Inequality reaches a record high in the US, but which countries are worst off?

Five years after Lehman Brother's collapse, one group has fared spectacularly well: the richest 1 per cent. The world's superpower is now worryingly dependent on the financial fortunes of just 1.35m taxpayers. But where in the world is inequality the grea

It’s now almost five years since Lehman Brothers collapsed, precipitating a global financial crisis. In the US, one group has fared significantly better than the rest as the country struggles out of recession – the richest 1 per cent.

Recent data from the Internal Revenue Service shows that the incomes of the richest 1 per cent of Americans increased by 31 per cent between 2009 and 2012, while the incomes of the bottom 99 per cent grew less than 1 per cent. There’s a good Economist chart to illustrate this here. The share of national income flowing to the richest 1 per cent has now reached a record high of 19.3 per cent.

So how does this compare internationally? The UK has little reason to feel smug. According to a report this February by the Resolution Foundation, the richest 1 per cent of Britons own 10 per cent of national income.

The Organisation for Economic Cooperation and Development (OECD) warned earlier this year that inequality was increasing across its 34 member countries. It has rated its members according to levels of inequality using the Gini coefficient (which measures the extent to which the distribution of income varies from perfect equality.) The UK ranks 28th out of 34 countries, and the US fares even worse at 31. Only Turkey, Mexico and Chile are more unequal than the US. Meanwhile Slovenia, Denmark and Norway are three OECD nations with the most equal income distribution. You can find the full list here.

The Gini coefficient can’t distinguish between different distributions of inequality, in that it doesn’t tell you if inequality is high because the top 1 per cent hold a huge proportion of national wealth, or if the majority of the country’s wealth is held by the top 25 per cent. The Gini coefficient also depends on up-to-date GDP data, which is especially hard to extract from developing countries. This can sometimes make comparison hard.

The CIA world fact book, for instance, compares 136 countries in terms of inequality, but some of the data it uses is over 15 years old. Here the US ranked 95th out of 136 in terms of inequality, with the UK in 76th place, and Sweden, Slovenia and Montenegro topping the list. The most unequal countries were Lesotho, South Africa and Botswana.

One conclusion that can be drawn is that both the UK and the US may be wealthy nations, but compared to their wealthy peers they stand out because of the wide gap between rich and poor. This has all kinds of implications. Rising inequality raises moral questions about fairness and social justice, and some researchers believe that inequality holds back economic growth. There’s also a worry that as the economic power of the richest 1 per cent increases, their political power increases with it.

In the US, for instance, the richest 1 per cent pay 37.4 per cent of income taxes – leaving the world’s superpower worryingly dependent on the financial fortune of just 1.35 million tax payers. Similarly in the UK, 30 per cent of government tax revenue comes from just 308,000 earners in 2012.

A homeless man rests along Wall Street in front of the New York Stock Exchange. Photo: Getty

Sophie McBain is a freelance writer based in Cairo. She was previously an assistant editor at the New Statesman.

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When the world seems dark and terrifying, we shouldn’t feel ashamed to dream of Utopia

Right now, the future seems dark and frightening and it is precisely now that we must continue to imagine other worlds and then plot ways to get there.

There are many cruel and routine lies we tell to children but perhaps the most indicative is this: if you tell anyone your wish, it won’t come true. This parable was probably invented by parents trying to avoid the trauma of not being able to give their children what they want but we carry it with us to adulthood, when it is repeated to us by our leaders. Don’t tell anyone the sort of world you would like to see – at best you’ll be disappointed and at worst you’ll be arrested.

“We want more.” This week, exhausted by the news, I dragged myself out of the house to a book fair, where I came across a new collection of utopian fiction by radical women. That was the first line and it stopped my breath in my throat. When basic survival seems like a stretch goal, caught as we are between the rich and the rising seas, hope feels like an unaffordable luxury. The precise words I used to the bookseller were, “Shut up and take my money.”

There has never been a more urgent time for utopian ideas, precisely because the concept of a better world has never felt further away. Right now, world leaders are deciding how many cities are going to sink before something is done to reduce carbon emissions. They are meeting in Paris, which very recently saw the opening scene of a new act in everyone’s least favourite dramatic franchise, “War in the Middle East”. We seem to be living in a dystopian trilogy scripted by a sadistic young-adult author and I very much hope that our plucky young heroes show up to save the day soon, even if there’s a clunky love triangle involved.

Dystopias are easy to construct: to paraphrase the novelist Kim Stanley Robinson, you might as well pick five news headlines at random, make a collage and there’s your plot. Utopias are harder. Utopias require that we do the difficult, necessary work of envisioning a better world. This is why imagination is the first, best weapon of radicals and progressives.

Utopian stories existed long before the word was coined by Thomas More in the 16th century to mean an ideal society, or “no-place”. Plato’s Republic has some claim to being the first but there are as many Utopias as there are communities that dreamed of a better life. The greatest age of utopian fiction was the turn of the last century and it is no accident that the early 21st century is a great age of dystopian fiction. The ideology of late-capitalist patriarchy has become so all-encompassing that it no longer looks like ideology. Fredric Jameson observed, “It is easier to imagine the end of the world than the end of capitalism” – and the reason for that is not that capitalism is the inevitable destiny of humankind but that we have spent our lives being told that even thinking about any other future makes us ridiculous.

Most leftists do have an idea of the sort of world they would prefer to see. We don’t say what we want for the same reason that we were told as children not to tell anyone else what we wished for – because it’ll be awkward and painful if we don’t get it.

When I think about Utopia, I think about my grandmother. My mother’s mother left school at 13, lived through the Maltese blockade and was obliged by religion and circumstance to marry young, suffocate all her dreams of education and adventure and spend her life taking care of a husband and six kids. Half a century later, I can choose when and whether to have children. I can choose to live independently from men. I regularly travel alone and there are no legal restrictions on getting any job I’m suited for.

The kind of independence many women my age can enjoy would have been almost unimaginable half a century ago – but somebody did imagine it and that is why we got here. A great many somebodies, over centuries of struggle and technological advancement, asked how the world could be different for women and set about making it happen.

Exactly a century ago, Charlotte Perkins Gilman’s novel Herland envisioned a society of women in which production was communal, motherhood was valued, relationships were equal and rape and violence were unknown. Reading Herland today, it is striking that for every proposition that came true – women are now allowed to divorce their husbands and participate fully in political life – there are two more that seem as far-fetched now as they did in 1915. Motherhood is still not valued as work. Women are still expected to organise our lives around the threat of sexual violence. But all that can change as long as we continue to ask for more.

For as long as I have been a feminist, I have been asked – usually by grumbling men – when, exactly, we will be satisfied; when women and girls will decide we have enough. The answer is contained in the question: because the instant that we do decide that we are satisfied, that there can never be a better world than this, is the instant that the future shuts down and change becomes impossible.

Utopia is the search for Utopia. It is the no-place by whose light you plot a course through a harsh and unnavigable present. By the time you reach the horizon, it is no longer the horizon but that doesn’t mean you stop going forwards.

Right now, the future seems dark and frightening and it is precisely now that we must continue to imagine other worlds and then plot ways to get there. In the midst of multiple global crises, the only truly ridiculous proposition is that things are going to stay exactly the same.

Human societies are going to change beyond recognition and from the conference table to the streets, our best shot at surviving that change starts when we have the courage to make impossible demands – to face down ridicule and say, “We want more.”

Laurie Penny is a contributing editor to the New Statesman. She is the author of five books, most recently Unspeakable Things.

This article first appeared in the 26 November 2015 issue of the New Statesman, Terror vs the State