America’s Been Exceptionally Unequal For A Long Time

The US income distribution is much more unequal than it used to be, and also much more unequal than it is in other rich countries. But Alfred Stepan and Juan Linz argue (via Henry Farrell) that the inequality gap between the United States and Europe is nothing new:

Certainly there were many important welfare improvements in the United States from the 1930s to the late 1960s, linked to Franklin Roosevelt’s New Deal, the Civil Rights movements, and Lyndon Johnson’s Great Society. In fact, by 1968, equality had improved greatly, with the Gini index of inequality falling to .388, the best Gini ever recorded in the United States. Even so, looked at comparatively, at its best where did the United States rank? Unfortunately, we do not have systematic comparative data for many countries in this period. But we do have some telling data. Two leading scholars of inequality have comparable data for the United States and at least seven other long-standing democracies in advanced economies for the period 1975–77. During this two-year period, four of the seven countries (France, the UK, Sweden, and Finland) had Gini indices that fell between .200 to .250; two of the seven (Germany and the Netherlands) were between .270 to .300; and only one (Canada) was over .300 at. 360. Thus, during the heyday of income equality in the United States, no other country in the set was as unequal as America, and most were substantially more equal.

Since that time, pre-tax income inequality has risen in parallel in both the United States and most European countries but in many European countries tax-and-transfer regimes have leaned against that trend much harder than in the US.