The Wealth of Nations

The Seattle Post Intelligencer ran an article yesterday reporting on China's completion of its Three Gorges dam across the Yangtze River. Apparently, this is the largest hydroelectric project the world has ever seen. This was, however, not what caught my attention. At the very end of the article there was a reference to China's growing wealth disparity, which piqued my interest:

Plans for a more elaborate celebration were canceled, Xinhua reported, without giving a reason. Elaborate state celebrations have been rolled back amid a growing disparity between the urban rich and rural poor.

Having, in recent years, heard a number of references to this troubling economic trend in China, I decided that it was about time I got to the bottom of things.

It turns out that the universally accepted statistic for measuring wealth disparities within a particular country is known as that country’s Gini coefficient. As I understand it, the Gini coefficient is a value between 0 and 1, with 0 meaning everyone in a particular country shares that nation’s wealth equally and 1 meaning, as you might expect, that a single person controls all wealth of that nation. Pretty straightforward stuff, right?

So, how well did China do? Well, the answer to that was surprising to say the least: China’s Gini index (the Gini coefficient multiplied by 100), it turns out, is 44, better than America’s, which is rated at 45! This, I believe, is a perfect illustration of media bias. Without looking more closely at the actual data associated with the above contention, there’s no doubt that many would have come away from that article with a much more negative opinion of China’s economic situation than appears to be warranted.

Here’s a link to a site that ranks countries by their Gini index. Remember, the lower the number, the more equal the distribution of wealth.