I wouldn't call Canadian (or Fr or Se) wealth inequality 'low'. 'Why I can't afford a house', again is more a problem in Fr/De/Se than in US, see https://en.wikipedia.org/wiki/List_of_countries_by_home_owne...
- Gini for SE is 0.25
- Gini for FR is 0.31
- Gini for CA is 0.33
- Gini for US is 0.48
- Gini for ZA is 0.65
I've also included South Africa for comparison, one of the least equal societies on earth. A photo of what a 0.65 Gini country looks like is here (https://blog.prif.org/wp-content/uploads/2019/10/SA_Drone_Pi...)
If nobody has any money at all, would you not say inequality is low? If everyone in Tajikistan has $5 except the president, Emomali Rahmon, is inequality not low?
I suspect you are looking for a pairing of HDI and Gini, which factors in both the development (and hence the standard of living) and the inequality.
Sweden: (Gini: 0.25, HDI: 0.933), France: (Gini: 0.31, HDI: 0.901), Canada: (Gini: 0.33, HDI: 0.926), USA: (Gini: 0.48, HDI: 0.924), South Africa: (Gini: 0.65, HDI: 0.709).
Now, Tajikistan has an HDI of 0.66 ("medium"), and Azerbaijan 0.756 ("high").
Kazakhstan might surprise you, the HDI is 0.817 ("very high"). The standard of living there is actually good, in spite of what you may have seen on Borat - incidentally filmed in Romania. Almaty's been on my list of places to visit for a long time :) [1]
That distribution will yield a very high gini coefficient of very close to 1.
The Gini coefficient is defined as 1/2 the mean absolute difference considering all pairs of households:
https://en.wikipedia.org/wiki/Gini_coefficient
A group of people where everyone has the same income as a Gini coefficient of exactly zero. Adding a single outlier will increase it a little. A group of 1001 with 1000 people earning $1 and one person earning $100 has a Gini coefficient of 0.09.
> That distribution will yield a very high gini coefficient of very close to 1.
It yields (n-1)|5-p|/(2n(5(n-1)+p)) which is about p/(5n+p).
So it depends on whether the president (p) has $10 or $n^2.
Romania: Gini: 0.36, HDI: 0.828
HDI is close to Kazakhstan, actually
Obviously you have to compare apples to apples
Well, I mean, except property rights and the people that will defend them in most of the places in the planet suitable for human habitation.
They tend not to be very wealthy by modern standards. Maybe you could ingratiate yourself to them with them gifts of things that require modern manufacturing infrastructure.
You were born into the tribe, and stayed there your entire life. Also there were no laws on hunting, setting traps, etc.
And the above presumes the existing population would accept you, and it's quite likely they won't.
Deciding to live off the land without special privileges enjoyed by native populations is simply not possible; regular financial transactions between you and society is a requirement, and it's pretty much impossible to raise children without access to modernities and without having the authorities go after you for child abuse.
I love eating wild weeds and berries, but it takes _a lot_ of time to get enough to fill yourself, and it's not a case that people have only eaten stuff like acorns only in times of famine.
This fact by itself made me question a lot of what's in "Sapiens".
Also from what i gather most meat was aquired from trapping, rather than hunting
1. HGs are very skilled, and they build their skills throughout their lives - crucially, starting with childhood and adolescence. I, an adult brought up in a Western civilization, would be totally clueless in a rain forest the same way that those HGs would be totally clueless in our world.
2. HGs live in groups. I would need to find a group of HGs that would accept me, which is highly unlikely because of the language and culture barrier, plus my lack of skills - why would they want to have anything to do with an useless guy in the first place? My CV full of accomplishments does not impress them at all.
Unfortunately, just like transplanting an adult HG into our society most likely ends in them becoming a homeless addict, most likely result for me heading for the jungle is fairly quick death.
If you are a hunter gatherer you just need a good hunt every now and then. There is no pressure to perform work all day if you get enough food.
This is different if you are a farmer. Farming is highly labor intensive. There is so much work to do that you are never done. You will have to repeat the same motions every single day. Swing the same tools the exact same way. People are tied to their land and it is possible to conquer the land violently. You are dependent on a military force which implies that a local ruler must collect taxes to pay the soldiers. That ruler also has power over you which can easily be abused.
Democracy is definitively fairer than having an authoritarian ruler but it can be subject to tyranny of the majority or the minority and still cause failure in leadership.
Break a leg, if you’re lucky, you’ll a burden for s month.
On the other hand, your teeth may be healthier than that of people who gulp sugary drinks.
Not quite. In totalitarian states, typically everyone's income is fairly equal.
Wealth, however, is often another matter.
In the soviet Union, party apparatchiks often had very nice dachas to live in, fancy cars, exclusive shopping venues with imported goods, vacations abroad, etc. But these things weren't necessarily purchased with disposable income, per-se. At least not officially.
My impression has been that wealth inequality in many places in Europe is much higher than income inequality, as a factor of it being an older society.
The places in Europe I'd want to move to are really no cheaper to buy a house than the places I'd want to live in the US.
I pulled some city-level numbers and it seems like at least in some areas, European SWE are missing out compared to coastal US ones:
London 2018: 0.7 https://www.ons.gov.uk/economy/nationalaccounts/uksectoracco...
SF 2012: 0.523 https://www.sfgate.com/bayarea/article/Income-inequality-on-... (probably this has gone up!)
Paris 2015: ~0.492 https://www.institutmontaigne.org/en/blog/data-inequalities-... (they just say "similar to brazil", which is 0.492
Its unfortunately harder to find a bunch of city-level data, I wasn't able to find any German cities on quick googling, so I'm definitely fulfilling stereotypes of "Americans who think of Europe as just a couple famous cities", but those capture at least a couple of major population centers that aren't so appealing if you're a dev compared to the US hotspots: they're still unequal, but suddenly you're not nearly as high on the totem pole.
SE is 0.867 FR is 0.687 CA is 0.726 US is 0.852 ZA is 0.806
(Of course this all depends on the alternative too: renting regulations vary widely over the world in how strong the position of the occupants is wrt rent increases and landlord initiated termination)
A house can easily lose its value or at least cause large expenses, e.g. if the cellar floods or develops mold problems. Or if the surrounding neighborhood becomes worse.
Selling houses has a large transaction cost.
I really don't see much benefits to owning over renting. I'd rather have 200k in a diversified portfolio that earns me 5k a year after taxes and has a much lower probability of losing 30% of its value while living in an apartment in a central location than own a house in a suburb that costs me a few thousand a year in upkeep and taxes. I'd likely need to buy a car too in that case, which is another few thousand a year.
From a financial point of you a difference is that to do this you need to have 200k cash, while you can borrow most of the money to buy a 200k house.
There is a leveraging effect when investing in property.
If you want to do it without reducing your expected returns you diversify to products with similar expected returns and, to the extent practical, mutually independent risks.
How could it not?
> If you’re splitting your investment, your downsides are smaller but your upsides are also smaller, and presumably by the same amount.
Yes, and your expected return remains the same. Reducing variability isn’t “reducing returns”, because, as you note, what you lose from reducing the 50+nth percentile returns is made up for by increasing the 50-nth percentile returns.
Also, extreme risks is not what most people aim for in investing when most of their net worth is involved; the utility of money is not linear.
Risks of buying your home include: - Not being able to move if you can't sell (because the market isn't right) - Being stuck in a house where you pay a high mortgage while you could rent for much less after a crash (what happened in Spain after 2008). Note than in US you can give up your house and your mortgage goes away, but that doesn't work this way in Europe. The bank sells your house and if it doesn't cover the mortgage you still owe the rest
Also if you sell too early after buying, you're losing money because you pay more in transaction fees that you would have in rent (unless there is a big spike in prices).
Anyway, for a long time real estate have been steadily appreciating and people (especially boomers) got used to it, to the point that all their reasoning about real estate is that it's appreciating faster than inflation. It was true for a long period but that's no longer the case.
The German population is shrinking.
Real estate as a safe and stable investment in the long term relies on steady population growth to insure that demand will always be there for you to be able to sell at a good price.
Of course, if you buy in the most desirable locations you may be shielded from this because demand outstrips supply by a huge margin to begin with.
This explains the high wealth inequality we observe[3], despite the low income inequality[4].
This could be caused by the low levels of home ownership given that home ownership (and the associated leverage) is a huge tool for wealth accumulation for the average person.
I know that people say you can make more from ETF's etc. than real estate, but I'm not sure if that applies so much to your primary residence given you will always need somewhere to live and a bank isn't going to lend you hundreds of thousands of euros to invest in ETF's, but they will for your primary residence.
The extra mobility you have while renting is an advantage but one that comes with a hefty price.
[1] https://en.wikipedia.org/wiki/List_of_countries_by_wealth_pe...
[2] https://en.wikipedia.org/wiki/Median_income#Median_equivalen...
[3] https://en.wikipedia.org/wiki/List_of_countries_by_wealth_eq...
[4] https://en.wikipedia.org/wiki/List_of_countries_by_income_eq...
So you have very high wealth inequality, average German net financial wealth is equal to Greece and Germany has a significant number of billionaires, but you also have a system that fundamentally cannot be compared with the US. It just optimises for different things.
That being said, whilst recognising those differences, lower wealth inequality is not the result of most of these systems. Income inequality is generally lower but the cost of this is usually: low competition, high structural unemployment, weak unions, low levels of business creation...it isn't free. It is readly apparent from the EU that whilst the US has high inequality, it also has a far more dynamic economy that results in more people actually becoming wealthy (to take Germany as an example, most billionaires come from families that got rich in the 30s and inherited...the level of downward mobility is very high in the US) and higher levels of innovation.
This is exactly the other side of inequality: if there is a big gap, someone must be taking advantage of this gap. The problem is that most people are losers in this competition.
https://en.m.wikipedia.org/wiki/Global_Social_Mobility_Index
Rent control sounds like a good idea in theory but in practice it seems the opposite, creating two tiers of renters.
The reason why it works is because the government is forced to change laws that prevent the construction it just promised. It's about accountability rather than the promise itself.
The reason why rent control doesn't work is because the government can enact or keep laws that restrict the supply of housing. There is no accountability. It's actually equivalent to censorship. If you want the housing market to look good, just ban bad news (high prices).