gamercube

HKDan, the list was rated according to the Gini coefficient which meaures the income inequality between a certain percentage of a country's richest people and its poorest people. Here's more on it:

Gini coefficient - Wikipedia, the free encyclopedia

It is a very important indicator of economic inequality and both the UN as well as the CIA compile their own lists based on it.

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HKDan

Gamercube,

You are pointing out an interesting instance of the fallibilty of statistics. Many of the commonly used metrics for measuring things in economics have serious shortcomings(i.e. Purchasing Power Parity). In this instance you have pointed out that India's Gini coefficient is higher that that of the US and thus India has less of a problem with income inequality than the US. However, in reality it doesn't take Stephen Hawking to realize that income inequality is a relative thing. Poverty in the US is still an ugly thing and I would hate to have grown up on an Indian Res. in the Dakotas or in Eastern Kentucky, but that is not the kind of poverty that still exists in India or rural China. The distance from Lakshmi Mittal and co.(and I mean no criticism towards him) and impoverished farmers heavily in debt and about to sell their kidneys is further than the distance between Warren Buffett and poor Americans. India has serious work to do addressing that distance(as do most countries) if they are to deliver long term prosperity and development.

gamercube

Actually, India's Gini coefficient is lower than the US' hence, there is less income inequality in India. It's true as you say that the difference between a Lakshmi Mittal and a poor farmer who has to sell his kidneys to survive is huge, but how many such Lakshmi Mittals are there in India? India has a total of 53 billionaires in the list out of a total population of 1.1 billion. That's peanuts when compared to the 469 billionaires in America in it's 300 million population.

Thus, for 400 of the poorest Americans (probably homeless people), there are 469 billionaires, but for 400 of India's poorest (again, probably homeless people), there are only 53 billionaires. Hence, I think income inequality is higher in the States. Of course, as you take a larger sample, the obviousness of it may not be easily apparent-for example if you take the poorest 1 million people in both countries, then 900,000 of those in the US maybe better off than their Indian counterparts, but then again, the 900,000 richest Americans will also be significantly richer than their Indian counterparts.

gunnut

The problem with Gini index is the definition and data being used to compile the chart. For example, in the US, if you use taxable income as a metric, then you miss out on a load of deductions that we use to lower our tax burden. Shek put up a chart on the US consumption rather than income to better illustrate the equality, or inequality, of the population.

You Are What You Spend

The lowest 20% of US household has an average income of $10000, but an average consumption of $18000+. Interesting, isn't it?

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Adux

HKDan,

I have no problem with helping the farmers, As a matter of fact I believe the investments made till now, arent even close to being enough. We need irrigation, good marketing pricing, ease of distribution etc etc. Most of the Indian farmers have no economies of scale due to the very small land holdings they have.

So even if you waive all the loans, they are still in the same mess as they are before, nothing has changed. And more over it creates a precedent, it makes people feel that government 'owe' them something. Nearing next election year, farmers might just take loans and not pay up, since they expect the government to do something for them. Is that the kind of citizens a country needs?

We need to give more money to the farmers, help them in investments, through open the field to private company level players. They are currently in bad situation, the farmer suicides are at the highest, I rather the government gave them more money on top of what they owe and give them more time, and simulatenously help them with investments in irragational projects etc etc.

I dont care even if he is Harvard educated bloke, he is still a politican trying to socialist and populist in an election year.

Adux

In India, If you earn hundred, you save 30, spend 40; Invest 30. We have one of the highest savings ratio's in the world, in some ways too much for our own good.

gunnut

I'm not sure if you understand our tax structure.

The "taxable" income is not the same as gross income, or adjusted gross income. I'm pretty sure the data used in most studies is the "taxable" income. That figure is substantially lower than gross income and adjusted gross income.

If I make $100k gross a year, I might have a taxable income of $45k with various deductions. In this case, my mortgage interest, 401k retirement fund, health insurance, plus any and all personal business losses are all removed from my income before federal tax is applied. Then there are the kids I can claim as dependents and further reduce my tax burden. Adding up all the expenditures, not including retirement fund, I can easily exceed my taxable income while still save 10% toward my retirement.

The lowest 20% of our population might get government subsidies which add up toward their gross consumptions. With all the standard deductions to reduce their tax burden, they appear to make way less than they really do.

Basically what I'm saying is stats are deceiving unless they are put in the proper context.

Adux

Gunnut,

There are tax brackets here,
If you earn under 1,50,000: You dont pay any. Other than some nominal charges
If you earn above1,50,000 : You pay 10% tax
If you earn above 3,00,000: You pay 20% tax
If you earn above 5,00,000 : You pay 30% tax.
There are several deduction for women, agriculture etc,

When I wrote above, it was the way society spends money, It is ingrained in my head by my family, that I have to save atleast 30% of my income. Basically we are very consicous spenders, 10,000 income to 18000 expenditure, is not something you will see in Indian Households.

gunnut

I understand. What I'm saying is that $10k income is not the true income. That might be "taxable" income. The true gross income, along with government handouts, might well exceed $25k. We have an insane amount of deductions in our tax structure. The government really should just switch to a national sales tax of 15% and abolish the personal income tax. The revenue will probably remain the same.

HKDan

Gamercube,

My bad on the high/low, its been a long week. I still dont agree with you though. You argument completely ignores the situation regarding poverty in both countries. Implying that the poorest million Americans might be better off than the million poorest Indians is very poor choice of wording. The difference in situation between those two groups is shocking. You are saying that because India has fewer rich people than America it has less inequality. That is an empty argument. I congratulate those Indians that made that list, but face the fact that for all its impressive growth India still holds more of the worlds poorest than any other country. America's wealth does not make it more unequal, India's poverty does.

Adux,

Thanks for the reply. I see what you are saying now.

Adux

HKDan,

There are income disparities, wide one's at that. There is no use of denying that, anybody saying otherwise is a liar. We have 300 million under the poverty line. But we are getting nearly 3-5 million out of poverty every year. But every new billionaire or person moving up the chain gives people the hope that even they can make it too.

HKDan

Adux,

Absolutely. I have the greatest respect for India's growth and the progress that continues to be made in reducing poverty. However, Gamercube's argument that India has less income inequality than America does not hold water and is basically a trick of statistics. That is the extent of what i was trying to say.

Adux

Well, for communist, propaganda is their fortae, even if the result and success isnt theirs. they wanna hog the limelight..every Indian out of poverty has to thank capitalism as well as Indian education sector..the most...lol

Bella

Adux,

I have not read the entire thread, but your figure is very positive for India!
At that current pace, "IN A PERFECT WORLD", would end poverty in about 75 years in India with no population growth.
I also agree with your statement that every person moving up on the chain gives people hope that they also can make it!
Here in the U.S., one of the most capitalistic countries in the world, has a population of 300 million. Of those 300 million people, we also have the most billionaires and millionaires! Am I bragging?? NO!!!
What I believe in, is the middle guy!! Your average American.
In this country, the gap between the rich and the poor is increasing. It is a disease that is spreading around the world!
Most of the U.S., "BLUE COLLAR" jobs have moved overseas to countries that pay "pennies on the dollar". With this modern move, the U.S. has now become a, "WHITE COLLAR COUNTRY", in which the poorer, and "UP AND COMING COUNTRIES" manufacture our everyday goods.
As a business owner myself, it is cheaper to pay someone $.30 per hour then $30.00. In this situation, it makes more CEO's richer, but CEO's in other countries that own the manufacturing factories wealthy beyond believe!
I know 99% of you already know this, but China and India is currently experiencing there new wealth. As long as China and India continue with cheap, or slave labor practices, the gap between the rich and poor will decrease, but only to a certain point.

Thanks!

Ray

Bella,

Could you amplify as to what exactly you wish to state wherein you equate cheap as slave labour?

Curious.

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