Thursday, February 7, 2013

China moves to narrow inequality

Read about it here at the NYT.
Note the discussion of corruption and income reporting as well as the move to increase spending on health, education and social welfare programs.  This article is interesting in terms of creating a natural experiment that economists can study as time goes by. It also highlights the importance of the source of inequality... we can expect rapid economic growth to cause increased inequality, but here it seems that illegal skimming of income by those in power is also to blame.

1 comment:

  1. Normally, we would expect that rapid economic growth leads to increased inequality in the beginning stages of a developing country, but there are times, where this is not the reason. Illegal skimming of income can cause increased inequality, but why? As the saying goes, "the poor get poorer, and the rich get richer." This means that the rich are able to maintain their power, while the poor cannot afford to try to oppose this power. It would not be in best interest of the poor in the short run to fight against oppression; however, in the long run, it would be economic beneficial.