If a person increases his income by one order of magnitude (e.g., from $10,000 to $100,000) and another person decreases his income by one order of magnitude (e.g., from $1,000,000 to $100,000), even if the two individuals end up with the same income ($100,000) the person of enhanced income becomes celebratory and the person of diminished income becomes despondent (McClain 2018; Lowenthal 1987). This is a clear case of individuals evaluating their financial status in terms of relative wealth rather than absolute wealth.
The Gini coefficient is used to measure the relative wealth distribution per country (also see Footnote 1). A Gini coefficient value of 1 indicates that one person has all the wealth and the others have no wealth, and a Gini coefficient value of 0 indicates that every person in the country has the same amount of wealth (see Figure 1). Currently the Gini coefficient of the US and China is comparable at values of 0.42 and 0.36, respectively (World Bank, Gini Index), even though the per capita income of the US far exceeds that of China (i.e., $76,000 per year vs. $24,000 per year, respectively, at purchase power parity). Nevertheless, when one compares the US and China, Americans are despondent and believe that they are in economic decline and the Chinese are optimistic. Indeed, the children of America expect a lower standard of living as compared to their parents, whereas the children of China expect a higher standard of living; also, the lifespan of Americans is in decline as it increases in China (Hernandez and Bui 2018; Shmerling 2022).
Even though the relative wealth distribution within the US and China is comparable (based on the Gini coefficient) there is differential sentiment between the two societies, one is backward looking (i.e., “Let’s Make America Great Again”, says Donald Trump) and the other is forward looking (i.e., “Let’s Build a Shared Future for Mankind”, says Xi Jinping). Americans need to break from their despondency by taking charge of their Constitution vis-à-vis the power of one-man one-vote, a corrective mechanism that is absent in China.
Footnote 1: A property of relative wealth is that wealth is evaluated according to a linear growth model. In fact, humans are so obsessed with linearity that they will even fudge the numbers to maintain an upward trajectory. The Dow Jones Industrial Average is such that it only includes the best performers of the market in its index. If a company begins to falter (i.e., have diminished stock value), it is removed from the index and replaced with a good performer: Exxon Mobile was replaced by Salesforce.com, and General Electric was replaced by Walgreens Boots Alliance.
Figure 1: Lorenz Curves: The fraction of all income is plotted as a population fraction. A Gini coefficient value of 0 indicates perfect egalitarianism and a Gini coefficient value of 1 indicates perfect totalitarianism. Values for countries vary between 0.2 and 0.7. At the extreme, the Netherlands have a value of 0.25 and South Africa has a value of 0.63.
Edward J Tehovnik "Nevertheless, when one compares the US and China, Americans are despondent and believe that they are in economic decline and the Chinese are optimistic."
Aren't you overlooking a very simple explanation? Chinese had been asked, in aftermath of possibly the biggest economic boom in human history, what would be the long term trajectory. They extrapolated past trend and reached a conclusion that it would be better. (at least for that time point, recently apparently the mood in China has soured).
Americans had been asked during some weak growth phase when the growth has not been really trickling down to median citizen - they extrapolated that past trend as well and reached a conclusion that what they have recently observed would continue.
You can't even try to explain that with Gini, as in Western Europe Gini isn't that bad, while due to stagnation the mood is bleak.
If a country is at the extremes of the Gini coefficient (0 or 1), this means the incentive system has been destroyed. Therefore, having a value in the middle guarantees that there will be something to look forward to. America has been resilient over its 250 years of life because it has been able to right its economy when the chips were down and I suspect it will do so again, as long as it does not become communist or totalitarian (0 or 1).
The statement “Countries are bound by relative wealth but advanced by optimism” oversimplifies the complex forces that shape national progress. While optimism and vision can inspire innovation, they are not enough on their own. Material wealth, geopolitical realities, and strategic alliances are equally—if not more—crucial.
A country’s economic resources set real limits on what can be achieved. At the same time, geopolitical position, security, and international partnerships determine access to markets, technology, and stability. History shows that nations succeed not just through optimism, but through a combination of resources, favorable positioning, and smart alliances.
In short, optimism must be grounded in reality. Advancement comes from both the will to progress and the means to make it happen.
Edward J Tehovnik I'd not deem myself an expert on Xi thought, however as far as I understand it, they do have some inward looking slogans as well:
https://en.wikipedia.org/wiki/Great_rejuvenation_of_the_Chinese_nation
Though, I don't fully see your point with Gini vs optimism. As long as it remains stable people simply look at economic trajectory from last decade and extrapolate their future accordingly.