Saturday, March 01, 2008


What do you call a society steeped in laissez faire capitalism with a communist government? Well, apparently you call it China if this Wall Street Journal article can be believed.

In reading through the article I was reminded of the information I gathered while researching Austrian economics. The "widening gap between rich and poor" is a growing problem there just as it developed into one here in America during the early days of the industrial revolution before the government stepped in to reign in the profit-takers. The WSJ tells us:

what has developed here sometimes resembles a sort of naked capitalism, where an unfettered pursuit of profit governs almost all facets of life, and a growing share of the population is left unprotected.

In fact the situation in China is serious enough that "China's Communist Party leaders have put dealing with social inequalities at the top of their agenda." Globally economists are concerned that if China's economy falters, the economy of the world will be affected. Problems that have developed in China include

- official graft
- real estate developers bilking farmers out of their property
- hospitals turning patients away who can't afford treatment
- soaring housing prices
- luxury housing developments for the wealthy
- pollution, pollution, pollution
- public protest--sometimes violent

In thirty years China has made the kind of economic progress that took the West 100 years to make, but not all have benefited, and many have been harmed.

The Wall Street Journal did a series of articles on China's developing economy in 2006. For more information on this subject, check them out.

Booming progressive economies need young workers with enthusiasm and innovative ideas. China is no exception. However resulting from the one-child policy, China is faced with an aging population and increasingly too few workers to support those growing old. The New York Times tells us:

China’s fertility rate is now extremely low, and the population is rapidly aging, especially in urban areas. Experts have warned that China is steadily moving toward a demographic crisis with too many old people in need of expensive services and too few young workers paying taxes to meet those bills. China is often regarded as having a limitless pool of young, cheap labor, but the country’s biggest manufacturing centers are already facing labor shortages.

Some of the biggest cities, like Shanghai, have tried to make small tweaks in the policy to spur more births. Nationally, the policy now allows urban couples to have two children if both spouses are from one-child families. But officials have resisted any major policy changes out of fears that a major population boom might follow. In recent months, Chinese officials have pledged to crack down on rich couples that are using their money or influence to disobey the policy.

The UK Times spells out some of the policies that have engineered this demographic difficulty:

Breaking the one-child rule would result in a heavy fine, calculated as a multiple of salary in the year of the child's birth, or as a proportion of the collective income of the community in peasant areas. State officials who have more than one child automatically lose their jobs, a heavy punishment.

The rules are privately detested by many Chinese and have been criticised abroad. Human rights activists complain that the one-child policy has led to the practice of eugenics, and that the Chinese state uses it as a method of social engineering.

Some couples are given rigorous medical tests before they are allowed to marry, and it is claimed that people suffering from mental illnesses such as schizophrenia and disabilities including dyslexia are banned from marriage.

There have also been claims of genocide, through state-imposed abortions among pregnant women of the Uyghur ethnic group, which seeks an independent Turkestan homeland.

Chinese officials say that the one-child policy has been successful in preventing at least 300 million births, and has boosted prosperity.

Birthrates are below replacement level now. The policy has resulted in a gender imbalance estimated to produce "men known as 'bare branches'" by the year 2020. These men will not be able to find a wife. It has also produced "little emperors"--boy children who have been indulged and cosseted and who are overweight, arrogant, and lacking in social skills.

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