Saturday, December 6, 2008

Income and Welath Inequality

I was crusing the streets of Da Nang yesterday with my new co-worker Dat. I mentioned I liked the way cars treat scooters/motorbikes out here. They basically honk as they drive saying "get out of my way, I'm coming." This is of course fairly common in many places, but seemed very callous here. Here was our conversation:

Dat: "Money Talks Here"
Me:  "Yeah but it's that way everywhere"
Dat:  "Yes but probably more so here"
Me: "I guess. It's probably pretty similar to Hungary. I spent many summers there as a child, and have travelled to just as many poorer countries as rich countries"

Well of course I can't just make a conjecture like that without Verifying. Turns out that Vietnam is by far the poorest place I've been probably. Here's some research.

Probably the cruedest measure of "wealth" of a nation is GDP/capita:

UK - 35,000
Hungary - 16,000
Vietnam - 1,000

But that's all in dollars and doesn't account for the COST of things locally. Still even if you factor in what's known as Purchasing Power Parity (PPP)  You get:

US - 45,000
UK - 33,000
Hungary - 19,000
China - 5,000
Vietnam - 2,600
India - 2,600
Congo - 180
Ethiopia - 175

So you were right. In that simple sense it's certainly much poorer here. About 8x more income per person in hungary. Still it's about 10X better to live in Vietnam. Now that of course doesn't tell you ANYTHING about how the income is distributed. Mexico for example has the largest number of BILLIONAIRES on the planet but is a very poor country. There are many metrics but the gini coefficient is the most common one and it measure the standard deviation essentially of wealth distribution. Typically this is inversely relate, but it clearly shows that while USA is wealthy, it's still pretty unequal as far as income. That's not to say everyone doesn't have an opportunity, I think it just means nobody believes in handouts, only hard work. Here's some comparison values :

Japan & Sweden 25
Hungary 27
Vietnam 34
USA 41
Mexico 46
China 47
Brazil 57
Bolivia 60
Namibia 75

So you can see that while wealth is high in USA for example the income distribution is still pretty unfair, though once again you can see Africa is a mess.


Paul S. said...

Tom, to be "fair", perhaps you should say that income distribution [in the USA] is still pretty unequal, rather than "unfair". ;-)

How long are you going to be in Vietnam? I didn't even know you were going!

Tom Gal said...

You're right. Unequal is a better world, and I concur with the Economists general opinion that a rising tide lifts all boats. We definitely have an unequal society but its true that if you work hard, you will succeed, and thats what I love about our country.

Still. We're almost up there with Mexico, the country with the most billionaires in the world, that is still very poor. No matter what Obama does we will not catch up to Europe any time soon.

6 weeks in Vietnam. Once the Luxtera haze evaporated I started moving fast. I got my project at UChicago rolling, found an exciting startup to join, and even got myself a gig out here in Vietnam showing them the Jedi way as an Software Architect and Process Consultant.

Exciting times!