. . .the United States also does less than most other rich democracies to redistribute income from the rich to the poor.
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There is little question that it is bad for one’s health to be poor. Americans at the 95th income percentile or higher can expect to live nine years longer than those at the 10th percentile or lower.
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As further evidence of a correlation between inequality and consumption culture, he points to national spending on advertising as a percentage of gross domestic product (GDP). The top-ranked countries on this measure, according to United Nations (UN) data, are Colombia, Brazil, and Venezuela—countries with inequality levels among the highest in the world—but also Australia, New Zealand, the United Kingdom (U.K.), and the United States, countries with higher inequality than similarly prosperous peers.
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Japan comes second only to Denmark in terms of equal-income distribution among its inhabitants, according to United Nations data. And life expectancy at birth for the Japanese is 82.3 years, compared to Americans’ 77.9 years, even though per-capita GDP in the United States is about $10,000 more than in Japan.
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One widely used measure of inequality is the Gini coefficient, named for Italian statistician Corrado Gini, who first articulated the concept in 1912. The coefficient measures income distribution on a scale from zero (where income is perfectly equally distributed among all members of a society) to one (where a single person possesses all the income). For the United States, the Gini coefficient has risen from .35 in 1965 to .44 today. On the per-capita GDP scale, our neighbors are Sweden, Switzerland, and the U.K.; on the Gini scale, our neighbors include Sri Lanka, Mali, and Russia.
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In 1965, the average salary for a CEO of a major U.S. company was 25 times the salary of the average worker. Today, the average CEO’s pay is more than 250 times the average worker’s. At the same time, the government is doing less to redistribute income than it has at times in the past. The current top marginal tax rate—35 percent—is not the lowest it’s been—there was no federal income tax at all until 1913—but it is far lower than the 91-percent tax levied on top earners from 1951 to 1963. Meanwhile, forces such as immigration and trade policy have put pressure on wages at the bottom.
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Americans and Europeans also tend to disagree about the causes of poverty. In a different survey—the World Values Survey, including 40 countries—American respondents were much more likely than European respondents (71 percent versus 40 percent) to agree with the statement that the poor could escape poverty if they worked hard enough. Conversely, 54 percent of European respondents, but only 30 percent of American respondents, agreed with the statement that luck determines income.
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As American neighborhoods have become more integrated along racial lines, they have become more segregated along income lines and, some research indicates, with regard to all manner of other factors, including political and religious beliefs. (The Big Sort, a new book by journalist Bill Bishop, examines this evidence.) What’s more, even along racial lines, American society is still far from integrated. Sociologist David R. Williams, Norman professor of public health and professor of African and African American studies, has examined racial discrimination and health in the United States and elsewhere, including South Africa, where in 1991, under apartheid, the “segregation index” was 90, meaning that 90 percent of blacks would have had to move to make the distribution even. “In the year 2000,” says Williams, “in most of America’s larger cities—New York City, Detroit, Chicago, Milwaukee—the segregation index was over 80.” Only slightly lower, that is, than under legally sanctioned apartheid.
When a society is starkly divided along racial or ethnic lines, the affluent are less likely to take care of the poor, Glaeser and Alesina have found. Internationally, welfare systems are least generous in countries that are the most ethnically heterogeneous. Those U.S. states with the largest black populations have the least generous welfare systems. And in a nationwide study of people’s preferences for redistribution, Erzo F.P. Luttmer, associate professor of public policy at the Harvard Kennedy School (HKS), found strong evidence for racial loyalty: people who lived near poor people of the same race were likely to support redistribution, and people who lived near poor people of a different race were less likely to do so. Differences in skin color seem to encourage the wealthy to view the poor as fundamentally different, serving as a visual cue against thinking, “There but for the grace of God go I.”
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Mean household income in 2004 was $60,528, but median household income was only $43,389. More than half of households make less money than average, so, broadly speaking, more than half of voters should favor policies that redistribute income from the top down. Instead, though, nations—and individual states—with high inequality levels tend to favor policies that allow the affluent to hang onto their money.
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Previous research has shown that voter turnout is low, particularly at the low end of the income spectrum, in societies with high inequality. Again, this is counterintuitive: in unequal places, poor people unhappy with government policies might be expected to turn out en masse to vote, but instead they stay home. Campaign contributions may provide the missing link.
Candidates, naturally, target voters with money because they need funds for their campaigns. And since the poor gravitate toward parties that favor redistribution and the wealthy align themselves with parties that do not, campaign contributions end up benefiting primarily parties and candidates whose platforms do not include redistribution. By the time the election comes around, the only candidates left in the race are those who’ve shaped their platforms to maximize fundraising; poor voters, says Campante, have already been left out. In a study of campaign contributions in the 2000 U.S. presidential election, he found that higher income inequality at the county level was associated with fewer people contributing to campaigns, but contributing a larger amount on average—so the haves participated, and the have-nots did not.
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“Adults’ economic status is positively correlated with their parents’ economic status in every society for which we have data,” write Christopher Jencks and Laura Tach, a doctoral student in sociology and social policy, “but no democratic society is entirely comfortable with this fact.” The prospect of upward mobility forms the very bedrock of the American dream, but analyses indicate that intergenerational mobility is no higher in the United States than in other developed democracies. In fact, a recent Brookings Institution report cites findings that intergenerational mobility is actually significantly higher in Norway, Finland, and Denmark—low-inequality countries where birth should be destiny if inequality, as some argue, fuels mobility.
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For most of the twentieth century, the average American exceeded his parents’ education level by a significant margin: between 1900 and 1975, the average American’s educational attainment grew by 6.2 years, or about 10 months per decade. Then, between 1975 and 1990, the authors find that there was “almost no increase at all”; from 1990 to 2000, there was a gain of just six months. Although college graduation rates for women are still rising steadily, for men they have barely increased since the days of the Vietnam draft.
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