Status of income distribution, trends and Reform

 Status of income distribution, trends and Reform
Time: September 7, 2009
Location: China Pudong Cadre College
am very pleased to have the opportunity to share the problem of income distribution in China. I want to talk about six aspects. First, the international perspective on income distribution; Second, China's reform and income distribution during the impact of changes in trends and factors; third is hidden on our income and actual income gap; fourth is hidden from where the income gap; Fifth, the threat of future development of the imbalance in income distribution; Sixth, reform the management system, to correct imbalance in income distribution.
First, income distribution, international perspective
(a) the theory of income distribution, income distribution problems and we
now facing the problem of insufficient domestic effective demand is closely related. China is faced with insufficient effective demand, direct impact factors of the international financial crisis. shrinking the world market, China's exports fell sharply, resulting in a serious decline in production of the export sector and some business failures . But the more fundamental reason is domestic demand, economic growth, excessive dependence on external demand. a long time, lack of effective demand in China has been a problem, from the international experience, it always and income distribution together. Now I want to mention three.
first is Marx. Marx's down, income polarization, leading to absolute impoverishment of workers and the public lack of consumer demand. It is because of lack of mass consumption, making the rapid expansion of production capacity after the goods sold, excess capacity. This is the result of a cyclical crisis of capitalism underlying causes. was the era in which Marx or the early stages of capitalist development, lack of demand from the allocation of capitalist society brings, so Marx believed that capitalism can not solve it is a fundamental contradiction. In Marx's view only through public ownership, changing the capitalist system, community together and shared the fruits of production, to be able to do to resolve this conflict.
but in the 20th century, a series of changes in this problem. So that is second to Cairns. 30 years from 1929 to the outbreak of the Great Depression, the United States, the British economist John Maynard Keynes in 1936 published the famous: that lack of demand, the demand for consumption and investment by the two major elements of an open economy, plus net exports, are the three elements. No matter which of these three elements in a little, and no other elements to add , will result in inadequate aggregate demand. Keynes was mainly focused on the investment, he believes when a high savings, but the investment will result in less savings, lack of effective demand. Therefore, he proposed the government to take expansionary fiscal policy to increase government spending, but also to adopt expansionary monetary policy to stimulate investment, thus expanding aggregate demand.
Overall, since the Keynesian theory developed, Western countries in response to the economic crisis should be said that with a fairly effective means is through expansionary policies, can substantially reduce the impact of the economic crisis and shorten the time of crisis, the relatively stable economic operation. Marx's early to judge that the lack of aggregate demand is a fundamental contradiction in the capitalist countries did not method to solve. in fact, came out from the Keynesian policies, the problem can be resolved in a way. but there are still problems, that is, after years of practice, that Keynesianism is often effective in the short term, but the expansionary fiscal policy and monetary policy, long-term will lead to inflation, and the leading role on economic growth decreased; inflation and economic stagnation are often associated with the line, that is often said that the stagflation. that is, to solve the crisis in the short term, but long-term development is a problem. This is because income distribution more fundamental problem is not resolved.
third is Kuznets. the last century 50's, the U.S. economist, published a well-known Kuznets articles, specializing in income disparity. He studied the United States, Britain, Germany, found that the historical data from the perspective of these countries in the past 50 to 100 years, have experienced a first expansion and later income gap narrowing process. later Economists call this discovery Kuznets inverted U-curve, that is, a certain stage in the development of rising income gap, and then go through a phase and gradually decreased.
many economists, including some domestic economy scientists of the Kuznets curve has a different interpretation, and some people say that because of the Kuznets curve, we do not need income gap too worried about the problem, because over a period of time after the income gap will automatically be reduced. But in fact if we read the article Kuznets, you will understand he did not mean that the income gap will not automatically shrink. He believes that the convergence of the income gap is conditional, and highlighted a number of factors. First, labor force in the development of these countries have gone through the process of industrialization and urbanization, large labor force in this process from rural to urban, from agriculture to non-agricultural. So in the long run will reduce the urban-rural gap. Second, the pattern of population growth , in a certain period of high population growth, high mortality, but later turned to low population growth, low mortality, demographic changes have an impact on income distribution. Third, he emphasized the role of government policies, especially progressive income tax and estate tax, that these changes in income distribution in the gap and solve the problem of uneven distribution of income has an important role. Finally, he also stressed the democratic political system, because most of these countries have experienced early in the development of authoritarian and centralized system This was gradually turned into the present political system. Kuznets summarized this process as a democratic political reform process. He believes in a totalitarian system, the ruling could plunder of ordinary people, so the distribution of income will cause serious uneven, and through the reform of the political democratization, making all levels of society got involved in politics, monitoring the government's right to a certain extent, this improvement in income distribution.
(b) of the income distribution system of foreign practice < br> In the past so many years of development, income distribution in different countries have different practices, following a simple list of what I have. First, Europe and America. European countries in the development process, just talked about the early 19th century, Marx referred to the capital case doctrine, when both Europe and elsewhere, the income gap is very large. In the later course of development, especially of the 20th century, European countries and gradually establish a public welfare, social security and transfer payment system, through the These changes in the system, improve the income distribution, reducing the economic and social instability.
economies of these countries is still the market economy, but some aspects of the problem is not the market itself can be resolved, such as the income gap that problem. European countries through social security and public welfare system to change the income distribution structure. The U.S. also experienced a certain extent such a process. In the 30's during the Great Depression, Roosevelt took office, the implementation of the New Deal, including two content. First, the expansion of public spending, and Keynes's claim that exactly the same, that is, to invest in public through the Government's financial infrastructure, roads, bridges, etc., to deal with the crisis this way. So when the Great Depression Keynes's writings published in the New Deal affected to some extent. There was recorded to the United States to see that Keynes Roosevelt, Roosevelt talked with him about some measures of public expenditure so the idea of Roosevelt's view of his attention. But also has an episode, Cairns left, Roosevelt speaks to others that this person is a bit pedantic. The second is to establish a system of social security and redistribution. In fact, Roosevelt was introduced from the policy, not limited to Keynesianism. because Keynesian say is the expansion of public expenditure, while Roosevelt was in addition to expanding public investment, the implementation of relatively easy monetary policy, there are other content, is to establish social security and improve income distribution. when the United States passed the Fair Labor Standards Act there are differences, though, when the 30s that the U.S. has basically established a social security and social welfare system, but later development, is still the greater emphasis on free market economy, not in favor of high social benefits. relative for the protection and welfare level of the United States and European countries is very low in comparison. Of course Europe is different, and different parties have different policies after taking office. But in general, European countries, social security and welfare extent than the United States. and how the two modes takes better, in fact, there has been controversy, some U.S. economists believe that welfare is too high, there is no efficiency; and some European economists believe that the gap will ignore the social distribution lead to social instability, disharmony. that the two statements are clearly in a way makes sense, but what some of which should be more, it is difficult to conclude, may have to look at the future. because both the United States, nor European these countries still have strong vitality, they still are developing.
Over the years, the United States have developed relatively quickly, but in the world financial crisis, we look back, will get some experience learned. according to some economists explain the rapid development of the United States over the past entirely from the free market economy and free competition. why the United States can maintain rapid development in a long time? it though not as high as the European level to implement the social security and public welfare, but on the other needs to find a way to expand is to expand consumption through debt. United States does not change the income distribution, holding the poor or small, rich or take the more money it can borrow the poor, by credit card, housing loans to advance, the ordinary people in this way to stimulate consumption. to the crisis erupted last year when the total liabilities of the U.S. general population 14 trillion, equivalent to the U.S. one-year GDP, coupled with the federal government debt, state government debt, corporate debt and bank debt, a total of 50 trillion, equivalent to half of GDP, three times. by living beyond the means to expand the consumer, the United States to maintain a fairly long period of rapid development.
statement by George Soros, the United States that by blowing up a bubble of debt, in fact, 50 years from the last century began, and more bigger and bigger, until it was broken today. So the crisis, the United States is very naturally carried out a series of major adjustments, the public is ahead of the past consumption, and earned both a money and now want to savings, consumption declined. China's exports have been such a big blow, but also because the international market is shrinking, especially the Americans not to spend money. not only the United States, also contributed to the impact on the European countries, leading to a significant decline in Chinese exports.
Next, I simply talk about the Latin American model. Latin American countries are also more concerned about the type of people. economists have a the development of a series of very distinctive features: the first is the income gap is very large; the second is the relative stagnation of economic development, and often hyperinflation; third is social unrest, social instability, frequent changes in political power, social conflict frequently. from the historical development of Latin America point of view, there are many academics in this analysis, that they faced problems in the development of practical and relevant income gap is too large.
recent years Latin American countries have experienced an obvious rebound, that is, leftist government came to power, the implementation of the policy of narrowing the income gap, which is called populist policies, but also a degree of nationalization and so on. It is caused by the enormous income gap between the past a rebound. the public vote left-wing government's vote, because it can bring a relatively equitable income distribution. However, if the adjustment in this respect too, may be a problem. As we reform before the distribution is equal, the absolute rule of the state economy status, but inefficient, slow economic growth rate, a large waste of resources. If Latin American countries prior to such adjustment to China's reform is not a good thing. but overall, the policy is like a pendulum, when placed head to the right time, on the left put out; it will be overkill and will not stop in the middle, but will placed on the left, place the head may turn back, then to the right place. If a country's political system, economic system, about the total swing in the course of this , of course, will affect its continued development. Therefore, both the protection of society to find a fair and appropriate system of protection of market efficiency, it is very important.
in Latin American countries, the last right-wing government in general and the United States have maintained good relations, they also acknowledged the ideological consensus in Washington. But in this and a lot of specific issues, in other words, although they admit the free market economy, but in fact in Latin America, relatively high levels of economic monopoly, competition inadequate. In some cases, in some industry sectors, the policy of laissez-faire and unrestricted private ownership, will gradually lead to natural monopolies. while in other cases, economic strength and power combine to enhance the degree of monopoly . In my opinion, this is actually caused the income distribution gap is too big a reason.
Reforms in Eastern Europe the Soviet Union. Yeltsin shock therapy introduced at the time, the privatization of all state assets, the price is open overnight, State plans to cancel the night, the implementation of a completely free market economy. This reform resulted in a significant decline in ten years the Russian economy, GDP has dropped by nearly half, in addition to economic decline, there is an important issue, that is, within a short time resulting in an extremely unequal distribution of property. For example, in the oil industry, the original state-owned enterprises, but also the former Soviet Union's most profitable enterprises, the privatization of a night, the form is to sell, in fact, sent. Who and the government, and the people in power relationship, one might get the oil companies.
did reform the former Soviet Union, an American economist named consultant Jeffrey. Sachs, he was the leading advocate of Russia's shock therapy, and afterwards he spoke in the Russian experience, said that corruption in Russia is unprecedented anywhere in the world countries are not so serious, how many billion worth of oil a relaxed manner by a man who took to become a private company. It all depends on you and how the relationship between those in power. Next the formation of a small group of super oil oligarchs, the original state monopoly into a private oil company oligopoly. under the conditions prevailing in Russia, the economy in decline, a large number of unemployed workers, the public living large rate of decline, but few riches in the shock therapy reforms, resulting in Russia was a high degree of inequality of income distribution. This is why Putin came to power after the efforts to change a problem, he came back and took some re-nationalization of oil companies, Some of the oil oligarchs were sent to prison for tax evasion charges, he tried to correct the period of shock therapy to bring some of the adverse consequences.
(c) of the country's Gini coefficient
I said the following about the Gini coefficient. It is the economics Measurement of income distribution gap in a key indicator of value from 0 to 1,0 that absolute equality of income distribution, that all people are exactly the same income; 1 is definitely not average, that is all the income or assets are concentrated into the hands of a man, except he has no income other than people. These are two extreme cases, only a theoretical assumption. virtually all countries of the Gini coefficient of distribution between 0 and 1. is generally believed that the income distribution of 0.4 is the warning line, 0.2,0.3 is relatively equitable income, more than 0.4 on the need to guard against, that income distribution gap has been large. In this case, may lead to social instability and other issues.
view from the developed countries , only the United States in the past 50 years, in 2000, up from 0.36 to 0.4 or more. All other countries are below 0.4, the United Kingdom, Germany, France, the Western European countries are about 0.3. in which a large income gap between the French original, 0.49 , is now down to 0.32. Nordic countries this feature more obvious, Denmark, Norway, Sweden, Finland the income gap in the last century 50's are above 0.4, Norway also went to 0.55, after 50 years of change has fallen to about 0.25. < br> In all the developed countries, the Nordic countries is the smallest income disparities, income distribution is relatively fair. Of course, some people say that efficiency is relatively low, but there are a significant feature that the public do not have to worry about how to do tomorrow, unemployment, old how to do, how to do sick, you all have a very peaceful state of mind, and not the poor of this society, so the relatively harmonious society, to ensure stability. When a society is unstable, the economy and then an efficient, long-term development, the loss is large. I think we must look at the direct economic efficiency, it also depends on long-term effectiveness, including factors such as social stability and harmony. In recent years, has repeatedly stressed the central building of a harmonious society, I think this is the right time.
Then simply look at the East Asian countries and regions, changes in the Gini coefficient in Japan, Korea, Singapore, China, and China Taiwan these areas, the largest income gap in China, the Gini coefficient is 0.447, which is 2000 data, 2005 is 0.47, also rose. In addition, the relative gap between Singapore and a large number of Hong Kong, China, other countries and regions are about 0.3, the income gap is relatively small.
the former Soviet Union and East Ou Jini coefficient change is Russia and China in 2000 is comparable to 0.45, the Czech Republic, Poland, Bulgaria, the Eastern European countries are relatively low, around 0.3 or 0.3 below. although these countries experienced an economic transition, but there has been no dramatic income gap as Russia enlarged. Latin American countries are in the 50's, when 0.4 or 0.5, to become high in 2000, most of above 0.5, 0.6 is coming out of Brazil, Chile, Argentina, Venezuela is also about 0.5.
II During China's reform and changes in income distribution trends and factors influencing
(a) before and after reform, changes in the pattern of income distribution reform
pattern of income distribution before and after our important changes. the planned economy period, quite average income of urban residents, because time, we are in accordance with the provisions of the wage central to practice. there regional disparities, wage levels are still less developed areas may be higher because of regional subsidies. quite average income of urban residents, but only low level of income of rural residents and urban and rural areas and rural areas between the relatively large gap between individuals in urban and rural per capita income .1978, the city is 343 yuan, 133 yuan in rural areas only, a difference of 2.6 times. At that time 32% of the rural population is poor, and this is a very low poverty standard, according to 100 yuan per capita to count, the annual income of the rural population accounted for less than 100 1 / 3.
early stages of reform, due to the implementation of the rural household responsibility system and a series of reforms, rapidly rising rural incomes, particularly in the early 80s, and the national income gap between urban and rural areas have tended to narrow. While per capita income of the entire reform period of rapid growth, but 84 years after the income gap has continued to expand, to the early 90s, more than the warning level of 0.4 Gini coefficient . Gini coefficient from the change in situation, from 1978 to 1984, a decline phase, because the first reforms in rural areas, narrowing the gap between urban and rural areas. And since the mid-80s, is basically the stage of the increasing gap.
of income since the reform distribution of such factors could be summed up in three aspects. the most important factor is the urban-rural dual structure. This is the historical legacy of the old problems. China's urban and rural per capita income ratio is 2.6 times that of 1978, to 2008 is 3.3 times, indicating that urban-rural gap continues to expand, but there are signs of slowing last year or two.
The second factor is the imbalance in regional development, measured by per capita GDP, the highest Shanghai, Guizhou, the lowest difference of 14 in 1978 times, is still a difference of 8 times in 2008. from 14 times to 8 times can not explain the gap region, as it is based on Shanghai, for example, if the entire eastern coastal areas compared to central and western regions, but also do not see the regional gap significantly reduced the trend. In recent years, some provinces in central and western regions relatively fast development, economic growth is high. especially the financial crisis, the east by the relatively large, the Midwest was less affected. but there are problems, that is the central and western region's economic growth statistics may be relatively large number of water. So that tends to narrow the regional gap has been also worth exploring the idea.
third factor is the income gap between classes, sectors of the population between the income gap is widening. with The data of urban residents, according to 10% of the group, equally divided into 10 groups of urban households. According to statistics, the maximum and minimum set of a group, a difference of 6.2 times in 1995, 2007, a difference of 8.7 times, 8.7 times in fact, still seriously underestimated the actual difference even more. the highest and lowest per capita income in rural areas compared, 1995 was 9.5 times, 12.4 times in 2004. Overall, the income gap is widening, but the widening income gap in rural areas than in cities to ease some .
these factors, different income gap between classes has become the lead is now a major factor in the widening income gap or dominant factor. Although the urban-rural gap, regional disparity is not resolved, but the years of attention to vulnerable groups to implement developing the western region, Northeast China policy, the regional policy, rural policy in a way of reducing regional disparities and urban-rural gap helpful. is still rapidly expanding income gap between classes. The following specific about cause income widening gap between a few reasons.
(b) stages of development and structural transformation of the income distribution
stage of development we are now in the midst of rapid industrialization and urbanization process, while gone from planning system transition to a market system, which led to the widening gap of income distribution. the last century 50's, the U.S. economist, Lewis proposed model of urban-rural dual structure. He historical data with the United States found that when large numbers of workers from rural to city, from agriculture to non-agriculture, this process due to the sufficient supply of labor, that is an unlimited supply of labor, rising wages suppressed. was supposed to be economic growth, per capita income growth, but no corresponding increase in wages during that period, because the stream of The new labor to the cities continue to have jobs in the competition, inhibition of increased wages.
situation in China is actually very typical reflection of the Lewis model to describe the situation. 30 years of urban population rose from 170 million to 600 million people, and now there are 100 million 4 million migrant workers in cities and towns to work, every year millions of rural laborers to cities added to such a labor supply and demand conditions in the long suppressed wages rise. but high growth economy , the main fruits of growth into the growth of non-labor income, wages grow more slowly. This leads to a widening income gap. As the impact of labor supply and demand. eastern coastal areas of these small rise in wages, especially unskilled labor. Last year, two years ago may once wages rose faster, but the financial crisis a result, wage growth has slowed down.
In addition, market-oriented reforms tend to improve the return on capital and human capital, but also widened income gap . the wages of almost all before the reform, the income level is very equal. After the reforms, the transition to distribution through the market, according to the contribution of distribution of production factors. As the supply of scarce human capital, high-quality personnel, management, engineering and technical personnel in return rising rapidly; ordinary workers without a corresponding substantial increase in wage levels, so the income gap widened. From the above factors, in the current stage of development, a certain degree of income disparity is inevitable, but also need to take measures to mitigate against the excessively wide gap.
(c) policy factors on income distribution
The next question is the influence of income distribution policies. We can not simply be attributed to the widening income gap is now stage of development and market-oriented reforms, because the widening gap there is another factor. At the policy level, I think the reason is that there is a considerable degree of imbalance between the elements of configuration, the local government's goal is to GDP, is growing, is a big investment, governments at all levels too keen to encourage capital-intensive investment, providing incentives for large businesses; and relatively speaking, inadequate attention to the labor-intensive small enterprises. In the past there are a variety of preferential policies for small and medium enterprises, but implementation The results are not satisfactory, the policy finally gave many of those larger medium-sized enterprises, small businesses benefit from relatively small.
particular statistic is called level of government's vision (the size of the following is an enterprise with annual sales of 500 million or less). According to the 2004 Economic Census, if the industry with these small enterprises engaged in industry self-employed, their employment accounted for 71 industrial employment %. which only the scale of these small businesses and self-employed, accounted for 44% of industrial employment. service in the scale below the proportion of small businesses may be greater, but because of incomplete statistics, there is no specific figures. We can make a general judge the scale of these small businesses account for roughly half of China's non-agricultural employment.
actually depends largely on the employment of small businesses, micro businesses, because they are labor-intensive employment to absorb the most direct, the greatest impact. But the companies used to consider the Government's policy is not within the scope of, I think this is a very big problem. As we consider the employment policy, it is often ignored. because economists have been saying that the financing difficulties of small business loans no credit. The People's Bank had done a survey, said the basic situation of medium and small enterprises are good loans, small business loans is also good. But the People's Bank survey of small-scale enterprises are more, but may be larger scale that part.
how to shift the focus of the Government's concern to come in this direction, is a prominent problem. because of the development of small business employment, workers have a significant effect on the income of .90 years, China's economic growth employment elasticity fell from 0.4 to 0.1, meaning that the original 1 percentage point of economic growth, employment growth of 0.4 percentage points; is 1 percentage point of economic growth, employment growth of only 0.1 percentage points. There are supply-side factors, but policy factors impact is also very important. So from the above view, only the pursuit of economic growth on employment is not much help.
(d) the institutional factors that affect the distribution of income
Next, I turn to the institutional factors that impact on income distribution . the current system, there are many factors that led to the widening income gap, one factor is the redistribution, social security and public service system issues. In this one, first is the income redistribution system is not perfect. The first is personal income tax. my personal income tax is progressive, high income, the tax rate is also high. but actually in the collection process, the progressive tax rate becomes regressive. because the personal income tax wage workers can not run away, when the wages deducted from the payroll. But high-income class is not a large number of income in the hands of the tax system, this part can be tax evasion. so the more high-income residents of the lower effective tax rate, lower than in the low-income residents, which makes the original progressive income tax into a regressive tax.
followed by transfer payments, despite the efforts of increasing transfer payments, but the low efficiency of transfer payments. As an example, more than 400 poor counties in China, the central fiscal year spend a lot of money helping the poor, supporting their development. But Although the money assigned to the counties, ultimately, the hands of the poor not to fight a big question mark. I do some investigation of poor rural, often see the most luxurious buildings throughout the county government building, the most luxurious car Government cars. not far from the county have poor villages, rural poverty, the poverty situation of very poor villages, poverty abound. Central continued to spend money to solve poverty, but the money is not necessarily the poor who are beautiful flowers. < br> Once again, incomplete social security system covering the issue. Social Security is basically the last city urban workers and the urban formal workers. of non-regular employment and not post the workers, urban residents did not work basically no coverage. now covers efforts have been added large, including the rural areas have also established a Rural Minimum Living Standard and the br> Finally, public service is not in place, especially in health, education and low-rent housing, which provides services to low-income residents is far not in place. Some people say that low-income residents, health care, education, housing is three big mountains is the tax system. China's taxation system in the lack of a reasonable resource tax, monopoly profits tax adjustment. dividends of state-owned enterprises, land transfer these systems are also related to fiscal and taxation system. our resources where are the benefits? 140 dollars last year, oil a barrel of crude oil profits increased substantially, as corporate earnings. But excess profits of oil resources is actually produced, which companies should not be able to appropriation. business should be to get the operating profit, rather than resource gain . resource revenue should be included in the distribution system throughout the country, but China did not, the existing resource tax is a nominal tax. Shanxi coal bosses get the coal mining rights, to open a coal mine to riches, while coal mine accidents have occurred However, despite repeated prohibitions. no qualifications, no standards of security conditions continue to mining companies, are of interest for guidance. who gets resources, resources that is, who benefits, it also led to corruption. Government officials in the coal shares, to the unqualified coal mines to provide umbrella, these problems are quite serious. I think this is not simply a question of ownership, mainly resource tax issues and institutional problems. We must create a more robust tax system, the resource revenue into the state treasury, for the people, rather than attributed to a minority share of these resources, businesses and individuals.
monopoly situation is similar to the extraordinarily high profits of some companies, the key is that it is in a monopoly position. monopoly profits should not be owned by individual income, corporate income or minority, and there should be a regulatory tax on monopoly profits. state-owned enterprises are also participating more recently discussed the issue. state-owned enterprises are the state investment company, the state has the right to participate as a shareholder dividend. Since the reform of state-owned enterprises are no longer turned over to the state after-tax profit, after tax profit is their own, so also resulted in rising corporate savings, part of the state-owned enterprise profits accumulated in large numbers. delegating powers and benefits of reform is the beginning, but now state-owned enterprises need to establish a reasonable bonus system.
There is also the issue of land transfer system. Now some local governments in China has become a land finance, only the sale of land to the money, but by land sales to finance to maintain the operation, which is very unreasonable. land in the circulation generated in the process ...