Income Inequality: Can The Rest Of The World Emulate The US

Tyler Cowen had this graph up a couple of days ago. It’s a useful reminder amid all of our current struggles of just how wealthy a country America happens to be.

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The horizontal axis is a measure of income percentiles within each country. The number one equates to the bottom 5% of each country’s population while the number 20 represents the top 5%. The vertical axis represents the world income percentiles.

Here are his observations:

The graph shows that the bottom 5% of Brazilians are among the poorest people in the world but the top 5% are among the richest. Thus the vertical range of the curve tells us about within-country inequality.

Comparing between countries we see that the poorest 5% of Americans are among the richest people in the world (richer than nearly 70% of other people in the world). The poorest 5% of Americans, for example, are richer than the richest 5% of Indians.

I would add a couple of other thoughts.

First, while I don’t discount the problem of stagnant wage gains and growing inequality in the US, the chart does demonstrate that the country has done a fairly remarkable job of spreading wealth throughout the population.

Second, Brazil, India and China have a formidable challenge in emulating that accomplishment. Either they find a way to pull the bottom 50% or more of their populations up the ladder or they face explosive internal political divisions which will likely stall if not destroy their march forward.

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