Income Distribution in China: Club for Growth Misreads Mark Thoma
Is the Club for Growth endorsing corruption? In their Tempers Flare in Red China, this club for rich people questions the intent of the Chinese government as expressed in this story:
After 20 years of opening and reform, China has now come to a key stage of development,” said Ye Duchu, a professor at the Central Party School for up-and-coming functionaries, in a recent interview with Southern Weekend newspaper. “Problems like the income gap, the rural-urban gap, corruption and so on, have begun to emerge quickly. How to solve these problems and eliminate inharmonious factors now seem crucial to China’s opening process.” Study Times, the party school’s official organ, warned last week that the alliance between party and business, often greased by corruption, itself is a big reason for the income inequality that has farmers so upset. Citing a study published by the Labor and Social Security Ministry, the paper said incomes gaps have reached “the yellow light alarm level” and within five years could reach a “dangerous red light level” that could result in “destabilizing social phenomena” unless something is done to change the trend.
The only two things about the intent of Chinese policy that this story told us are: (1) that the government is properly concerned about income inequality and (2) that the government is properly concerned about corruption in the market place. For this, the Club for Growth fires off:
the communist Chinese government is going to be more, well…communistic
They give a hat tip to Mark Thoma even if it appears that they failed to read his post. I did and commented that the U.S. distribution of income is about as uneven as China’s, and Mark kindly reminded me to look at the graph in this link, which has a nice picture of Gini coefficients in different nations around the globe. Memo to self: checking with Wikipedia saves the trouble of checking with the CIA World Factbook. Memo to the Club for Growth: we can have free markets without corruption and caring about income equality is not solely a Communist ideal.