IN the 1992 Disney animated movie Aladdin, the late, great comic genius Robin Williams played the talented, trapped genie who was released by street urchin Aladdin, to the delight of moviegoers everywhere! I was pleased to learn that a live action version of Aladdin is in the works with superstar Will Smith taking over the pivotal genie role.
The expression “you can’t put the genie back in the lamp” has been gaining traction at least since the late 1930s, when the Manhattan Project — led by the US with support from the UK and Canada — created the world’s first atomic bombs, which were used to devastating effect on Hiroshima and Nagasaki in August 1945 to bring Japan to its knees and end World War 2.
The fears we all share concerning North Korea’s nuclear threats are a direct consequence of that atomic genie never returning to its lamp.
In demographic economics there is a similar sounding metric — the Gini Index — that has leaders of some countries scratching their heads, mulling solutions to a persistent problem: Rising income inequality. That’s a global problem because when income inequality rises too much, so too does rage amongst the masses, which if left unchecked, might lead to Arab Spring-type violence.
Measuring income
The Gini Index was named after its creator Corrado Gini (1884-1965), an Italian statistician who blended his prodigious number-crunching skills with his other professional roles as sociologist and demographer to create something useful. In keeping with other world-class thinkers, Gini formulated his self-named coefficient in 1912 by building upon the work of American economist Max Lorenz who in 1905 published a graphical method of showing complete (hypothetical) income equality with a straight diagonal line as part of his development of the famous Lorenz Curve, which depicts income inequality.
The Gini Index (or GI) is a useful tool for any country intent on narrowing income inequality specifically to enhance social stability.
A GI of 1.0 means all income in a country is earned by just one person and everyone else earns nothing, which is wrong; a GI of 0 means that everyone earns the same, which is ridiculous.
According to Central Intelligence Agency data, a high GI would be above 0.60, which is what countries like Botswana, Haiti and South Africa have to contend with. In contrast, a low GI is below 0.25, which is what Sweden, Ukraine and Finland enjoy. Given a choice, where would you rather live?
I’m sure you’ve heard the expression “the rich are getting richer and the poor are getting poorer”. That is true in relative terms. In 1900 the total wealth held by the world’s richest 20 per cent was 10 times more than that owned by the world’s poorest 20 per cent. That gap widened dramatically throughout the 20th century to 30:1 in 1950 to 60:1 in 1990 and 75:1 in 2000.
There is an understandable link between income and accumulated wealth. The parallels between countries and people are obvious because unspent national income that flows to constructive uses like education and infrastructure upgrades will help a well-run country grow wealthier over time. Similarly, individuals who use personal income to educate themselves and their children, and who sacrifice present consumption to build diversified investment portfolios that tap into domestic and international opportunities, tend to grow wealthier from decade to decade.
Measuring integrity
In contrast, badly run countries, which perpetuate a culture of corruption, kleptocracy and communalism, lose ground to those that, while not perfect, at least battle tooth-and-nail against corruption at all levels, and that provide equal opportunities to all citizens based on meritocracy.
Scrutinising the CIA’s measurement of the GIs of some countries enjoying reasonable levels of success is fascinating. Consider the US (GI 45.0); China (46.5); Japan (37.9); the Philippines (46.0); and Singapore (45.8). All of these mid-level GI rated countries enjoy significant economic success, despite their different ethnic and national economic structures.
It’s heartening to see Malaysia’s GI of 46.2 is between China’s and the US’s. Oddly, though, we seem to have higher income inequality than the Philippines and Singapore. If our goal is to transform ourselves into a mature, industrialised nation like Japan, then I believe at least one goal that our national planners and leaders should focus on is to gently and gradually reduce our 46.2 GI to below 40.
Obviously no country can be governed by just one metric. People are multi-dimensional, messy, temperamental and easily disgruntled. But using Corrado Gini’s creation to measure and manage economic disparity within our nation might beneficially strengthen, widen and deepen our middle class core even as our per capita income rises. But frankly that’s our government’s job.
Your goal is markedly different.
You would be wise to imbibe lessons from well-run countries battling corruption and public theft by applying some of their disciplines to your life.
For instance, you could raise the proportion of personal and household income you invest in education and long-term global investing to help all members of your family succeed — collectively and individually — as well-read, cultured, bona fide citizens of the world.
© 2017 Rajen DevadasonRead his free articles at www.FreeCoolArticles.com
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