Tuesday, July 1, 2008

Chinese Income Inequality

Ever heard people say of a country "there's no middle class there; you're either real rich, or real, real poor." True very often in less-developed countries. Income inequality is often measured by social scientists using the Gini coefficient: the bigger your Gini coefficient, the bigger the rich-poor gap is. In a country where one person has all the money and everyone else is flat broke, the Gini would be 100. In a country where everyone makes exactly the same money, the Gini would be zero.

I'm not going to get into the moral debate of whether governments should redistribute wealth to decrease income disparities, or to what degree. Rather, I'd like to point out that socialist or communist ideologies justify their goal of class-leveling based on the argument that income disparities are a form of injustice; therefore, to produce a just, moral society, disparities should be eliminated by wealth redistribution. Which is exactly why it's so funny that communist China's income inequality is considerably higher than that of the supercapitalist US (44.7 vs 40.8; see pages 50-53). Or rather, it would be funny, that is, if the Chinese government's backward policies weren't retarding the progress of one of the world's great civilizations, keeping its people in the mid-Iron Age and dragging down the rest of us who'd like to benefit from trading and investing there. But isn't China on an upswing, you say? Well, yes, in geopolitical terms, but if you're a farmer in Manchuria, you may not have noticed. Furthermore, if you're looking for the people responsible for China's recent good fortune, you're less likely to find them in the Communist Party than among the businesspeople and scientists in Hong Kong and Shanghai. The problem is those businesspeople are still a vanishingly small fraction of China's population, judging by the Gini coefficient and a per capita income, still today, of $2,458. That's right. By comparison, out of the thirty-four Latin American countries, only five have per capita incomes lower than China's (Bolivia, Guyana, Haiti, Honduras, and Paraguay - yes, even that powerhouse Ecuador blows by them). The world average is $8,125.

I wrote before about P.J. O’Rourke’s encounter with the old boys’ network of regulatory "fixers" that’s rampant in China, which less benevolent bloggers might refer to as "racketeers"; there too I addressed the oddity that the goal of Marx was a classless society, not one with a new professional racketeering caste. It seems that one thing highly centralized economies do succeed in producing is irony.


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