Bryden Allen's Website

Equality Measures


This diagram explains how unevenly the wealth of the US

is distributed among its people.

As opposed to the three previous measures, a reasonable degree of equality between all people benefits a nation enormously. The purpose of this section is rather to examine the means by which this equality can be measured.
            I will deal with this subject in terms of the following four headings.

 

 

 

a)         Equality of Opportunity

 

We, in Australia, image we are reasonably good in giving all our citizens equal opportunities to progress. And so we are in comparison with many other countries. But this is not the case in my simple measurable terms.
            The fact of life is that people with secure employment have a huge advantage over those people who do not have such employment. I have already outlined this problem in my other webpages. So I will say no more on this subject here.
            The solution I use in my societies to overcome this huge fundamental problem is two fold. Firstly I prevent people working for money in the essential activities, when they have amassed sufficient wealth to look after their own wellbeing. (This level of wealth is usually a little more than the level of the “pro-rata” wealth – see later in this webpage.). This restriction means that - the people, who need to get work, can work at least in the essential industries. Then secondly I require my societies to re-elect all the important senior jobs at least every five years (and the previous holder must leave the job). Thus these important jobs would be circulated within the country regularly. Then all people would be in the same position to compete for the better senior jobs.
             These rules should give all people a reasonably equal opportunity to progress in my world. I think these rules would be healthy for every one to accept. But I can’t see these simple rules being accepted in the current world.
            In the present world, I am afraid that the “Equality of Opportunity”, which we all claim, is not as good as we imagine. And this kind of equality is very difficult to measure. So I will say no more on this subject.

 

 

b)          “Income Equality”

 

This measure is usually regarded as the most important measure of equality. But there are problems about how the various incomes should be measured.
            The easiest way of measuring the incomes of people is to use their yearly tax returns. But the incomes, we really want to know about, are the incomes, which people can use to support their standard of living. So then this comparison would be a comparison of the effective income of different people. And this is the comparison most people want to know about. (Though I admit this comparison would be meaningless for me. Thus I consider that I have a perfectly high standard of living, and I obtain this standard of living on a remarkably low income. But then I am a climber – and all climbers are a bit weird about how they are prepared to live.) I will call this form of income the “Effective Income”.
            To obtain the “effective income” from the “taxable income” the following adjustments need to be considered: the number of people the income must support, the various taxes on this income, whether the recipients of the income must rent their home, and the possible pensions this income must pay for (or are being received). So the calculation of this relevant income is difficult and hence the measure is always open to doubt. Probably both forms of incomes need to be compared.
            A realistic comparison graph of the “effective incomes” is now shown below.

effective income diagram

 

            This graph starts with the lowest incomes and then moves along, in percentage points, up to the highest incomes. Of course I don’t know what these “effective incomes” are. This graph is just my best guess of what currently happens in Australia.
            The first part of this graph is flat. This is because the lowest-income people are all receiving the various government pensions (age, disability, unemployment etc). And these pensions all roughly have the same value (i.e. the minimum safety net). Then the graph gradually increases corresponding to the higher incomes. Finally some incomes become so large that I have had to use a different scale to fit the incomes on the graph.
            This graph as a whole shows the general picture and it can be compared with different time-periods to see how the situation is gradually changing. However we would also like to have just one figure, which summarises the general nature as to how equal (or unequal) these incomes are.
            A simple method is to note the value at the middle of the graph, which I will call a “normal income”. On this graph this about $30,000. Then we can work out a “pro-rata income” which is “total amount of income received in the nation” divided by “total number of people in the nation”. On this graph, this is about $50,000. Then a comparison of these two figures tells us how much more money a normal person would receive, if the total income of the country was shared equally between the population. So this is a simple measure of the disparity.
            A better method is to divide the total income in half between the rich and the poor people. Then the percentage of rich people, who receive half the total income, is good general measure of the income disparity. This percentage is found by finding a “dividing line” which equalises the income areas on either side of the line. (Except that the income in the rescaled area must be readjusted to its correct value). So this figure summarises the equality situation. I call this figure the “% rich have half-total-income”. On this graph this figure is about 18%. And so the figure can easily be compared with other time periods. (This “half-” term is analogous to the “half-life” term used in exponential decay. However this analogy would have looked better, if my graph had started with the rich incomes first.)
            So this is a good measure of the income disparity.

 

 

3)         Wealth Equality

 

In  “The Unstable Nature of Life” webpages (particularly in “How Our Problems Evolve and get Worse), I explain in detail how there is a huge tendency for the wealth of a nation to gradually accumulate into the hands of a very wealthy minority. So a figure (or a graph), which demonstrates clearly how this wealth is distributed between the people of the nation, is enormously important. There are also three important reasons to prefer this wealth measure as the primary measure of equality, in preference to the income measure (although both are important). These reasons are:
a)         The wealth of all people can be defined quite accurately. I described how this can be done easily in my section on The Rich will be prevented from getting Richer. And all people can actually see all this significant wealth in terms of the land, buildings, vehicles and implements we see all around us. And we can check the ownership of these assets in the public records (which I also talked about in the above webpage). And we can all make a quick estimate on its value. So it should be quite hard then to cheat on how much of our assets our wealthy people actually own.
b)         Wealth is a more stable measure than income. Thus it usually takes a long time to accumulate or to lose wealth i.e. many years. But a person’s income can easily change over a week. So any measurement of this various ownership will remain relevant for a longer period of time
c)         Wealth also equates with ownership and control. Thus the wealthy people of our nation tend to own and run the big companies and firms, which give employment to those of us who are not so wealthy. So we, the not-so-wealthy people, tend to be dependent on the wealthy people for our incomes. So the wealthy people are the people in control. And if several of these wealthy people act together and form a clique, then we the poorer people are at their mercy. So it is definitely better for the safety of our incomes that the wealth of our nation should be reasonably evenly divided between all people. So it is essential that a nation should keep a close eye on how this wealth is divided.

 

Below then there is a graph of how I imagine the wealth of Australia is divided between all her people.

wealth with respect to population diagram

 

This graph has the same form as my “effective income” graph. And so the “normal wealth”, the “pro-rata wealth” and the “% rich have half-total-wealth” have the same meanings as in the previous graph. On this graph, the “normal wealth” is about $70,000; the “pro-rata wealth” is about $400,000; and the “% rich have half-total-wealth” is about 8%.
            You will see that this graph is now a lot more extreme than “expected income” graph. So now there is a large section of our population who have very few assets in comparison to the “pro-rata wealth” figure. A “ normal person” now is only just starting to gain assets. But this is true to life. Many people do not own their homes and all such people will have assets whose value will be small in comparison to the value of a home. This graph must reflect this situation. And this situation is getting worse. And the “% rich have half-total wealth” is very small percentage. I do not know the correct figures of course. But we all ought to be able to see this graph.

 

Below this graph I include the “pro-rata value of national assets” per person. A significant amount of the wealth of a nation is in terms of the government infrastructure i.e. the total value of our roads, train system, communications, health facilities, educational facilities, governmental buildings, defence facilities, etc. So it is convenient to express this wealth per person below, so that it can be compared with the individual wealth above. In this graph I put this at value $100,000 per person.
            And finally all people should be able to see the value of our country that is owned by overseas interests on the same pro-rata basis. In this graph I put this value at $50,000 per person.
            It is enormously important to know how we have been increasing or decreasing the value of either our government infrastructure or the overseas ownership in Australia.

 

In a democracy it is essential that all people have a clear understanding of what is happening in general terms to wealth and ownership of our nation’s assets. And at present this basic information is not readily available in a simple understandable form. Also often these total figures are given in terms of billion or trillions of dollars. But no normal person can understand the significance of such figures. Such figures need to be brought down to an individual pro-rata value before the figures can be understood.
            But, because this graph is so important, the rich clique, who tends to run our country, avoid this essential information coming to light.

 

 

4)         The Inequality between the Young and Old

 

This is an important inequality that is getting worse. But unfortunately the situation is so complex that it is very hard to give a general measure. I have spent quite a long time thinking about the problem. But there are too many different effects that alter the situation, and it is too hard to avoid these effects changing the meaning of the measure. So I have had to give up – the situation is simply too complex.
            In both my “Society of Choice” and my “Green Living” books I recognised this problem and I have given two different solutions. You can read my solutions I give there. It is not very hard to work out a just solution. But to give a comprehensive measure of the current situation is simply too difficult.
            But there are two important measures that I have already mentioned. One is the length of time it takes a normal young person to buy a normal home. This is quite good. I have discussed this measure in my section on “Inequality between the Young and the Old” on page 73 in A Special Period to stop Climate Change. And the other important item, which also needs to be measured, is the average debt a young person needs to pay for their education. This subject was covered in my webpage The Poor will be protected from getting Poorer”.
            Both these measures seem to be getting worse.

 

 

All these four measures need to be born in mind. But by far the most definite and important of these measures is the “Wealth Equality” measure.

 

 

 

You might now also like to look back at:

either my "Home Page" (which introduces this whole website and lists all my webpages).

 

My next normal webpage is Freedom Measures.

 

Updated on 11/11/2016.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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