Bob's Daily Buzzword: `Gini Index'

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Sept. 12 (Bloomberg) -- Bob Rice, general managing partner with Tangent Capital Partners LLC, explains "Gini Index." He spoke with Deirdre Bolton Sept. 5 on Bloomberg Television's "Money Moves." (Source: Bloomberg)

Welcome back to "money moves ." time for our daily buzz word, one investment term to improve your alt folk capillary.

Bob -- alt vocabulary.

Bob, this is enabled in gauge of economic -- an important gauge of economic health.

This is not a genie like robin williams in "aladdin." this formula describes the inequality of income distribution in a society.

It has become very widely followed, lots of organizations from the cia to the st.

Louis fed tracking and producing this information.

You prepared a chart that we are going to pull up which actually shows going back to 1965 essentially to the present day, and these shaded areas indicate u.s. recession.

Quite a few of them, as we can see.

Essentially, this line is going in the wrong direction if you want to say the u.s. economy is healthy.

It is, and what is interesting is to zoom back and see how long this trend has been going on.

A lot of people assume that this is a recent phenomenon or just a bad recession -- unemployment, of course the gini ratio got worse.

But if you zoom back, you see it has been going on a long time indeed.

It is pretty steady.

It is pretty steady, so why is the question.

Why not is almost more important.

People say it is tax policy -- we need to tax capital gains because all of the money is going to rich people, or it is republican or democratic administration, or whatever.

You can see that the trend has powered right through all of these tax regime changes and democratic and republican administration changes.

I don't think that the reasons that are commonly bandied about are actually the reasons.

What do you mean, politicians are not always right?

What is your take?

How can someone who is trying to invest or just get a handle on different parts of the economy use it?

What it tells you is that the technology revolution is having fundamental impacts on the way our society is functioning.

Economists traditionally said no, that is not really right, or tech creates new jobs and doesn't eliminate jobs.

I don't think that is true anymore.

For proof, it is exactly coincidence -- almost exactly coincident with the growth in this index is productivity and wage growth.

This could be developed into a tech story.

I really think it is a tech story, it has been a tech story, because it was never true before that tech displaced

This text has been automatically generated. It may not be 100% accurate.

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