The Shared Inequalities of DC and Puerto Rico

Back in 2011, I visited Brazil, which was so wonderful and interesting. In a blog post at that time, I looked at its notoriously high Gini index (a conventional measure of income inequality) and compared it with the Gini index of DC and Puerto Rico. According to the Census, “The Gini index varies from 0 to 1, with a 0 indicating perfect equality, where there is a proportional distribution of income. A Gini index of 1 indicates perfect inequality, where one household has all the income.” According to the latest data in 2011 (2009 Census data), DC and Puerto Rico have long had the highest Gini indexes of the entire United States and had similar levels to Brazil.

Last weekend, I visited Puerto Rico, which was so wonderful and interesting. Today I decided to revisit my comparison:

	1960	1979	1989	1999	2004	2006	2009	2015	2016	2018
DC Gini		.450	.492	.549		.537	.532	.535	.542
Puerto Rico Gini				.558		.535	.532	.559	.542
Brazil Gini	.500		.630	[.61]	.560		.540	.513	.537	.539

(I need to fix this table. The years go from 1960 to 2018.) As before, DC and Puerto Rico share exactly the same Gini index, which was .532 (2009 data) and most recently is .542 (2016 data), and which is now above Brazil’s Gini index. You can see that these numbers are very high in the World Bank’s listing of Gini indexes for countries worldwide here. Of course, there are issues with comparing countries, states, and cities, as well as the problems with using measures of income inequality in place of other kinds of inequality. Leaving those aside, what could explain these similar Gini indexes?

Back in 2011, I hypothesized that these high levels of inequality may be due to the fact that both DC and Puerto Rico lack representation in Congress and lack democratic control over parts of their governments. Furthermore, in 1995-2001, DC was subject to Financial Control Board (see its 1995 law here). During this time, there was a large jump in DC’s Gini index from .492 to .549. In 2016, Puerto Rico is now subject to its own financial control board (see its 2016 law here) and may experience similar increases in inequality.

In 1989, when Brazil had reached its highest Gini coefficient level, the Brazilian people freely elected their first president after decades of military dictatorship. After 1989, Brazil’s Gini coefficient declined significantly through the reduction of poverty. According to a 2017 IMF working paper, Brazil’s “Inequality reduction was achieved thanks to a decade-long period of economic growth and deliberate income and social inclusion policies, such as minimum wage increases and targeted social programs.” Could lack of full democratic representation have an impact on inequality?