Tag: Gini Coefficient

Declining U.S. Rankings in Important International Socio-Political Indices

There are many international rankings of socio-political characteristics of the countries of the world. Here are at least six in which the U.S. ranking is declining.[1]

Freedom of the Press Index. The U.S. ranking has declined from 41 in 2016 to 48 in 2019in this index by Reporters Without Borders. Despite the importance of freedom of press in the First Amendment to the U.S. Constitution, the U.S. this year is behind all of Europe, Australia, Canada and New Zealand as well as far below Papua New Guinea and right below Romania.

This Index is “determined by pooling the responses of experts to a questionnaire devised by RSF [Reporters Sans Borders]. This qualitative analysis is combined with quantitative data on abuses and acts of violence against journalists during the period evaluated. The criteria evaluated in the questionnaire are pluralism, media independence, media environment and self-censorship, legislative framework, transparency, and the quality of the infrastructure that supports the production of news and information.”

Human Development Index. This index from the U.N. measures life expectancy, education and per capita income. For the most recent year (2018), the U.S. is 13th behind most of our European friends, Australia and Canada.

Level of Corruption Index. Compiled by Transparency International, this Index for 2018 (the most recent year) has the U.S. as 22nd in 2018 with a score of 71/100 versus 18th in 2016. The U.S. is far below Denmark, Sweden, Australia and Canada as well as below Estonia and just a little less corrupt than the United Arab Emirates and Uruguay.

The U.S. along with Brazil and the Czech Republic was listed as a “country to watch” in 2019. According to Transparency International, “With a score of 71, the United States lost four points since last year, dropping out of the top 20 countries on the CPI for the first time since 2011. The low score comes at a time when the US is experiencing threats to its system of checks and balances as well as an erosion of ethical norms at the highest levels of power.”

Income Inequality Index.  The Gini Coefficient measures perfect equality as 0 and perfect inequality as 1. In the mid-1970s the U.S. had a coefficient of 0.406 and in the mid-2000s as 0.486. Other reports of this Index by the CIA had the U.S. at 39th with a score of 0.450 (2017) while the World Bank said 59th with 0.410 (2013).

Global Peace Index. This Index is produced by the Institute for Economics and Peace (IEP) as the world’s leading measure of global peacefulness. This report presents the most comprehensive data-driven analysis to date on peace, its economic value, trends, and how to develop peaceful societies.” From a ranking of 124th in 2018, the U.S. has declined to 128th out of 163 in 2019.

Social Progress Index. This ranks countries by their average score for scores for three broad dimensions: Basic Human Needs, Foundations of Wellbeing, and Opportunity. For 2019 the U.S. had a score of 84.78 for a ranking of 25 out of 146 countries after declining since 2014. All of the G7 countries are ahead of the U.S. in health and education.

Conclusion

These indices are examples of contemporary efforts to reduce complex socio-political phenomena to digital numbers and thereby enable the construction of tables and rankings. Theoretically one could make a detailed analysis of the assumptions and sources of the data used to make these tables and rankings in order to make an informed conclusion about the validity of the indices. But the overall conclusion of these indices that the U.S. is not Number One would be shocking to many Americans.

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[1] Kennedy, The U.S. Is Falling, World View (Summer 2019) ;Reporters without Borders, World Press Freedom 2019; UN Development Programme, Human Development Indices and Indicators (2018) Transparency International, Corruption Perceptions Index 2018 ;World Bank, GINI Index (World Bank Estimate)–Country Rankings; CIA, Distribution of Family Income—GINI Index ;Institute for Economic and Peace, Peace Index 2019; Social Progress Imperative, Social Progress Index (2018); Kristof, Keynote Address, American Oxonian (Winter/Spring 2018).

 

Steven Pinker’s Analysis of Wealth and Inequality

“The world has made spectacular progress in every single measure of human well-being,” as noted in a prior post, is the cheery synopsis of the new book, “Enlightenment NOW: The Case for Reason, Science, Humanism, and Progress “ (p. 52)  by Harvard University’s Johnston Family Professor of Psychology, Steven Pinker.

Two of the measures that he examines are wealth (Ch. 8) and inequality (Ch. 9), both of which illustrate his overall analysis over long periods of time and for the whole world with unusual sets of data and graphs.

Wealth

For wealth, he starts with the proposition that “wealth is created . . . primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor . . . [and] that we can figure out how to make more of it” (p. 80).

His graph of Gross World Product, 1-2015 (p. 81) shows virtually no change from year 1 through the middle of the 19th century and then virtually a straight-upward line through 2015. This “Great Escape” from poverty was due to “the application of science to the improvement of material life,” “the development of institutions that lubricated the exchange of goods, services, and ideas” and “a change in values” or “endorsement of bourgeois virtue” (pp. 80-85).

The next graph–GDP per capita, 1600-2015 (p. 85)—shows, Pinker argues, that “starting in the late 20th century, poor countries have been escaping from poverty in their turn,” thereby converting the Great Escape to the Great Convergence. This is also shown, according to Pinker, by data and graphs of World income distribution, 1800, 1975, and 2015; Extreme poverty (proportion of world population), 1820-2015; and Extreme poverty (number), 1820-2015 (pp. 86-88).

For Pinker, the following are the three major causes of this Great Convergence:

  1. The “decline of communism (together with intrusive socialism).” Market “economies can generate wealth prodigiously while totalitarian planned economies impose scarcity, stagnation, and often famine. Market economies, in addition to reaping the benefits of specialization and providing incentives for people to produce things that other people want, solve the problem of coordinating the efforts of hundreds of millions of people by using prices to propagate information about need and availability far and wide.” Moreover, many market economies also “invested in education, public health, infrastructure, and agricultural and job training, together with social insurance and poverty-reduction programs.” (Pp. 90-91.)[1]
  2. Better leadership in developing countries (p. 91).
  3. The end of the Cold War (p. 91).
  4. Globalization through an explosion of international trade (p. 92).
  5. Advances in science and technology (pp. 94-96).

Inequality

The initial premise of this chapter is that unlike “health, prosperity, knowledge, safety, peace “ and certain other factors, “economic inequality is not a fundamental component of well-being.” The contrary view confuses inequality with poverty. (Pp. 98-102.)

Here Pinker asserts that inequality comes with modernity and refers to the Gini Coefficient as the usual measure of economic inequality with 0, when everyone has the same as everyone else and 1, when one person has everything and everyone else has nothing.  (Pp. 98, 102.)

He then displays three graphs of the Gini Coefficient: International inequality, 1820-2013 (population weighted and unweighted), Global inequality, 1820-2011 and Inequality, UK and US, 1688-2013. These graphs demonstrate, he says, that “inequality in the world is declining.” (Pp. 98, 103-06.) An historian, Walter Scheidel, is said to have identified the Four Horsemen of Leveling: mass-mobilization warfare, transformative revolution, state collapse and lethal pandemics by obliterating wealth and killing large numbers of workers. (Pp. 106-07.)

Moreover, “modern societies now devote a substantial chunk of their wealth to health, education, pensions, and income support (the Egalitarian Revolution).” This has “redefined the mission of government to include such social spending to inoculate citizens against the appeal of communism and fascism, to benefit the entire society, to indemnify citizens against misfortunes against which they can’t or won’t insure themselves and to assuage the modern conscience.” (Pp. 107-08.)

The conclusion from Pinker on this issue is the following:

  • “As globalization and technology have lifted billions out of poverty and created a global middle class, international and global inequality have decreased, at the same time that they enrich elites whose analytical, creative , or financial impact has global reach. The fortunes of the lower classes in developed countries have not improved nearly as much, but they have improved . . . The improvements are enhanced by social spending, and by the falling cost and rising quality of the things that people want. In some ways the world has become less equal, but in more ways the world’s people have become better off.” (P. 120.)

Conclusion

The overall thesis of this book– The world has made spectacular progress in every single measure of human well-being—is very attractive. What are the counter arguments?

The above summary of Professor Pinker’s analysis of wealth and inequality raises at least the following questions:

  • Many of the data sets used by Pinker are not well known. Therefore, do they accurately and fairly depict what they purport to depict?
  • It seems valid that “wealth is created . . . primarily by knowledge and cooperation: networks of people arrange matter into improbable but useful configurations and combine the fruits of their ingenuity and labor . . . [and] that we can figure out how to make more of it.” Any legitimate objections to same?
  • Is it valid to state that “in the late 20th century, poor countries have been escaping from poverty in their turn,” thereby converting the Great Escape to the Great Convergence?
  • Are Pinker’s reasons for the Great Convergence valid?
  • Is economic inequality not a fundamental component of wellbeing?
  • Is the Gini Coefficient a valid measure of inequality?
  • Are the major causes of Leveling or reduced inequality these factors: mass-mobilization warfare, transformative revolution, state collapse and lethal pandemics?

Comments from others who know more about these data sets and analyses are earnestly solicited.

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[1] Right now we are seeing Cuba struggle with whether and how it will modify its communist economic system to allow greater private enterprise. See Economic Challenges Facing Cuba’s New President, dwkcommentaries.com (April 5, 2018).