Friday, September 22, 2006

The Shakai Kakusa illusion - more evidence from the United States

Hal Varian of UCB, writing in The New York Times, has put together a well-written but disastrously hyperlinked reexamination of the increase in income disparities in the U.S. during the Clinton years.

Many Theories on Income Inequality, but One Answer Lies in Just a Few Places

According to research being led economist James K. Galbraith at the University of Texas Inequality Project the tech boom led to concentrations of wealth in an incredibly small geographic area, leaving much of the country unchanged throughout the decade.

U.S. national figures show increasing income disparity over the course of the Clinton presidency. The increase in the Clinton era, however, was not due to the rich of American grabbing and keeping more of the nation's wealth for themselves. If one makes a single small adjustment to the data - replacing the economic growth experienced in 4 of America's 3,100 counties - Santa Clara, San Mateo and San Francisco Counties of California and King County, Washington - with the national rate of economic expansion, then the radical growth in income disparity in the years 1992 to 2000 simply fades away.

See the slide show:

Measuring Inequality - a practical workshop on theory and technique

Slide 61 shows the result of the thought experiment--though the presentation is worth going through for the interesting things it has to say about the structural differences in the growth of inequality in Russia and China.

And the discussion starting on page 11 of the paper:

Income Distribution and the Information Technology Bubble

So now how many people (please raise your hands) believe that one could find 4 municipalities of Japan which would have an equally powerful effect on national statistics--that is, if we replaced their growth since 1992 with the national average, one would see the shakai kakusa disappear?

What are those four municipalities?

Ok, let's see:

Tokyo Metropolitan District, Minato City...

P.S. The Inequality Project has a nice list of papers on rises in inequality around the world.

Nothing on Japan, though.

1 comment:

Jun Okumura said...

"It would have been better had they encouraged a wider distribution of economic gains, and a broader geographic distribution of income gains."

???OMGWTF!!! Redistribution of income (more appropriately consumption) is an admirable, indeed, necessary, social and political objective that has been part of human society for as long as it can be traced. (Think zakat, tithing, 7-11 bento leftovers for the homeless, etc.) Not that this has anything to do with the content of the research paper, but, like that "one nation under God" rimshot, I appreciate the sentiment. It is with the second assertion that I take serious issue. Do the authors of UTIP 27 really think the US would have been better off if the federal government had dictated where dot.coms could set up shop and Intel build its research centers? What's to keep them from choosing Canada? And if they had relocated within the US of A, how would that have helped the single mother heating up hamburgers at the local White Castle get a better deal?

Rush Limbaugh only got it half-right when he insisted godless communists in academia were out to destroy America. He’s wrong; there wiss no criminal intent.

Thank you, Shisaku, for digging up yet another wonderful example for my campaign to banish PCs and regression analysis from the classroom. (Don’t worry, I’ll let you keep your Pledge of Allegiance.) We must keep our young from confusing correlation with causation.

BTW, I appreciate your blurb for my piece. Actually, that's the first thing I’ve ever written that I thought I deserved to be paid for.