Friday, November 24, 2006

China's Trickle Down Economy

A critique of capitalism in China from the voice of Capitalism; The Wall Street Journal. The irony being is that they denounce their favorite argument for unbridled capitalism, the trickle down theory of economics. Their argument could equally apply to America.

In China, Growth at Whose Cost?
Nation's Poorest Seem to Be Getting Left Behind,

Raising Sticky Questions for Communist Party

As long as the country's newfound wealth eventually trickled down to everyone, the reasoning went, the benefits outweighed the problems.

But now, as the Chinese government worries about social stability and amid questions about the social costs of China's rapid growth, new figures suggest the poorest of the country's 1.3 billion people are getting even poorer.

From 2001 to 2003, as China's economy expanded nearly 10% a year, average income for the poorest 10% of the country's households fell 2.5%, according to an analysis by the World Bank that has been presented to the Chinese government. Those roughly 130 million Chinese earn $1 a day or less, the World Bank's global benchmark for poverty.

Meanwhile, the nation's total income rose sharply, and other income groups saw gains, suggesting that the rich are getting richer at the expense of the poorest.

Latest Data on Poverty in America

In this period of 'great economic growth', according to the delusional Bush administration, these recently released facts by the Census Bureau are quite telling of the real America:

-In 2003, 2004, and 2005, the percentage of the poor living in deep poverty stood at 42-43 percent, higher than in any prior years on record.

-The percentage of the poor who are below half the poverty line has risen steadily over the last two and half decades: from 34 percent in 1980 to 39 percent in 1990 to 43 percent this year.

-The actual percent of the population who lived in deep poverty in 2005 rose to 5.4 percent!

-The poverty rate is higher in the fourth year of an economic recovery (2005) at 12.6 percent, than it was in the previous height of recession (2001), when it stood at 11.7 percent.

-The median income for non-elderly households was $2,000 lower in 2005 than in the 2001 recession year.

These developments in a so-called 'economic recovery' are unprecedented in economic recoveries (with data going back to the 1960s). They are bad news for the poor, indeed.

It is the shame of the republic!

On Congress’ responsibility for poor Americans:

What does it mean to be poor in America?

For many of the 37 million Americans trapped in economic bondage, it means work, often backbreaking work, for little pay. Illness, car trouble, a rent increase — any of these can spell disaster, sending a family into economic meltdown.

For seniors struggling to live on a fixed income, an increase in a power bill or at the gas pump can send a monthly budget crashing. More seniors are now relying on their adult children for financial help. And for the 13 million children living in families with incomes below the poverty level, it sometimes can come down to challenges as basic as having enough food.

Recently, Congress has done less and less to help Americans hanging onto the ledge of the nation’s prosperity. That should change.

... Congress could fix the broken reform effort by doing more to give families a way up and out of poverty. Congress cut $55 billion from programs that help the most vulnerable, including food stamps, employment training and child care. Putting this money back would ensure the best chance of success. An increase in the Earned Income Tax Credit also would help families climb out of poverty. ...

— Daytona (Fla.) Beach News-Journal





Find blog posts, photos, events and more off-site about:
, , , , , , , ,

1 comment:

cxx_guy said...

"Market Socialism", which is what is practiced in China, and increasingly practiced in America since the Depression, cannot be called capitalism. Capitalism is characterized by individual ownership of business. Although some businesses in China are owned by private individuals, many are owned by the government and the military. This, of course, means that they are not run efficiently or well. Some may ask "if these businesses are run so badly, how can China experience 10% economic growth?". This is easy to explain: it used to be even worse, when the government owned and controlled everything, and there was no economic freedom at all.

One has to remember, when thinking about China, that they are coming from a place where all power was vested in the Communist Party, and anyone who was not a member or did not completely toe the party line was entirely at the mercy of those who were and did. This created an imbalance as bad as or worse than the Feudal system under which Europe suffered.

As for poverty in America, it is important to remember that here there is also a great deal of meddling in the economy, which naturally hampers the ability of those who are not politically connected to pursue their goals.

Minimum wages prevent people from taking low paying jobs in order to improve their skills and move on to more useful (and better paid) positions in the future. If you cannot produce enough to justify paying you minimum wage, you are trapped in the welfare system, which is hospice for the well. It prevents it's victim from making any progress toward improving their life, and dooms them to a life of frustration

Even worse for the poor, the minimum wage laws also forbid workers to work more then 40 hours for a single employer in a week, and punish any employer so short sighted that he is forced to allow a worker to work more than 40 hours by forcing him to pay time and a half overtime. This means that if your needs are such that 40 hours of work do not meet them, you must get a second job. This implies, of course, wasting time driving from job to job, difficulties in scheduling, and general inefficiency for the worker. It damages employers as well, in that they have to spend more money on training and such, but for a low paying job, there is very little training required. The chief damage done is to the worker.

Business regulation also makes it very difficult to start a business. If you intend to do so, you had better have several lawyers at your disposal, as well as a tax professional. There are 30,000 pages of tax code alone in the United States. There is not a soul on earth who understands this garbage, including those on the IRS payroll. This will not prevent the government from fining or imprisoning you for errors on tax forms. That is, of course, unless you have political connections that allow you to influence the commissars in question.

There are just a few of the way that the socialist interventions in our economy have harmed the very people they were supposedly intended to help. Please check out a basic text on economics for other examples.