An excellent question, Nathan, and the answer is a bit of everything. In reality, we can just say that the Gini index represents how well income ended up being distributed or not.
I looked at political systems in the early 2000s and discovered statistically significant confirmations that political systems influence the distribution of wealth/income. I'll show that here with data from nationmaster.com and the CIA World Factbook. Today, I would use World Bank data.
In this graph you can see that two systems stand out, columns #1 and #3, as presenting outcomes 'all over the place'. In both cases there is an aspect of winner-take-all, of holding elections in which a single person claims to represent all voters, but who has then the greater potential to give to his/her buddies, or just to the elite of the country.
In District elections, all representatives are single winners. In Proportional with President, the President is the single election winner, while the House has various parties (i.e. more divided). In both cases, there is a hierarchy with a sharp point like a pyramid (or steeper still, like the American pyramid in San Francisco).
The winner, the person in top, makes more decisions benefiting a select group instead of society as a whole.
Columns #4 and #5 have outcomes that are found in a much smaller bandwidth, plus they give less to the wealthy and more to the lower strata in society (that graph on the bottom 10 percent to appear further below).
That means that
A: Voting systems totally matter, and
B: Culture matters when the voting system is not all that good.
With B, I would give as example that all politicians in the United States can deliver We The People decisions; all it takes is for them to put those decisions in place. Yet the point is that they don't have to. That should explain why columns #1 and #3 can be ‘all over the place.’ The outcomes depend more on specific individuals (and culture).
In columns #4 and #5 we see that these nations all have We The People decisions nearly all the time. Their rich are still the rich, but they are not filthy rich. Their poor are still the poor, but they are not dirty poor.
So, information is key and information is cue.
The UK dominated the world for three centuries because they had that competitive winner-take-all installed and foreigners loved to invest in the British Empire (because they got great returns). The foreign nations in the mean time had a hard time competing with that British Empire (France succeeded to follow suit, but no other nation did until the beginning of the 20th Century).
It is really difficult to compete with lean and mean, when lean and mean is not stopping at some point but rather will compete until lean is leanest and mean is meanest.
Then, skip-jump, and the United States is then taking over the leading role in the world.
Again, we see total competition and foreign investors loving to invest here because they get fantastic returns. meanwhile, the bottom does not get to share in the wealth because we need to attract investors and have the latest (gadgets and warfare). We have to stay the hippest and bestest, most attractive, greatest returns. The slant must be steep to establish that top position. And it helps to be a large nation (or for the UK, to be an empire).
Twice, we see nations that have an extreme elitist upperclass with fantastic education, and a deeply entrenched level of poverty, stratification of society, galore. Of course, the true poverty must be not be shown too often in the public's view, or blamed on the slant of society, so many folks end up ignoring the actual bottom of society and think they have nothing to do with ‘us’.
Where the British sent many of their poor to their colonies, the US actually sends many to jail or to its army. The street poverty of the USA is known throughout the world and rivals that of third-world countries. Let’s not kid ourselves.
So, review your questions once more, Nathan, and ask yourself if your questions contained a bias or not. The USA and the UK are not like Germany or the Scandianvian countries.
Have you gone to Canada and experienced that different feel in society? Have you been to Western Europe (excluding the UK and to some extent France here).
Here is the graph produced in 2006 but then for the bottom ten percent of society. You can see, it is a mirror image of the richest 10% graph.
Again, we see the same wid bandwidth for #1 and #3, and more limited, similar outcomes for #4 and #5.
Yes, Column #3 provides the real answer to your question: Culture can change the outcome. If money is spent on education, then many may do well in society. If the culture has a strong belief that ultimately we are all the same and money is just money, then that money may get spread out better for all.
But if we have selfish folks in top, or if we have folks in top that believe that competition-for-the-sake-of-competition is super healthy, then we see the more slanted societies. Cultures can be very rigid.
I am sure there are a couple of handles I did not pronounce. For Mr. Gini it was an exercise of showing the good, the bad, and the ugly in income distribution, no matter the reasons.
Thank you, Nathan. I hope you don't mind my spiritedness in this reply : - )
