Poverty and Inequality

1
Poverty and Inequality

2
The Good News

• 1950 63 lt 1 / Day
• 1980 35 lt 1/ Day
• 1999 12 lt 1 / Day

3
More Good News

• From 1993 to 2000 in the USA
• Poverty rate fell from 15.1 to 11.3

4
Not so Good News

• 1990 to 1999
• Extreme Poverty 29 to 22.7
• Still 1.2 billion lt 1 / Day
• Outside China and India not much progress

5
More Bad News

• 2000 2001
• Poverty rates up from 11.3 to 11.7
• 1.3 million new poor
• Median household income down 2.2
• 32.9 million poor / 11.7m children

6
Distribution of IncomeUSA

• 13,000 richest families have as much income as
  the 20 million poorest
• Between 1979 and 1997after-tax incomes of top 1
  rose 157 and 10 for middle income

7
Gini Coefficients and cumulative quintile
distribution
8
1970 2000USAAvg. salary 32,522 -
35,864Top 100 CEOs 1.3m - 37.5m39 times
greater to 1,000 times greater
9
WHY?Three Hypotheses

• Globalization
• Skill-biased technology
• Superstar

10
Social Norms

• The Rules of the Game (Stiglitz, 2002)
• Boards, Stock options, and Fame
• Enron, WorldCom, Tyco, Global Crossing,Adelphia,
  Arthur Anderson, Merrill Lynch,

11
The Price of Inequality

• Yes, we are the richest major nation. But
  because so much of our national income is
  concentrated in relatively few hands, large
  numbers of Americans are worse off economically
  than their counterparts in other advanced
  countries. (Krugman 2002)

12
USA 34,142Sweden 24,277 Mississippi

• Life Expectancy
• Infant mortality/000
• lt5 mortality rate/000
• Survive to 65(f,m)
• Gini
• Poorest 10
• Richest 10
• Poverty lt 11/day
• Functionally illiterate
• HPI rank

• US Sweden
• 77 79.7
• 7 3
• 8 4
• 85,77 91,85
• 40.8 25
• 1.8 3.7
• 30.5 20.1
• 14 6
• 20.7 7.5
• 17 1

13
Inequality and Politics

• 1999 The Estate Tax
• 2 of all estates paid tax
• Half of all payments made by 0.16 (3,300
  estates)
• Avg. value of the estate 17million
• Most Americans want the death tax repealed why?

14
Inequality and Democracy

• As the rich get richer, they can buy a lot
  besides goods and services. Money buys political
  influence used cleverly, it also buys
  intellectual influence. (Krugman, 2002)