Continuing from my earlier post, I wanted to elaborate upon the point I made that income inequality doesn’t equal standard of living. I also wanted to point out the difference between equality and quality.
According to the OECD, the US has greater income inequality than the UK. That shouldn’t come as a surprise to anyone. Who, then, would you think has the greater standard of living? In which country would you think the average person would be better off? If you guessed the UK, you’d be wrong. If the UK were a US state, it’d be the second poorest in the nation, behind only Mississippi.
“OK, Jon, but that’s a single data point! You can’t draw any conclusions off of that!” you cry. And you’d be right. Only a total fool would draw a conclusion from a single data point. So, let’s look at the entire OECD. The poorest in America live better than the poorest in every country but Canada, Australia, and Sweden, and they live better than the richest in Russia, Italy, Israel, Portugal, Brazil, Turkey, and Mexico.
Income inequality doesn’t matter. It is not a measurement of anything other than how income is distributed. It’s a useful political tool, but as an economic measurement it is about as useful as a blind valet.