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View Diary: Bill Moyers on Income Gap in America (164 comments)

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  •  Chinese Inequality vs. U.S. Inequality (4.00)
    Yesterday, the official Chinese media outlet Xinhua (a/k/a New China News Agency) released information regarding a rising trend towards income and wealth inequality in China: "Income gap in China widens in first quarter".  It noted that

    • The richest 10% in China own 45% of the wealth of the country, versus only 1.4% for the poorest 10%;

    • The ratio in incomes between these two groups has increased from 10.9 times to 11.4 times between the first quarter of 2004 and the first quarter of 2005;

    • Incomes increased by 15.7% for the richest 10% and by 7.6% for the poorest during that period.  (Summary stolen from Jerome a Paris.)
    "There are two gaps that need to be addressed," Li Xiaoxi, head of the economic and resource management institute of Beijing Normal University, was quoted as saying. "The first is the very wide gap between different social groups. The other is the astonishing economic development gap between regions."
        --  --  --
    Zhou Xiaochuan, governor of the People's Bank of China, China's central bank, said efforts at facilitating urbanization and setting up a social security system were keys to narrowing the income gap.
    By comparison, the United States looks far worse:

    The top 1% control around 33% of the nation's net worth, while the top 10% control 71.5% (!!), according to this paper: Changes in Household Wealth in the 1980s and 1990s in the U.S., by Edward N. Wolff, The Levy Economics Institute and New York University, May 2004.

    See also this chart:

    And according to Merrill Lynch and CapGemini, the rate of growth in wealth for High Net Worth Individuals appears to be about as large in the U.S. as it is in East Asia.  (Source: World Wealth Report 2004.)

    More from Xinhua:

    "The income gap issue will not become smaller in the next 10 years, but probably will increasingly widen," Fan Gang, a leading economist at the National Economic Research Institute of China told Xinhua.

        "When discussing the issue of income distribution, the thing that everyone hates most is corruption, this is unfair."  Fan, however, maintained that at China's developmental stage an income gap was to be expected with or without corruption.

        Still, China's Gini coefficient -- an internationally accepted measurement of income equality -- was calculated to be over the "alarm level" of 0.4, the report said.  On the Gini scale, zero corresponds to complete equality and one refers to perfect inequality, or one person having all the income.

        No precise Gini coefficient was provided, but state press reports in recent weeks said the value was more than 0.48 and approaching 0.5.  Most developed European nations tend to have coefficients of between 0.24 and 0.36, while the United States has been above 0.4 for several decades, according to the United Nations 2004 Human Development Report, which calculated China's value last year at 0.447.

    Income disparities between the richest and poorest 10% in China and the U.S. are also somewhat in line with one another.  According to the UN Human Development Report 2004 (at pp. 50-53), the ratio in the U.S. was 15.9 in 2000 (and surely it has increased since then).  By their measure, China's was 18.4 in 2001.  For comparison, of the top 20 nations listed (in terms of "high human development"), only the U.S., the UK, Australia and New Zealand had ratios well over 10.

    So there are rising inequalities in China, mirroring the trend in the U.S.  I can't imagine that anyone would be pleased about this.  Dragging China into a similar economic morass will do nothing to improve the state of the U.S. economy.  We need to get our own house in order, both on a governmental and an individual level.

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