Income Inequality in Chile, Europe, and the USA

Christian Jessen, a Start-Up Chile participant, wrote about the culture of Denmark:

The Danish Parliamentary Elections of 2011 is going on right now…. For the first time, I will not vote. Theoretically I could (and should) go to the Danish embassy here in Santiago and make a letter with my vote.

But to be honest, it just doesn’t matter anymore. When I look back at Denmark, the current government is increasing public spending, hidden taxes and making new stupid rules and legislation. The opposition (which according to polls are to win) is suggesting even more taxation, public spending and new rules and legislation….

The only way to increase a country’s economics, is to create jobs in the private sector…. And there is the fundamental problem I see in the Danish culture. Being successful is bad. Earning a lot of money is bad. This is one of those weird negative impacts of having a flat class-culture – Denmark is all one middle-class. And if you are in the top, you are a bad person….

Unless we can start changing our culture, and learn to respect, admire and credit the people creating jobs, creating companies and earning good money, we will fall into a hole of self-pity. Unless we learn to be independent and not expect our government to wipe our ass, we will end up worse than Greece.

According to the United Nations, Denmark is one of the most difficult countries for an ambitious person to stand above the crowd, as measured by the Gini Index:

Country Gini Index Ranking
Chile 54.9 14
Hong Kong 53.3 17
USA 45.0 44
Japan 38.1 74
United Kingdom 34.0 92
Denmark 24.0 132
Sweden 23.0 134

A Gini index of 0 implies perfect equality and a score of 100 implies perfect inequality. Each of the 20 poorest ranked countries are in Europe. Denmark and Sweden scored worse than countries in the former Soviet empire. In contrast, Chile and Hong Kong are growing capitalist economies with opportunities for ambitious people.

Chile Communist Party leader Camila Vallejo wants to socialize education and redistribute wealth because she studies geography, a major in lower demand than software engineering, accounting, and medicine. The Occupy Wall Street movement in the USA wants to redistribute wealth from the top 1% to the other 99%, even though many rich people earn money legitimately without government handouts.

Some people don’t mind the poor becoming poorer, so long as the gap between rich and poor is narrow. Chile Treasury Minister Felipe Larraín disagrees:

There has never been a case of a stagnant economy successfully reducing inequality. To distribute wealth, you first need to have the capacity to generate it and the best way of doing that is by having a growing economy, not by raising taxes…. We are seeing a veritable cavalcade of tax announcements – that seem to assume economic growth is guaranteed – and this compromises Chile’s development.

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