China recognises the danger of inequality while in the West politicians are silently implementing policies that increase the gap between rich and poor. Watch Nobel Prize winning economist Joseph Stiglitz discuss the pheonomena with Vanity Fair Contributing editor, William Cohan:
Interesting video, isn’t it. Above all how China and the U.S. are responding to the threat rising inequality pose to economic growth and stability. And it is not only in the United States that politicians are actively and quietly making sure the gap between rich and poor is growing. Believe it or not, but even in Sweden the government was recently implementing policies that take from the poor and give to the rich. So it comes as no surprise that poverty is increasing.
American approach to rising inequality
Simply put; doing nothing and in fact making the gap increase. Median income is the same as forty years ago and medium wealth the same as it was twenty years ago. In other words the US economy is not delivering to a large section of Americans.
For the Chinese it’s a top priority
Whatever your feelings about China you have to give them credit for getting somewhere between 400 and 500 million people out of poverty.
They know what problems inequality entails and reducing the gap between rich and poor is hence a top priority for their leadership. Why? Because they have seen first hand the detrimental impact inequality has on economic growth and stability. And in case you regard them as a communist country, don’t forget that Milton Friedman went to China and taught Deng Xiaoping how to implement neo liberal policies. And to this day the Chinese economy is run according to Milton Friedman’s gospel.
Who’s on the right path?
Sure, China is still much poorer that the US. Their per capita income is about a fifth of that of the United States. But don’t forget that they are growing on average 7-8% a year, while the US and Europe are hardly growing at all. China is according to some estimates the largest economy in the world and their voice in the global economy is carrying more impact.
Do you agree with Stiglitz that inequality is a threat to economic growth and stability? Is China right to make reducing the gap between rich and poor a top priority? Or is the US and EU doing the smart thing by implementing policies that increase inequality? What can the West do to increase equality? Do you agree with Joseph Stiglitz that better education for all, investment in technology and infrastructure would have a positive impact? Is that likely to happen in a society where politics are as divided as in the United States? What’s your recipe for reducing inequality? Or maybe you think it’s a good idea for the gap between rich and poor to increase?
Video: Asia Society – Picture: Abhisit Vejjajiva