THE WEALTH GAP
OVER 100 years ago, in the year 1912, an Italian statistician, one Corrado Gini, published the pleasant and surprisingly modern book, Variability and Mutability.
Therein, he introduced a measure of variability that is known today as the Gini Index. The Gini Index had about 13 formulations originally, none of which are known to the general public today.
Gini defined his index as ‘the mean difference from all observed quantities’ and proceeded to provide different formulations to easily compute his index with various types of data, and indicated the fields where each formulation might be more appropriate to use. The text is enriched with many curious and practical applications that made the stunning publication ahead of its time. In 1914, Gini discussed his index in relation to the Lorenz curve and popular contemporary measures of variability.
The World Bank uses the Gini Index as a summary statistic to measure how equitably resources, such as income or wealth, are distributed within an economy. The 2018 figures tell the story that in the whole world, the Republic of South Africa is the most economically unequal. On a scale of zero 0 to 100, where zero represents total equality and 100 represents total inequality, South Africa scored a colossal 63.
The pre-1994 racist regime designed to keep South Africa’s black population under the thumb of an elite white minority, was overhauled by the introduction of a democratic government in the early 1990s, tasked to extend basic human rights and opportunity to all citizens of that land.
The South African black population of today enjoys basic freedoms, but is yet to share in the land’s wealth and prosperity. The legacy of apartheid endures. Previously disadvantaged South Africans hold fewer assets, have fewer skills, earn lower wages, and are still more likely to be unemployed. Some might argue that the rainbow nation is even more divided now than it was in 1994.
The Kingdom of Eswatini scored 52 on the same scale, making us the sixth most unequal nation in the world. Eswatini has been independent for more than half a century; we should be doing a better job at distributing income among the populace by now, especially considering our relatively meagre population size. Systematic failures at a government level, and barriers to start and grow new businesses continue to be the bottlenecks that limit our overall throughout, andcompromise how high we can fly.
South Africa’s richest households are 10 times wealthier than the poorest households, while the wealthiest 20 per cent in Eswatini enjoy a 56.7 per cent share of the national income. Murray Leibbrandt, economics professor at the University of Cape Town, posits; “The best signifier of a country that’s really on its way isn’t a society with no inequality.
It’s a society with declining inequality and a growing middle class.” Inequality in Eswatini has declined by about eight percentage points since 1994; and South Africa’s taxes and social spending system have achieved the largest reductions in income inequality among a sample of 29 developing countries in the Commitment to Equity database, according to the African Union’s Africa’s Development Dynamics report of 2018.
Things are looking up then? Eh, not really.
Southern Africa is the most unequal region in the world. Of the 10 countries with the highest income inequality, six are found in Southern Africa. It doesn’t get much worse than Southern Africa, I’m afraid.
The conversation around wealth redistribution will only intensify in the region. Social mechanisms such as taxation, charity, welfare, public services, land reform, monetary policies and, at the extreme, confiscation have been devised and employed in various jurisdictions yielding varying degrees of success
. Are dramatic policy changes warranted to level the playing field if only in access to opportunities? Go and ask your grandfather.
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