Gini Coefficient
Income inequality index (0 = perfect equality, 1 = maximum inequality)
“Income inequality rose after 1971 due to monetary debasement.”
The Gini coefficient was roughly stable through the 1970s, then rose starting in the early 1980s — the same pattern as the top 1% income share. The causes are declining unions, globalization, skill-biased technology, and tax policy changes.
Perspectives
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Structural economic changes, not monetary policy, drove inequality
Rising inequality reflects declining unions, technological change, globalization, and tax policy — multiple forces that accelerated in the 1980s, not 1971.
The Gini measures a broad trend driven by labor market structure, education policy, trade, and taxation. Monetary policy affects inequality indirectly (through asset prices and interest rates), but the direct drivers are non-monetary. Other fiat-currency nations (Scandinavia, Japan) have much lower Gini coefficients.
Causal Factors
Declining union membership
25%Unions compressed wage distributions. Their decline from 35% to 10% membership directly widened income gaps.
Skill-biased technological change
25%Technology increased returns to education and skills, widening the gap between college-educated and non-college workers.
Tax policy changes
20%Progressive taxation was weakened: top rates fell from 70% to 37%, capital gains were preferentially taxed, and estate taxes were reduced.
Globalization
20%Trade competition reduced wages for manufacturing workers while increasing returns to capital and high-skilled workers.
Household composition changes
10%More single-parent and single-person households (which earn less) shifted the income distribution even without wage changes.
Data Source
Key Events
Nixon Shock
Gold standard ends — Gini barely changed for a decade
Reagan era begins
Tax cuts and deregulation accelerate inequality
Census methodology change
CPS redesign causes a one-time jump in measured inequality
China joins WTO
Globalization accelerates, hollowing out middle-class jobs