Is America at a Pre-French Revolution Level of Inequality?

I’ve been a Redditor for over a decade. I follow hundreds of subreddits to be entertained, informed, and to learn something new daily.   As a data nerd and engineer, I constantly question the information with which I’m presented.  Such was the case when I came across this post by @AubreyLefkowitz on r/WhitePeopleTwitter.

In searching for a source for this claim, I came across this same bar chart graphic recently posted on both r/SandersForPresident and r/LateStageCapitalism. With the timing of Aubrey’s Twitter post relevant to this graphic circulating online, surely this is the source of her comment.

The reference for the French Pre-Revolution data is found on pages 59-83 of the 4th volume of the European Review of Economic History, specifically a paper titled The Income Inequality of France in Historical Perspective.  A quick read of the paper’s title is enough to debunk the claim of Twitter and the graphic.  Few things get under my skin like misrepresented data.  Income is not the same as wealth, although I’ve heard people on both the left and right falsely equate the two when discussing inequity. Wealth, being the net effect of income, spending habits, and other factors, is important to understand but I’ll reserve that for another blog post.  The opportunity to build wealth is deeply rooted in income, so let’s focus on income inequality first.

This paper makes clear that “there are no reliable estimates of how income was distributed before World War II… The absence of information about the income distribution in the eighteenth and nineteenth centuries presents a serious impediment to understanding how the socioeconomic fabric of France evolved during those times that preceded (the revolution).”  Wealth metrics are harder to confidently estimate than are income estimates, so this series of quotes from the original source gives me great confidence that no one has yet found wealth inequality metrics for Pre-Revolution France.

After clearly stating the difficulties in their work and the many assumptions that got them to a result, the authors of the paper presented a table summarizing a rough estimate of income distributions as derived from capitation assessment (their form of taxes).  This is the apparent source of the bar chart falsely claiming to show “Wealth Distribution in France, 1760-1790,” the period leading up to the French Revolution. 

I decided to make a better comparative income distribution for this Pre-French Revolution period and more current times for the U.S. and select EU countries.  Besides the Pre-French Revolution data, all data shown is from 2018, the most current common year of data for all countries shown. The bottom two quintiles are combined into the bottom 40% because this is how data from the Pre-French Revolution source is bucketed.

Data for the U.S. are from the U.S. Census Bureau’s Income and Poverty in the United States, Table A-4, and data for all other countries are from Eurostat.  France is included, so we can see how things stand there with income inequality pre-1800 and in 2018.  Switzerland, the UK, and Estonia are shown because they are among the Top 10 countries of the 2020 Economic Freedom of the World Index, with high rankings associated with being capitalist.  It’s worth noting here that the U.S., which is a republic that already has a mixture of capitalism and socialism, is absent from the Top 10 in this ranking.  Lower rankings on this Economic Freedom metric are associated with communism and socialism, with Greece, Italy, and Turkey being the European countries lowest on the list’s spectrum, so they show what sort of income distributions might be expected with such non-capitalistic political systems.

The results:

  • Of the EU countries, both the capitalist and socialist countries have about 40% of income going to the top 20% of earners and about 20% of income going to the bottom 40% of earners. This appears to be common regardless of the political system in place.  Simply put, socialism and communism don’t result in equal distribution of wealth among a country’s citizens. 
  • In France, immediately before their revolution in the 1790s, the top 20% of earners took 76% of wages while the bottom 40% was given just 5% of all wages. France in 2018 shows that they have certainly worked towards a more equitable share of incomes even while being currently considered Moderately Free according to the Economic Freedom of the World Index.
  • In the U.S., which is considered Mostly Free, the top 20% of earners capture 52% of the income while the bottom 40% get just 11% of income. Could one rationalize this as acceptable compared to the EU countries because of the United States’ GDP and concentration of high-paying tech companies with global footprints?

A key comparison in the context of the recent internet rumor is that of France immediately before their Revolution to the U.S. now.  Pre-Revolution France had 76% of wages going to the top 20% of earners versus the U.S.’s 52% while the bottom 40% received just 5% in Pre-Revolution France versus the U.S.’s 11%.  While the U.S. has greater income inequality than its European contemporaries, it is arguably closer to the current EU countries than Pre-Revolution France.  Consider that in Pre-Revolution France the top 10% of earners took in 60% of all income according to The Income Inequality of France in Historical Perspective paper, which is more than the top 20% of earners get in the U.S.  In France, at that point in history, they truly had a ruling class of the top 10%.

The income and ownership stake that Jeff Bezos has had from Amazon or that Bill Gates has had from Microsoft has propelled them to astronomical personal net worth (wealth).  But, again, we’re talking about income inequality first in this article.  These individuals have taken what many (including myself) believe to be exorbitant compensation year after year, driving us towards Pre-Revolution France income inequality and away from the distribution patterns seen currently in EU countries — but we’re still a far cry away from the income inequality that existed in France in the 1780s. Marie Antoinette and other monarchs of the time quite literally built fake, fully staffed villages on their properties to masquerade as common folks for fun; theirs was a true ruling class on one end and peasants on the other.  Sure, we’ve got an eccentric billionaire who shot his used car into space to entertain us all, but we’re no Pre-Revolution France.  We’ve got work to do to correct income inequality should that be a common enough voting point to drive policy in the U.S.  If you’re one who feels strongly about this issue, maybe stop boycotting beans and start boycotting the companies which have driven this very trend by so grossly overcompensating their leadership.  Good luck canceling Google, Facebook, Microsoft, Twitter, Apple, Amazon, Starbucks (here’s some guidance on just how impossible that is and some great leftist press exalting some of these giants and their wealth).