Thursday, August 09, 2007

Income inequality rising in China

As China industrialises, the difference between rich and poor is rising, as measured by the Gini Index. (The above chart is from the Wikipedia entry. 0 is perfect income equality, 100 means all the income is held by one person. ) The Gini score for China is around the same as for the USA.

By contrast, China's very rich neighbour Japan has the lowest Gini rating in the Far East, similar to Australia's. It seems possible to achieve prosperity without great inequality.

Speaking of neighbours, see how France's very high score in the 1950s has plunged, whereas the UK's has risen steadily since the 1980s. We in Britain are now significantly more unequal than the French, and far more so than the Belgians and Italians.

2 comments:

hatfield girl said...

And income inequality growth leads to market economy inefficiency because, in turn, it leads to a denial of legitimacy to the market system and calls forth populist (and statist intervention) alternatives.
When the transition is studied few apply its lessons, and the lessons on the collapse of command economies, to market economies; but many market econonomies have large state sectors that while behaving differently from command economies, display some of the problems of transition as they are dismantled. They also resist being dismantled via populist pressures and the attractiveness to any state Executive of the power they confer.
Democratic governments, which serve best untramelled market economies, should have as their guiding principles transparency and simplicity not just because controls damage economic efficiency nd slow progress but because their lack will feed into the installation of power elites who will reward themselves rather than seek the efficiency markets provide.
(shall we go round again, it feels a bit circular to me).

Sackerson said...

HG - thanks, I think I understand this, roughly. But can you clatify a bit on the market economy inefficiency caused by pay inequality - an example, perhaps?