The Best Way to Deal with Wealth Inequality is to Encourage Wealth Creation

By EO Editorial Board
Published: 2011-02-25

Cover, Issue 507
February 21, 2011
Translated by Tang Xiangyang
Original article:

In February this year, the Chinese-language edition of The People's Daily published four articles that probed problems relating to China's income distribution and wealth gap, the articles called for a reasoned approach to the issue of social justice.

Given the special position of The People's Daily within China's political and media circles, this articles naturally attracted a certain amount of public comment and attention.

The four commentaties were titled: Work Hard to Reverse the Trend of Growing Income Disparity (努力扭转收入差距扩大趋势), More Attention Needs to be Paid to the Income Gap (收入鸿沟需正视), A Rational Approach to the Existing Problems with Social Justice (理性看待当前的社会公正问题) and Don't Fear an Income Gap Between Industries but Rather Unfairness (行业收入不怕差距怕不公)

The income gap and social justice (or social injustice) are the key themes of all of these four commmentaries and from one perspective, you can say these articles are a reflection of two of the most contentious issues that are currently being debated in China - the fairness of wealth distributution and the growing gap between rich and poor.

But, in the short history of mainland China's reform and opening up, this is not the first time that debate about social justice has erupted among both the general public and intellectuals.

During the 1990's, China's intellectuals were already discussing the problems related to economic transition, economic development and social justice.

John Rawl's A Theory of Justice was translated into Chinese at that time and many scholars engaged in the public debate quoted extensively from Rawl's work.

But, from today's perspective, people at that time viewed economic development was China's top priority, it was also seen as the most important tool in solving many of China's problems.

The idea that development is everything became a kind of faith for most Chinese people.

People beleived in a better, more properous future.

Everybody started to pay attention to wealth creation and the media had not yet begun to make all this noise about wealth distribution.

Overnight, free-market economists became the darlings of society - heroes who were leading the rallying cry for reform.

Today, however, the tables have turned. As the income gap continues to grow, free-market economists are rapidly being marginalized and criticized as the defenders of the greedy while discussions of wealth distribution now far exceed those that touch on wealth creation.
China is no longer a country that gives priority to business.

The slogan "Development is Everything (发展才是硬道理)" (which now sounds a little similar to Bill Clinton's "It's the economy, stupid.") has shifted from an item of faith to a phrase that people are beginning to doubt and debate.

Our attitudes towards economic development and social justice are changing in subtle yet substantive ways.

The four commentaries published by The People's Daily and the variety of critical responses they inspired are all focused on the question of unfair distribution of wealth.

These issues are always worth debating.

Howver, what's interesting, is why these perennial issues that had been debated in the past, have once again become pressing problems that we're trying to solve.

Is it because we're finally rich that we can sit down and discuss how to better divide up the wealth?

Could it be because we've has overtaken Japan to become the world's second largest economy?

Or is it because the problems related to the unfairness of current income distribution have already become so large that they are beginning to affect wealth creation?

There is no harm in asking the question - if the public sphere and mass media contining to produce discussions that focus on the topic of wealth distribution, if we encourage people to think about how to distribute wealth (of course, we advocate doing it fairly and justly) and stop talking about the problems of how to create wealth and cease to encourage people to set forth and create wealth, then, how long is it before our society will be in crisis?

Micheal Sandel, a professor at Harvard University, once said, people don't hate greed (Is this the same in China? We should think about this), after all, greed is one of the fuels that drives capitalism and creates wealth.

Personal success is created through the desire for wealth, and that is often admired. 

What people tend to oppose is social injustice.

Take Warrant Buffet for example. Most people don't blame Warrant Buffet for his personal success, however, people are angry and resent the growing income gap between those employed by major state-owned monopolies and ordinary people like themselves.

While Buffet is thought to have accumulated his wealth through reasonable and fair means and is even sometimes admired as a model for wealth creation, these employees of state-owned monopolies are considered to have accumulated their wealth in an unfair way that is difficult to accept.

A more equal distribution of wealth may help to ease public frustrations. However this won't eliminate poverty or help the poor to improve their plight, nor will it ease the tensions between social classes and the harmonious society that we hope for will not be realized.

The wealth that Chinese society possesses is limited and is not enough to satisfy everyone's demands.

China's leaders once called for "unleashing the competitive forces of labor, knowledge, technology, management and capital in order to produce an abundance of social wealth," - this call is still relevant today.


This article was edited by Tammy Zeng and Paul Pennay