Friday, January 17, 2014

Gini coefficient measures equality but not wealth.

Equality is against the laws of nature. There is the whale and there is the mouse, both mammals. A cheetah kills a gazelle for food and then is chased off its kill by a hyena. Even a herbivorous animal like the elephant is unaware of how many ants it crushes at every footstep as it forages. Human beings are the top predators and the only animal that preys on its own species. Thus the powerful control land, resources and finance while the poor survive by physical labor. The Gini coefficient measures the inequality in any society where zero indicates complete equality and one indicates very high inequality. It should be the effort of every government to bring down the number as close to zero as possible. This they do by taxing the rich and helping the poor through social schemes such as income support, health benefits and free education to help the poor to step up to middle class where they can control their own finances. However to distribute wealth it has to be created. The collapse of the Soviet Union, the high inflation and lack of basic commodities in oil rich Venezuela and the aggressive capitalist policies of China prove that socialism produces equality by making everyone poor. In an article " Gini Coefficient and India ", Mr Rajwade shows how Margaret Thatcher and Ronald Reagan increased inequality in the UK and the USA by destroying trade unions, reducing the role of manufacturing and deregulating financial institutions, leading to a small number of people with enormous wealth while the majority has seen no rise in living standards in over 30 years. The Gini coefficient in these countries is higher than that of India but Germany, which has a thriving manufacturing sector, and Sweden, which has an efficient social support system, have much lower coefficients. At around 68 South Africa has the highest coefficient in the world, probably because a tiny elite controls its rich mineral resources . But what is most interesting is that the coefficient of the whole world is also at around 68. Which means that the rich countries are exploiting the poorer ones. They are doing it by spending very little by manufacturing in poor countries and making huge profits by selling the finished products in their own countries. However, by destroying manufacturing in their own countries they have produced high inequality there. The only way to stop exploitation and make people equal will be by controlling population in poor countries. Our government works to keep everyone poor so that our coefficient is around 38.

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