The wealth inequality in France that is causing riots is nothing compared to the United States
Where is the outrage here?
Paris is literally burning. Fires have been set all over the City of Light by protesters wearing yellow vests. The reason? They are outraged over rising income inequality in France. The media is saying that the relatively new administration of President Emanuel Macron is in trouble. Already, he has had to cancel a planned increase in the gas tax in response.
There is some basis for the criticisms raised by the yellow vests. France has indeed been experiencing rising inequality over the past fifteen years. As in the United States, this change has been driven largely by higher incomes for high level employees as well as greater returns on invested capital. As a result, the middle and lower classes are being squeezed, and they are angry about it. Macron, for his part, they perceive as too supportive of the very rich to the detriment of everyone else.
If that problem sounds familiar, you’re more right than you know. The United States has struggled with growing income and wealth inequality since about the same time France started experiencing that trend: in the early 1980s. Not coincidentally, the U.S. trend in that direction started under the twelve years of Reagan-Bush. Some progress was made during the Clinton administration, mostly because everyone’s incomes were rising during that period. Obama also made some positive strides, but overall, this has been a consistent trend in the United States since 1981 or so.
Both France and the United States value equality of opportunity. You have to remember that the motto of the French Revolution was “equality, fraternity, liberty.” And in the United States, our founding document stated that “all men are created equal.” So how are we doing on that front?
The Organization for Economic Cooperation and Development (OECD) has developed a measure of income inequality called the Gini coefficient. Of the 34 OECD member countries, the United States has the fourth highest Gini coefficient (0.378) behind only Italy, Turkey and Mexico. France is number 22 on the list, with a Gini coefficient of 0.293.
So in France, where income inequality is far lower than here, there are riots. In the United States, the white working class support an administration that has done everything it can to increase income inequality.
The numbers tell an even more striking story. Despite claims to the contrary, it turns out that income inequality is not just a function of an efficiently operating market. According to the data, before taking taxes and transfers into consideration — in other words, government policy — the United States is ranked 6 among OECD countries and France is ranked 7. But then, once government policy is applied, the U.S. moves up to 4, and France drops down to 22. Therefore, U.S. government policy actually increases inequality, while French policy decreases it.
We saw how government policy can impact inequality with Obamacare. On the one hand, the availability of affordable health insurance for the middle and lower classes made the burden of health care less onerous. On the other hand, much of the costs of the program were paid for by taxes upon the wealthy. As a result, income inequality growth slowed under Obama’s leadership.
Contrast that policy with the Trump tax cut which has been shown to be nothing more than a give-away to the rich. When you contrast these two policies, you can see why the Republicans fought so hard to get rid of Obamacare and to pass their tax cut. Fundamentally, their goal is to increase income inequality through government policy, and they have been very effective at it.
So the French, with less income inequality than we have and with government policies that reduce inequality rather than increasing it as we have here, are protesting. Where are the comparable protests here?
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