Friday, September 04, 2015 08:04am
North Adams, MA now: 70 °   
Send news, tips, press releases and questions to info@iBerkshires.com
The Berkshires online guide to events, news and Berkshire County community information.
LOG IN | REGISTER NOW   

Home About Archives RSS Feed
The Independent Investor: The Next Third World Nation
By Bill Schmick On: 03:57PM / Thursday October 18, 2012

Here's a great cocktail party question. What do Cote d'Ivoire, Uruguay and the United States have in common? Answer: all three nations have about the same level of income inequality among its citizens. For those who didn't know it, America now ranks lowest of all developed nations in terms of income distribution.

After my last column on this subject, I realized that when it comes to measuring the wealth gap, rarely do we Americans compare ourselves to other nations. Instead, we check out what our neighbors are making and if we are in the same income ballpark then we leave it at that. And most of the time we ignore the stories of multimillion dollar salaries that others make as simply a one-off event, an exception, not the rule. But times are changing.

Beginning with the Occupy Wall Street movement, income inequality has come to the forefront in our consciousness and has now become a campaign issue. So I decided to find out just where this nation's income inequality stands in comparison to the rest of the world.

As a first step, the easiest measure of determining whether a country is rich or poor is to simply add up its cumulative wealth or gross domestic product (called GDP). If you divided the number of people in a country by its wealth you get per capita GDP. The problem is that measurement falls short in determining whether a society is truly wealthy. You could have, for example, the highest per capita GDP in the world on paper, but if all that wealth were controlled by just one or two people, the society overall would be dirt poor.

In order to discover whether a society is truly wealthy, I needed to account for the distribution of wealth. I quickly discovered that most economists and sociologists use the "Gini Index," which measures how equitable a nation is in its distribution of wealth. The Gini Index or scale begins at "0" (everyone gets the same income) to "1" (one person has all the income). 

I discovered that the U.S. ranks at 0.450 on the Gini Index, sandwiched between the two Third World nations I first mentioned at the beginning of the column. America ranks the lowest of all developed nations in the index. What is equally shameful is that not one state ranked in the normal range of income distribution anywhere within the developed world.


The Independent Investor: The Incredibly Shrinking Middle Class

The Independent Investor: Income Inequality: The Trend is Not Your Friend

The ranking of your state might shock you. For example, California, at 0.466, was comparable to income distribution in Rwanda. Connecticut was slightly worse at 0.480, the same as Venezuela. Massachusetts was about equal to Mexico at 0.461. New York came in on par with Costa Rica at 0.495. New Hampshire at 0.417 equated to Cambodia while Maine at 0.428 had the same inequality that citizens of Singapore endure.

The U.S. is a great deal wealthier than all of these nations. It boasts one of the highest GDP per capita in the world, but in terms of distributing that wealth, this nation is sucking wind. No matter how wealthy we become, if an increasing share of that wealth continues to flow to the same one percent then this country is no better off than it was before. It is, in fact, worse off.

Unfortunately, researchers expect the trend of income inequality in this country to increase and maybe accelerate. As more and more of us become disenfranchised, our stake in the country and in its political system will decline. Bottom line: income inequality undermines democracy. What can be done about it? Stay tuned for my next column.

Bill Schmick is registered as an investment adviser representative with Berkshire Money Management. Bill’s forecasts and opinions are purely his own. None of the information presented here should be construed as an endorsement of BMM or a solicitation to become a client of BMM. Direct inquires to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com.

 

 



0 Comments
     
News Headlines
Mount Greylock, Lanesborough Committees Discuss Hoosac Valley 'Proposal'
Clarksburg School Preparing for MSBA Enrollment Discussions
FERC Extends Pipeline Comment Period
Local Patriots Fans Hail Judge's Ruling on 'Deflate-gate'
'We Are Your Friends': Thursday Night Fever
Pittsfield's Superintendent McCandless Given Six-year Contract Extension
North County Groups to Rally for Substance Recovery Awareness
Williams Field Hockey Returns Experienced Core
2015 Fall Foliage Festival Events
Adams-Cheshire Hopes for Lanesborough Referendum by Winter

Bill Schmick is registered as an investment advisor representative and portfolio manager with Berkshire Money Management (BMM), managing over $200 million for investors in the Berkshires. Bill’s forecasts and opinions are purely his own and do not necessarily represent the views of BMM. None of his commentary is or should be considered investment advice. Anyone seeking individualized investment advice should contact a qualified investment adviser. None of the information presented in this article is intended to be and should not be construed as an endorsement of BMM or a solicitation to become a client of BMM. The reader should not assume that any strategies, or specific investments discussed are employed, bought, sold or held by BMM. Direct your inquiries to Bill at 1-888-232-6072 (toll free) or email him at Bill@afewdollarsmore.com Visit www.afewdollarsmore.com for more of Bill’s insights.

 

 

 



Categories:
@theMarket (178)
Independent Investor (243)
Archives:
September 2015 (1)
September 2014 (5)
August 2015 (7)
July 2015 (6)
June 2015 (8)
May 2015 (6)
April 2015 (8)
March 2015 (6)
February 2015 (7)
January 2015 (9)
December 2014 (7)
November 2014 (4)
October 2014 (9)
Tags:
Federal Reserve Europe Euro Metals Interest Rates Currency Recession Retirement Pullback Selloff Markets Energy Fiscal Cliff Fed Stock Market Bailout Economy Greece Election Commodities Congress Debt Ceiling Stocks Europe Rally Debt Deficit Housing Stimulus Banks Oil Taxes Jobs Crisis Japan
Popular Entries:
The Independent Investor: Don't Fight the Fed
The Independent Investor: Understanding the Foreclosure Scandal
@theMarket: QE II Supports the Markets
The Independent Investor: Does Cash Mean Currencies?
@theMarket: Markets Are Going Higher
The Independent Investor: General Motors — Back to the Future
The Independent Investor: Will the Municipal Bond Massacre Continue?
@theMarket: Economy Sputters, Stocks Stutter
The Independent Investor: Why Are Interest Rates Rising?
The Independent Investor: How Will Wall Street II Play on Main Street?
Recent Entries:
The Independent Investor: Senior Housing Set to Soar
@theMarket: Are We There Yet?
The Independent Investor: The Marijuana Market
@theMarket: Markets Are Supposed to Pullback
The Independent Investor: Not All Bonds Are the Same
The Independent Investor: The Risk of Rising Rates
The Independent Investor: Boomers' Kids Don't Want Your Stuff
@theMarket: Month-End Musings
The Independent Investor: Supermarkets Evolve to Survive
The Independent Investor: Are You Ready for El Niņo


High School Football
Wednesday afternoon football scrimmage at McCann High...
Motorama Winners 2015
Plenty of trophies, plaques and jackets were awarded to...
Motorama 2015
The 5th annual Motorama filled downtown North Adams with...
Live on the Lake: Madison...
Madison Avenue wrapped up the 2015 Live on the Lake concert...
Whitman's Wins Torchia League...
The Pat Torchia Women's Softball League playoffs concluded...
Berkshires Craft Beer Fest...
The 9th annual Western Mass beer festival drew hundreds of...
Pat Torchia Women's Softball...
Whitman's took the first game in the best two out of three...
Third Thursday August 2015
It was another beautiful night for 3rd Thursday on North...
Berkshire Chamber @ Darrow...
The Berkshire Chamber of Commerce held its monthly...
Shire City Sessions August...
Wild Adriatic performs at Monday's Shire City Sessions, a...
BYP Networking @WTF
The Berkshire Young Professionals held its networking event...
Softball: VFW Post vs Pizza...
VFW Post vs Pizza House at DiSanti field on Monday night.
Second Cheshire Block Party
Cheshire resident enjoyed good food and music by the...
Downtown Celebration 2015
The annual Downtown Celebration brought hundreds to Main...
Pittsfield Ethnic Fair
Pittsfield Ethnic Fair was held at the Pittsfield Common on...
Annual Cruz Nite And...
Cheshire residents enjoyed classic cars, good food, a BMX...
High School Football
Wednesday afternoon football scrimmage at McCann High...
Motorama Winners 2015
Plenty of trophies, plaques and jackets were awarded to...
Motorama 2015
The 5th annual Motorama filled downtown North Adams with...
Live on the Lake: Madison...
Madison Avenue wrapped up the 2015 Live on the Lake concert...
Whitman's Wins Torchia League...
The Pat Torchia Women's Softball League playoffs concluded...
| Home | A & E | Business | Community News | Dining | Real Estate | Schools | Sports & Outdoors | Berkshires Weather | Weddings |
Advertise | Recommend This Page | Help Contact Us
iBerkshires.com is owned and operated by: Boxcar Media 102 Main Street, North Adams, MA 01247 -- T. 413-663-3384 F.413-664-4251
© 2012 Boxcar Media LLC - All rights reserved

Privacy Policy| User Agreement