Last modified: 7:58 AM Saturday, 14 January 2017

More questions than answers

This article is interesting in that it ranks countries’ wealth not by GDP (which reflects every transaction of any kind, with the consequence that natural disasters, for example, actually cause GDP to rise) but by other and somewhat more reliable criteria. One effect of this methodology is that certain nations appear on the list in other than the order to which we are accustomed. However, it also raises certain questions.

Map: Income inequality in the United States, 2006

Mapping inequality: Not only is there a wide and growing national gap between the richest and the rest of us,
but it is far from uniform; the nation is a
crazy-quilt of unequal disparities.
[ Image Source ]

As regards “gross national income”: Was this, as is usual, a mean average? Statistics based on mean income tend to be misleading to the extent that inequality of wealth exists. That some people in a group are disproportionately rich artificially raises the mean income in a way that doesn’t accurately reflect how much money most people in that group actually make. You will note, in reading Charles Dickens’ Hard Times, for example, that this has been understood for centuries, although it presents an unflattering picture and therefore tends to be glossed over by many economists and writers reporting their findings.

As to “literacy”: How was this determined? According to this article, the U.S. ranks surprisingly well, at 99 percent. However, this is much at odds with what disinterested observers have noted about functional literacy rates, which are far lower. Given the extremely strong correlation of functional illiteracy with poverty (and other such negative outcomes, such as criminality and incarceration rates), this is worthy of further examination.

Infographic: Understanding Illiteracy

Functional illiteracy: If you can’t understand this chart, you may be part of the problem.
[ Image Source ]

One added observation: To its credit, this article forthrightly states that the U.S. is in seventh place in spite of its overall wealth specifically because of income inequality caused by laissez-faire capitalism. What it does not sufficiently emphasize, it seems to me, is the debilitating effect produced on any economy carrying at least a 9.6-percent formal unemployment rate; nor does this figure adequately reflect the real extent of joblessness and underemployment, which together leave a significant fraction of U.S. citizens without sufficient resources to sustain themselves.

I would be intrigued to see a follow-up report — on this site or linked from it — addressing these methodological shortcomings. Would the U.S., for example, still appear on a more accurately constituted list at all? When we speak of “literacy,” do we merely denote the ability to read a simple sentence, or do we consider it to include the ability to comprehend complex ideas in written form — such as the distinction between mean income and what the average wage-earner brings home?

On the whole, this article leaves us with more questions than answers, and I for one would welcome a more comprehensive follow-up.

Originally published as a review of a debtloanrate.com article on economics and relative national wealth. As of 17 March 2015, the site apparently no longer exists.

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