This post concludes a series of posts on the topic of “American exceptionalism.” In my last look at the topic several weeks ago, I argued that one conception of American exceptionalism among conservatives – the idea that the United States is uniquely free or has a particularly small government due to its culture – is mostly mistaken. In fact, while the U.S. does have a relatively small government by high-income democratic standards, that relative smallness can be explained more or less entirely by its fiscal-federal institutions, which are also shared by Canada and Switzerland (and Switzerland has a much smaller government than the U.S.). In this post, I take aim at a conception of American exceptionalism more widespread on the left, the idea that the U.S. is uniquely sinful in its degree of inequality. To a significant degree this premise on the left mirrors the premise on the right of uniquely small government: the cost of that small government, it is argued, is more inequality.
The problem with the claim is simple: comparing the U.S. to Europe on inequality is inappropriate because Europe never imported a large number of slaves into their territory. When you compare the U.S. to other countries with a history of slavery, U.S. inequality is actually remarkably low.
To show this, I use Frederick Solt’s Standardized World Income Inequality Database (SWIID). The SWIID is the most up-to-date, cross-nationally comparable dataset on income inequality. It reports the Gini coefficient, which is a summary indicator of income inequality in which higher values represent greater inequality. The Gini coefficient can be measured for both pre-tax-and-transfer and post-tax-and-transfer income, and the SWIID provides both. To get at the core of the American exceptionalism issue, it is probably best to look at post-tax-and-transfer inequality, which takes into account both the level of inequality in market incomes and the extent to which taxes and transfers alleviate those inequalities (updates in italics). Here is a chart of post-tax income inequality in some high-income democracies in 2007:
But let’s see how the ranking looks if we compare the U.S. to other New World countries that once had slavery. Here’s that ranking, from 2006 so that more countries are available:
The U.S. has the least inequality, by a fair margin, of these countries. Of course, the U.S. also has a smaller combined percentage of blacks and Amerindians than all of these other countries except Costa Rica, Chile, Argentina, and Uruguay. But that’s precisely the point – the overriding factor determining inequality in New World countries is the white or mestizo percentage of the population. When you control for that, the U.S. actually has very low inequality.
If the U.S. is exceptional at all, it is exceptional for its high GDP per capita and low income inequality, relative to similarly situated countries.