The Ambiguity Of Income Inequality

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The Ambiguity of Income Inequality Pundits say that income inequality has been one of the greatest downturns of our country’s growth and development, however a puzzle exists where economics and politics meet that does not make the solution to income inequality easy to find. Political leaders, economists, and bankers all agree that policies have appealed more to the interests of the governing class than those of the ordinary people. The comments surrounding this topic mostly stem from the strong shift of wealth distribution over the last few decades. Figures from the Economic Policy Institute demonstrate that the share of income accumulating by the top 1 percent of the United States increased from 9 percent in 1978 to 26 percent in 2011.…show more content…
The closer to 1 a country is the more unevenly the income is distributed in that country. According to the CIA’s public database, the Gini coefficient of the U.S. was .40 in 1997. This number was not too bad compared to Brazil’s .59 at the time (the world’s highest). By way of contrast, a decade later Brazil experienced high economic growth and managed to cut its Gini coefficient by nearly a tenth while the U.S. increased to .45 during the 2007 year. The trend continued to rise with the U.S. reaching new heights of .48 in 2014 according to the U.S. Census Bureau. However, the Gini is only a snapshot of a single aspect of an economy. like any measuring index the Gini coefficient has its flaws. Absolute and relative levels of inequality are tough to measure, which is why income inequality is a convoluted topic. For instance, a hypothetical country with three people of yearly incomes of $650, $1500 and $10000 would be counted as having the same level of inequality with a three person country with incomes of $65,000, $150,000 and $1,000,000. The oversimplification of measuring income inequality is one of the biggest drawbacks of the Gini coefficient. Numbers can create a hyperbolic perception. My dollar may stretch further in mainland China in terms of purchasing power but that alone is not indicative of a better economy. While I may be able to rent a decent hostel for a weekend stay in Beijing, catch a bus to the
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