SOCIAL DISPARITIES ON EARTH

SOCIAL DISPARITIES ON EARTH

THEORY AND PRACTICE OF GINI INDEX

BY DIDIER BERTIN

29 APRIL 2012

This survey is a part of an essay on the new geopolitics

I-DEFINITION

The GINI index measures the inequality of the revenues distribution in each country and was created by the Italian Statistician Corrado GINI

The index varies from zero to 1 or from zero % to 100% where zero means that everybody receives an equal revenue and 1 or 100% means that one single person receive the whole revenues of a country leaving nothing for the others..

II-CALCULATION

This index is in principle calculated on the basis of the function of Lorentz which associates to the population segmented according to increasing revenue, the value of such revenues.

In fact the exact the data requested by Lorentz but instead the cumulated revenue per cumulated segment of population and then the coefficient is calculated as follows by the formula of Brown:

Where X is the cumulated share of the population and Y is the cumulated share of revenue.

This index is a key measure of social justice and of the effectiveness of democracy in each country and is used by major institutions worldwide.

III-GINI INDEX APPLIED TO THE WORLD

1-Determination of significant geographic areas

Areas listed below, were determined on a geopolitical basis not necessary related with the geographical logic.

• The Middle Eastern countries generally belong to Asia but have been considered separately on the basis of a cohesion in the fields of politics, culture, cults, and conflicts. Turkey appears now clearly as a part of Middle East. Although Saudi Arabia, Kuwait and the UAE do not provide data to determine their GINI index, we have estimated them in order that such economically important countries because of oil  be taken into consideration for the understanding of the Middle Eastern situation.
• Europe includes the countries that lie entirely on the European continent for purpose of clarity  by exclusion of Russia and Turkey whose situation is very particular as regards Europe.
• Asia excludes the Asian Middle East in order to give more sense to this too vast and too much heterogeneous continent.
• We consider that Russia, China and the USA are each independent geopolitical areas. Their integration to other areas would reduce the significance of the latter because of the geographic specificity of Russia and because of the incomparable supremacy of USA and China in the world.
• Canada has been included in the U.S. area because it is largely a reality and moreover the geographic North America is not socio-politically consistent.
• Latin America has far more geopolitical, social and cultural sense, than its geographic areas South, Central and North America..
• Africa: We have excluded from the geopolitical Africa, the Maghreb and the Mashreq, which focus cultural, religious, linguistic features, economics  and conflicts , which are different from those of the rest of the geographic Africa.
• For clarity, the Caribbean and Oceania were considered independently from other nearby areas.

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2-LIST OF 140 COUNTRIES AND THEIR RESPECTIVE GEOPOLITICAL AREAS

It was possible to calculate the GINI index for these countries and consequently it is unknown for 53 largely poor countries.

IV-ANALYSIS

1-COUNTRIES PER GEOPOLITICAL AREA

The indexes of 140 countries were calculated (3 estimated) i.e. 72.5% of the UNO's recognized countries but 95% of the world population. The indexes of 53 countries are unknown by lack of data; but we may think that generally cumulate high disparity and poverty. Among these 53 countries, a large majority of the most important ones are Africans. These countries represent 27.5% of the countries number but only 5% of the world population.

• EUROPE: 41 countries were analyzed out of 43 (Russia excluded)
• AFRICA: 33 countries were analyzed out of 50 i.e.66% of African countries after deduction of the Maghreb and Mashreq considered separately.
• LATIN AMERICA: 17 countries out of 19 were analyzed – The Caribbean islands were analyzed separately.
• ASIA: 26 countries were analyzed out of 31; the Asian Middle East and China were considered separately.
• MIDDLE EAST: 10 countries out of 15 were analyzed
• MAGHREB: the 3 countries of Maghreb were taken into consideration.
• RUSSIAN area: 1 country-Russia
• US area: 2 countries - USA, Canada
• CHINESE area: 1 country - China
• OCEANIA:- 3 countries were analyzed out of 14
• CARABBEAN: 3 countries were analyzed out of 14

COUNTRIES NOT CONSIDERED FOR LACK OF DATA

AFRICA: 17- EUROPE: 2 - ASIA: 5 - LATIN AMERICA: 2 - CARAIBBEAN: 11 - OCEANIA: 11 - MIDDLE EAST: 5 - TOTAL= 53

27.5% of countries and 5% of the world population. If we do not take into consideration the 22 small countries of Caribbean and Oceania, we may notice that 55% of the main remaining countries are Africans. These 53 countries and the considered 140 countries are the 193 UNO's members.

2-BREAKDOWN BY TRANCHES OF GINI INDEX

A-From 59.2% to 70.7%- 11 Countries - 7.9%of the countries taken into account. 108 million inhabitants; a negligible share of the world population. 

Few take all revenues and leave the people with almost nothing. These countries are de facto Feudal organizations.

11 countries out of which 8 particularly poor in Africa and Haiti, the 3 others are small oil countries whose power and assets are owned by few families.

B- From 50.1% to 58.2%- 16 Countries

11.4% of the countries taken into account - 558 million inhabitants i.e. 8% of the world population

A few take possess most of the wealth and leave the majority of the others with a little. Some of these countries may have a semblance of democracy that the figures debunk.

This segment includes 16 countries out of which 9 Latin American countries and 4 African countries. This social unbalance  is often applied in Latin America. Colombia is of course in this segment but more surprisingly Brazil and Mexico also. Brazil ranks now sixth in the world by GDP size but the eradication of the extreme poverty was not a success for the previous government of Lula mostly  because the goodwill and the power of the central government are limited by the federalism.

C- From 38% to 49%  - 49 countries

35% of the countries taken into account -2 869 million inhabitants i.e. 41% of the world population

This is the largest segment whose common characteristic is a low economic development and imperfect democratic functioning. The distribution of wealth exists but remains highly uneven but is not a so  big caricature as the two previous segments. The distribution is affected by the inefficiency of public administration or by the corruption.

This segment includes 8 Latin American countries, 9 African countries, 9 Asian countries, 5 Middle Eastern countries and 2 European countries: Moldova and Portugal.

This tranche includes also the two major world powers: USA and China and also Russia.

The U.S.A and China have an index of inequality somewhat similar 45% and 48% respectively and Russia has an index of 42%.

The U.S. emerged as a particularly unequal country, but the size of GDP can give the people an acceptable average income with the remaining balance of the global at the moment. Such unbalanced system remains precarious and do not exclude high poverty. Barak Obama was elected to improve this system but  this was not achieved due to the lack of support of the Senate. We may still expect a change after the next elections of 2012.

The Situation of China stems from its full economic strategy to become a major world power. This bet was won by the Communist Party and China could even become the first world economic and military power in the near future by continuing to combine the largest people on earth to its ability to produce a growing GDP.  This domination strategy includes also the control of the Yuan left at a level artificially low, which made China the world's largest exporter.

Moreover unlike capitalist countries China has built its development without going into debt. Purchasing Power Parity (PPP) is an open door to figures manipulation for comparative purpose and we prefer generally to consider the GDP at the official exchange rate currency; however taking  into account the artificial level of the Yuan we have preferred to consider the figures at PPP. Since China is a dictatorship, it is now time for the Communist Party to distribute a larger share of this economic success among the whole population.

Russia has become an economically limited country and a military power of second category equivalent to France. A limited part of the population continue to benefit of corruption and individual appropriation at low price of the former state assets. This basic situation  explains the high level of GINI index of 42% and why the vast majority of the population should live in poverty. Russia remains globally poor and is nevertheless the richest countries of the former USSR and has thus benefited from the loss of the very poor Ukraine, Georgia and Belarus, which would have been an economic heavy burden for Russia.

Israel is also part of this unequal segment with an index of 39%. The paralysis of the democratic parties by an orchestrated rise of populism may lead to consider that this country is no more a fully authentic democracy as this is reflected by the 2009 Parliament dominated by the far right and the religious parties. Populism may have an appearance of democracy in which the citizens have in fact lost their ability to decide on real information but on propaganda. Social justice that was the basic principle of the State of Israel is no longer a priority for a government that remains deaf to the insufficiently political demonstrations against the general rise of prices and reduced purchasing power.

Israeli populism is fueled by

• an indigent education system (primary and secondary),
• the orchestrated frightening by insecurity,
• the withdrawal into oneself,
• the rise of religion in politics as in neighboring states,
• the restricted number of democratic Parties with insufficient political values, and
• the expansionism together for itself and to slow down the peace process. This process has probably been also slowed the by the weakening of Democrats in US Senate. USA may have played a bigger part in the peace process since they provide the funding of a major part of Israeli defense expenses.

D- From 36% to 37.5% - 12 countries

8.6% of the countries taken into account - 1797 million inhabitants -26% of the world population

Income distribution is better than the former category but still insufficient especially since 11 of these 12 countries are poor. Still too many people benefit of privileges at the expense of the poorest wide majority.

Japan is part of this category, but as a rich country such an unbalanced distribution does not deprive too much the middle class from comfortable living conditions according to Japanese criteria.

Taking into account all categories already analyzed, we can see that 62.3% of the countries representing 76% of the world population, suffer from a very unequal income distribution. The social order of the vast majority of the planet is concerned; this is not only an economic issue but also a worldwide human issue in the fields of ethics and social justice.

E- From 30% to 35.5% - 31countries

22.1% of the countries taken into account -1 095 million inhabitants i.e. 16% of the world population

We reach a tranche of income distribution such that we can hope for real democracies with a capitalist economies and limited social policies.

These countries have a moderate solidarity but citizens do not enjoy very privileged social system and direct tax system is not particularly heavy.

The tax revenues are mainly generated by indirect system, which reduce the purchasing power of people receiving the lowest revenues.

52% of these countries are European countries and represent 360 million inhabitants i.e. 33% of this tranche; 29% of these countries are Asian out of which 4 former Republics of the USSR.

Greece belongs to this category with an index of 33%, which does not take into account the fact that many rich Greeks have traditionally savings in Banks of fiscal paradises.

13 of these 16 European countries belong to the European Union representing thus 48% of the countries of the European Union and 69% of its population, among which two countries, which despite their opposite statements look hostile to solidarity and have a quasi similar index: United Kingdom and France. The latter pretends apparently to be different of what it is  in fact. The expected political change of 2012 in France is expected to correct this abnormal gap between statements and reality.

F-From 23% to 29.4% - 21 solidarity champions

15% of the countries taken into account - 90.5% of European countries - only 3.7 of the world population

This tranche shines by the sense of solidarity to which France does not belong and is somehow a European club. 19 of these 21 countries are European out of which 12 are members of the European Union. Among the seven countries outside the European Union 4 will become soon members of the European Union : Croatia and et Iceland in 2013 and Serbia and Montenegro after.

We may thus say that 16 of the 21 countries members of this tranche are members or future members of the European Union.

The best among the champions is of course Sweden with an index of 23%.

Theses 12 EU countries represent now only 44% of the UE's countries and  27% of its population. This percentage may be increased to 52 with the 4 coming  members and even 55% if France improves its rank after the 2012 elections. The 4 candidates to EU will not generate a remarkable change in this tranche in population since they are small countries; With the expected coming of France in this tranche the included EU countries  would represent 42% of the EU population.

Solidarity reflected by GINI index does not mean  not economic expansion but is an efficient way to reach it and to share equitably its  fruit or the difficulties in case of economic downturn.

V - CONCLUSION

We can see that 62.3% of countries in the world suffer from a very unequal income distribution, which represent 76% of the world population. The social balance of more than  three quarters of the population of the planet is concerned; the issue does not concern the economics, which is a tool,  but ethics and social justice in the world.

The 2 best tranches of revenue distribution are the particular domain of the European countries and include 35 of the 41 European countries and 24 of the 27 countries of the European Union.

19 of the 21 countries of the best segment are European countries and 12 of them belong to the European Union.

Countries of the European Union which set the best example  of an equitable  social order, i.e. tranche of the  index inferior to 30%, are small  with the exception of Germany, and represent only 27% of population of the European Union.

We expect  that after the presidential and legislative elections of 2012, France will join this tranche. Countries of the European Union account for only 14% of all countries and 7% of world population but could promote worldwide an equitable model.

If the Charter of the Fundamental Rights was really implemented, all countries of the European Union would have been included int eh best tranche of the index (less than 30%) including France.

The European Union has created the Charter of Fundamental Rights which cover all aspects of civic life: democracy, life in the workplace, health, education, social system, minority rights and has unfortunately left in fact each member state to apply it at will despite the resolutions of the Lisbon Treaty of 2009. Too often the States apply only partially the Charter and not allow the creation of a true common social ethics that would turn Europe into something different of an economic association.

This game between statements and reality is not acceptable and reflects the lack of courage that has characterized too often too many European countries.

We still see through the clues, some convergence in terms of social justice  as compared to  the rest of the planet. This could be the basis of  first common identity of Europe despite huge differences between members.

The building of a common Ethics, through a strict application of the Charter of the Fundamental Rights may reduce the risk of  disaggregation of European Union, but in order to achieve it we  must remain deaf to the siren song of capitalism based on  a misinterpretation of the economic downturn aiming to convince Europe to renounce to its expected ethical identity.

Solidarity has nothing to do with Economics bur relates to Ethics. Solidarity is necessary to create a sustainable and equitable growth and in case of economic downturn to share also equitably the difficulties.

In addition more than three quarters of the world population suffers from social injustice because of the policy of their States. One of the guidance of the  foreign policy of the European Union should be the promotion worldwide of the Charter of the Fundamental Rights. This promotion may be done by the main members since the European Union has not yet a consistent common foreign policy and many countries do not apply correctly the Charter. This promotion is one of the targets of our association and site.