Wednesday, August 1, 2018

DIviding the national pot - gap between rich and poor.

68% of the U.S. population lives literally form paycheque to paycheque. If they lose their job there are no savings to live off.  You may say that is a rather dismal state of affairs.  But in many ways this is a lot better than what wealth distribution was in the world at the beginning of the 20th Century.  Here is a statistical representation of GDP distribution. On the vertical axis is a representation of the Gini-coefficient. The closer the coefficient is to 0 the more equal the GDP distribution is and the closer it is to 1, the more wealth is concentrated in few hands. This data is based on 173 regions (not countries) in Europe.
From 1900 until 1980 all regions showed a similar trend – a increasingly equal distribution of wealth.  Since 1980 the Gini-GDP, as this stat is called has slightly, but surely increased, i.e. more wealth in less hands. But compared to the early 1900s the middle class owns today a lot more of GDP income.  To say that the ‘rich get richer’ in terms of income distribution is not correct. Still 68% of Americans only getting by as long as they receive a paycheque is depressing.  The thought that a similar percentage of Canada’s Seniors, i.e. 68%, just depend on Canada Pension is to say it nicely ‘very depressing’. No wonder so few can barely afford to live in a nursing home or an assisted senior living facility.

I have some more revealing statistics for the OECD about wealth or better asset distribution. Have a look at the tables below. Canada is one of the worlds most egalitarian countries in terms of wealth distribution while the U.S. is least, i.e. the largest gap between rich and poor. You think Europe is much more socialist but look at the Netherlands, my native country!  It is second after the U.S.!

In fact, yes in the U.S. 80% of the wealth is owned by 10% of its households and in the Netherlands,  it is 68% but look at the lowermost 40% in the U.S. they own NOTHING while in my ‘socialist and bureaucratic’ motherland the lower 40% OWE close to 7% of that country’s wealth to the top 60%
That is in fact a nearly as large a gap than in the U.S.  I guess, high taxes and lots of government interference does not necessarily mean equal distribution of wealth.  In Canada the top 10% owns just over 50% (51.1%) percent and the lower 40% owns a whopping 3.4% that leaves  around 45% for the middle class?


Statistics are dangerous things, yet they may shed surprising light on things. To end on a political note.  That we have currently a silver-spooned liberal government that apparently favors interfering in our personal life does not mean that they favor a more egalitarian distribution of income!  Just look at my native country: the Netherlands.  You may not consider that corruption, but those with their snouts closest to the public trough do tend to enrich themselves at the expense of the rest of the population – I mean both left and right - lets never forget that.  I recently heard a statistics about trust in U.S. government by Americans which was in the 1960s well over 60%. I don’t think that this is the case in today’s Trump era - I checked it: 19%.  According to EKOS, 44% of Canadians trust our government - Ouch! 

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