Income Inequality Not What OWS-Loving Media Claim
If you listen to Occupy Wall Street-loving media members, you'd think income inequality in America is worse than anywhere else in the world.
Quite the contrary, a chart from World Bank economist Branko Milanovic's book "The Haves and the Have-Nots” paints an entirely different picture:

This was reprinted by New York Times economic writer Catherine Rampell in January with an explanation:
Here the population of each country is divided into 20 equally-sized income groups, ranked by their household per-capita income. These are called “ventiles,” as you can see on the horizontal axis, and each “ventile” translates to a cluster of five percentiles.
The household income numbers are all converted into international dollars adjusted for equal purchasing power, since the cost of goods varies from country to country. In other words, the chart adjusts for the cost of living in different countries, so we are looking at consistent living standards worldwide.
Contrary to the current media meme, when adjusted for international dollars as well as cost and standard of living, there is far greater income inequality in Brazil, China, and India.
Frankly, it's not even close (emphasis added throughout):
Notice how the entire line for the United States resides in the top portion of the graph? That’s because the entire country is relatively rich. In fact, America’s bottom ventile is still richer than most of the world: That is, the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants.
That deserves a replay for those whining on Wall Street and the ignoramuses supporting them: "the typical person in the bottom 5 percent of the American income distribution is still richer than 68 percent of the world’s inhabitants."
Rampell further observed in her January book review:
The typical person in the top 5 percent of the Indian population, for example, makes the same as or less than the typical person in the bottom 5 percent of the American population. That’s right: America’s poorest are, on average, richer than India’s richest — extravagant Mumbai mansions notwithstanding.
But there's more:
At a very basic, agrarian level of development, Milanovic explains, people’s incomes are relatively equal; everyone is living at or close to subsistence level. But as more advanced technologies become available and enable workers to differentiate their skills, a gulf between rich and poor becomes possible.
Doesn't that perfectly explain what's happened in America the past 30 years?
The protesters and their media minions want to blame all the income inequality on Reaganomics, Wall Street, and the tax code. Yet radical changes in technology the past three decades allowed a minority of highly-ambitious, creative entrepreneurs to acquire riches most can only dream of.
The first and third wealthiest people in America - Bill Gates and Larry Ellison - are perfect examples of this.
It would actually would be fascinating to find out how many of the nation's millionaires made the bulk of their fortunes during the high-tech boom of the '90s.
Yet this principle is not just true of folks specifically in the high-tech or bio-tech arenas, but on Wall Street as well. The kind of trading most hedge fund managers now engage in wouldn't be possible without computers and the internet.
As such, it is our very advancement as a society that has so enriched the most successful among us.
As Rampell noted in her review, "The possibility of unequal economic outcomes motivates people to work harder."
Indeed, but I would also argue that the existence of various entitlement programs acts as a demotivator.
Social Security and Medicare allow Americans to make less during their income earning years and still be able to retire. Most people plan for their retirement with projections of exactly what these programs will provide for them. In their absence, people would have to earn far more money in their income earning years to even consider retirement.
On the other end of the spectrum, welfare and food stamps allow those at the bottom to subsist without finding work, while unemployment insurance and its extensions allow the jobless to survive without the urgency they would have without it.
Add it all up, and there's a lot more to income inequality both here and abroad than our media care to divulge.
Why might that be?

(H/T @JonHenke)
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Comments
a speciic example of how freer trade made all in a very
Submitted by Paarl on Tue, 10/18/2011 - 7:02pm.
specialized machine shop much wealthier but the owners even more so....a natural occurance but ALL are better off...
I ran a trucking firm for 15 yrs here in NJ..One customer was a very high tech machining shop that did all kinds of magic with steels and titanium and aluminum for very high end mnfrs like United Tech and Sikorsky and GE etc...they built repaired high end machines to specificcations on very short notice as they were generally important cogs on assembly lines for things like jet engines.....
in the early 1990s this machine shop had 15 employees all very skilled...97% of their business was stateside and Canada....in the ensuing years of growing international trade trade till the recent downturn of 2008 their revenue grew 20/22: per year....and their margins fattened as well as they expanded into Europe and SE Asia through the promotion of trade and the great usefullness of the internet...by 2008 their staff of skilled workers had increased by 4 times and the average income was
125% higher than in 1994....the two owners income had grown by a higher percentage than their workers but when you summed the income of all the employees the employees earned a much greater sum than the owners....but the relative income of an owner to an individual employee had grown wider....yet ALL had significant real income growth....this is what should happen under free trade
just think and compare the owners of a national department chain in Denmark to the Walmart family....who is going to earn more (pre EU I am speaking)....since the EU is now one market there is the great opportunity for the Danish dept store owner to create a continental wide chain and bring the corporations earning to the Walmart level over time....and yes the relative income of the Danish dept store owner to the average Danish worker will grow larger and wider....
Larger markets do allow the owners of capital to increase their wealth faster than small markets with smaller owners of capital....just compare Rush Limbaugh to the greatest local talkshow gabber..no matter how good he is ...he cannot earn as much as Limbaugh....
The basic difficulty with free trade and the theory of comparative advantage is that the economic gains for the consumer are diffuse throughout the economy with products cheaper here...better there...etc...BUT the costs of free trade tend to concentrate on industries and geographical locations that do lose jobs and opportunities to overseas competition and migration of P & E...
certainly the benefits outweigh the costs in strict economic/financial terms but the costs are very concentrated and easily identified..
Hope this run on treatise did not cause mass narcolepsy
Paarl of Rhodesia
Not sleepy at all.
Submitted by JLin on Wed, 10/19/2011 - 11:16am.
Excellent post.
The best antidote to leftie
Submitted by robert108 on Tue, 10/18/2011 - 8:01pm.
The best antidote to leftie propaganda is the actual numbers.
America is the best nation in the world!
Submitted by GW on Wed, 10/19/2011 - 9:04am.
Our POOR people have cell phones.
I'm confused
Submitted by JLin on Wed, 10/19/2011 - 11:21am.
The graph suggests that the poorest Americans are wealthier that the richest Indians? Am I reading that right?
Here you go JLin*
Submitted by cajun2 on Wed, 10/19/2011 - 12:05pm.
Maybe this article will help you break down the graph
Well, at least we agree
Submitted by coin of the realm on Wed, 10/19/2011 - 8:39pm.
that the gap is an issue.
Give me control of a nation's money and I care not who makes her laws. Mayer Amschel Rothschild