myth of the competent apartheid government
- It's a disaster that 'peak oil' is not a disaster
- No Gravy: a label for sustainable business
- This lightbulb's going to blow
- Smokers? Get 'em up against the wall!
- Inflating the obesity scare
- Bring a Shotgun to School Day
- GMOs: Hacking genes to feed the world
- The hidden dangers of charity
- Fracking: the unread paper debated
- Fracking: The “U-turn” paper nobody has read
- Eco-cronyism is as dangerous as any other
- SKA: Be grateful Karoo residents didn't object
- Energy: Get cracking on fracking
- Fair trade, unfair trade-off
- Casual labour is only bad for Vavi's unions
- 'Externalities', the catch-all justification for regulation
- 'Externalities', the catch-all justification for regulation
- How do we fix our dismal education?
- Barter: the rebirth of sound money
- Rights are not entitlements
- Debunking 'limits to growth' inanities
- Tax: Why align with "most other countries"?
- Newspaper sensationalism doesn't help rhinos
- Rolling Stone reprises Gasland's fracking fantasies
- Cosatu's manipulative march move
- Why do 16 million people not constitute an economy?
- The age of smear politics
- Does fracking cause earthquakes?
- The Chinese model is morbidly obese
- Green tech: doubling down on a losing bet
- Rape, pornography, and hell's grannies
- Petrol taxes won't hurt the poor
- Jailtime mooted for bad weather warnings
- Let's ban bans, and start with CITES
- In defence of overpaid sport stars
- On the death of Kim Jong-Il
- COP17: Let's ban fire
- Cancer gets you when nothing else can
- COP17: The 'party on' agenda
- COP17: The Blue Line of Death
- New seven natural inanities
- Occupiers' anger is all that makes sense
- The Luddites and Technocrats live on
- Malema marches for economic slavery
- Profitable purveyors of pudendal prettiness
- Sense? Us?
- If they want rhino horn, let's sell them some
- "Stimulate" economy by ending telco abuses
- Executive pay makes nobody poorer
- Malema's real persecution
- Mogoeng: Lock up your daughters
- Don't mandate insurance, deregulate healthcare
- I sympathise with Malema's persecution complex
- Short selling: panicked pols ban proof of failure
- Don't blame those who saw it coming
- What's obscene about profit?
- In defence of Bombela
- Dear president Zuma, you are not above the law
- The economics of love
- Treasure the Karoo? Ban the SKA!
- Malema is right, you know
- Gautrain's PPP: political patronage profiteering
- Kumi Naidoo is no hero
- LeadSA fails to lead when it matters
- No logo means carte blanche
- The drug war: dopey but dangerous
- A response to fracking critics
- Don't vote. It's your right.
- Welcome Walmart
- If you're happy and you know it clap your hands
- Buy local, support poverty
- Ubuntu, the free-market way
- Karoo fracking scandal exposed!
- I'm ashamed for my profession
- The bill of bunkum
- Being gay: a brand new concept!
- Who's afraid of the nuclear wolf?
- The nationalisation canard
- Ogilvy should grow a spine
- The new robber barons
- A classy revolution: Why we cared
- Bombastic Bombela balks
- Liberty is more than mere democracy
- Gautrain has a law unto itself
- The irony of 'services for all'
- How to hire a hitman in SA
- Arrive alive and neurotic
- The oppression of taxis
- Protection of Information Bill and why WikiLeaks is so dangerous
- Fifa, Russia and Qatar deserve each other
- One day, we'll all hate WikiLeaks
- The cycling mafia strikes again
- What Julius got for Christmas
- Let's return the beads
- Away with fascist seat belt laws
- Tintin Mbeki in the Sudan
- How the ANC can make everyone happy
- Currency: the race to the bottom.
- Hurrah for national healthcare!
- Give Zimbabweans citizenship
- Carte Blanche has no carte blanche
- That finger-licking, lip-smacking taste
- Bomb the barbaric lot already
- Green tax: another raid is coming
- Do strikers deserve anything?
- The media will lose this battle
- Global warmism needs a fisking
- A glass half-full
- Go ahead, have a baby
- Stop the handouts - end xenophobia
- The right to fire
- FIFA's heart of darkness
- Have some self-respect
- I ordered an orange skirt
- Secretly, Match blames South Africa
- The stupendous Gautrain: a rare marvel!
- The Fifa conquistadors are coming!
- What's wrong with everyone?
- Leave poor BP alone
- The destructive power of government
- The bonsai economy
- The darkness of Africa
- Who is ripping off whom?
- Anatomy of a whitewash
- While FIFA takes over, we fight
- The pointless pretence of Earth Hour
- Ten reasons to reject climate alarmism
- Really, boycott the FIFA farce
- The climate dominoes fall
- Lessons in ethics from Dick Cheney
- Screw the consumer
- In defence of bankers
- Break the banking cartel
- Julius Malema, the walking contradiction
- Boycott FIFA
- Climate clarity
- In defence of Boney M
- Pray Copenhagen fails
- Capitalism is not unkind
- Climate fraud kills people
- Pop goes the hot air balloon
- Peace, love and schadenfreude
- The irony of the left
- Too late to cool it?
- Going cold turkey