Paul R. Gregory's writings on Russia, the world economy, and other matters that he finds of interest.
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Sunday, February 26, 2012
Want More "Fairness?" Look to Europe's Basket Cases
President Obama calls for “social justice.” He agrees with the motley “occupiers” that the One Percent gets almost everything. Reagan and the Bush tax cuts burdened us with a tinderbox of inequality, he lectures us. The rich should pay their fair share. “Enough is enough.” We must create a “just” society that guarantees the poor a dignified life.
In a word, we must become like Europe, for whom Obama expresses open admiration.
Obama apparently does not know that the European countries that have become “fairer” over the past two decades are now basket cases of debt, social unrest, and an unaffordable welfare state. Those European countries that have had the discipline to become “less fair,” are, in the words of a sympathetic liberal columnist (The GOP scrambles for a bogeyman) “doing well economically, both in absolute terms and in contrast to us.”
We should be like Germany or Sweden but not like Greece, I guess. But Germany and Sweden are recovering from too much of the social justice that Obama wishes to impose on us, while Greece is falling apart in a sea of equality and justice.
Buried in OECD statistics is an innocuous table entitled “Gini coefficients (after taxes and transfers).” Gini coefficients are the most widely used measure of income inequality. A zero Gini means everyone has the same income. A unitary Gini means one family has all the income. Ginis therefore fall between zero and one. The higher the number, the greater the inequality.
The table shows the percentage increase (or decrease) in income equality for European countriesafter redistributionby the state through taxes and benefits. (The more positive the number, the greater the increase in inequality. Negative numbers show a reduction in inequality, as Obama would like.)