Posts Tagged Forbes
Forbes 400 List Reveals Why the Greedy Rich Fully Deserve Your Contempt — And Jesus’s
The bulk of America’s superwealthy refuse to pull their weight and kill opportunity for the rest. And they want your thanks!
Photo Credit: Shutterstock
Last week, as you were treated to Mitt Romney’s contempt for nearly half the country, Forbes Magazine published its annual list of the 400 wealthiest Americans.
The list reveals that Bill Gates is still the top dog, boasting a whopping $66 billion fortune. Warren Buffett, Michael Bloomberg, various members of the Walton family, and the Koch brothers are all in the top 10. Mark Zuckerberg hung on, despite the evaporation of a big chunk of his wealth. Spanx founder Sara Blakley, who brought women a whole new world of restrictive undergarments, is on the list.
Nothing extraordinary in all that. But this year’s Forbes list has a big lesson for us: It shows just how jaw-droppingly rich the top 400 have become compared to everybody else.
Forbes reports that in the last year alone, the total net worth of the 400 people at the top skyrocketed $200 billion. The average net worth of a 400-lister jumped from $3.8 billion to $4.2 billion, the highest figure ever recorded. Two-thirds of the individuals got richer in the past year. Forbes, not exactly a cheerleader for income equality, concluded: “The gap between the very rich and the merely rich is widening.”
And how did the rest of us do while the uber-rich were getting richer? Not so well, according to the Census Bureau. Adjusted for inflation, America suffered a 1.5 percent drop in median household income last year.
The redistribution of wealth toward the top is clearly getting worse. In fact, despite the financial crash, the Occupy movement, and the obvious failure of trickledown economics, the Census Bureau reports that the gulf between the rich and the rest of us is at an all-time high.
Maybe that’s why the rich and their apologists are getting a bit defensive lately. Like a drug addict turning every cushion upside-down in search of lost change, the 1 percenters are scrounging up every timeworn myth, lame justification and absurd rationalization they can think of to convince us that the rich are super-smart, hard-working job creators instead of greedy parasites refusing to pay their share in taxes and play by the same rulebook as everyone else.
This line gets harder to sell every minute. Mitt Romney’s candidacy has done wonders to expose not only the general contempt of his class toward ordinary people, but also just how many special privileges the rich enjoy. Romney has accumulated great wealth not only because of his job-destroying and predatory business activities, but also because he gets a special break that allows him to get away with paying the capital gains tax rate of 15 percent.
And that’s one big reason that the rich are getting richer. Romney and his ilk claim this is good for the economy – the old “trickledown” myth. But as New York Times columnist Joe Nocera points out, that canard is easily exposed: “In 1986, when Ronald Reagan was president, the differential between capital gains and ordinary income was eliminated — and the economy soared.” Interesting, isn’t it? Nocera adds that the capital gains rate was higher during the Clinton years than in the George W. Bush years, yet the economy miraculously did better under Bubba. Doesn’t sound like a low capital gains tax rate that lines the pockets of the rich is what the doctor ordered, does it?
Let’s take a closer list of who is on the Forbes list. Financiers make up a big chunk. Around 40 percent inherited their wealth. The vast majority, some 65 percent, came from circumstances ranging from very comfortable (Mark Zuckerberg went to the fanciest schools) to downright plush (Donald Trump inherited his dad’s company). A mere 35 percent came from backgrounds that could be described as middle- to lower-middle-class.
Most of the folks on the list got great breaks in life. And yet in a recent survey conducted by Salon, only 2 percent of people in this Happy Billionaires Club said they would be willing to pay more in taxes (Warren Buffet, Todd Wagner, James Simons, Leon Cooperman, Mark Cuban, John Arnold, Herbert Simon, and George Soros). Which is proof that not all of the rich are unpatriotic and rapacious. But they are lonely voices in a storm of greed.
Charles Koch, CEO of Koch Industries and funder of conservative causes, summed up his opposition to the idea of forgoing special tax breaks: “I believe my business and non-profit investments are much more beneficial to societal well-being than sending more money to Washington.”
Ordinary Americans are plainly getting screwed, and the vision of America as a land of opportunity is increasingly becoming dimmed. And yet a recent article inFortune magazine, “Stop Beating Up the Rich,” shamelessly calls for an end to what author Nina Easton describes as “diatribes against the 1%.”
“America stands out among Western nations for its grudging, and often fawning, admiration for the wealthy classes it produces,” explains Easton. (It’s hard to argue with that. Score one point for Easton). She continues: “With the road to riches seemingly wide open, Americans favor aspiration over resentment, envy over animus.”
The key word here is “seemingly.” It seems like anybody can make it, because the press makes much of those Horatio Alger rags-to-riches stories. Unfortunately, as economist Joseph Stiglitz frequently points out, those stories make the news for a simple reason: they are rare. And becoming rarer all the time. By Easton’s own admission, “today American upward mobility (especially for men) lags behind Canada’s and some European nations.”
Easton goes on to complain that the Occupy movement, the most recent incarnation in America’s traditional disdain for cheating, hording fatcats, is wrong in its 99% v. 1% frame. ”Sadly, it is a confusing and flawed prism,” sniffs Easton, “marred by hyperbole, half-truths, and unnecessary pessimism about what it means to succeed in America.” She goes on to whine that “if Americans really understood who the 1% are, they would be more likely to stop the name-calling and shift the debate to the dire task at hand — getting millions back to work.”
All righty then. While we’re trying to get back to work, we’ll try to forget that Wall Street’s reckless casino games crashed the economy in 2008, destroying millions of jobs. And we’ll see if we can ignore the fact that corporate-friendly policies pushed by the greedy rich have made decent wages and job security a thing of the past for many. And we’ll pretend that all the people at the top of the pyramid are ordinary folks who had the same chances as everybody else and made it through hard work and grit. And we’ll make an effort to discount the fact that it is the super-rich who should be thanking us, for our job creation, and ourtax dollars that build their roads, educate their workforce, provide the research needed to make their products – and, oh wait! — lots of them don’t make or do anything, they just bleed money out of the real economy and deplete the government of revenue with their special tax breaks!
While we’re at it, we’ll see if we can forget the famous teaching of Jesus, uttered after a rich young man came to ask how he could be saved. Very simple, said Jesus. You just sell your worldly possessions and become a follower of my teachings. But the young man was overly fond of his worldly possessions, and turned away. To which Jesus said:
“Again I say to you, it is easier for a camel to go through the eye of a needle, than for a rich man to enter the kingdom of God” (Matthew 19:24).
That Jesus. He sure did beat up on the rich, didn’t he?
- Forbes 400 List Reveals Why the Greedy Rich Fully Deserve Your Contempt — And Jesus’s (alternet.org)
- 5 Obscene Reasons Why Richest Americans grow Richer As Middle-Class Declines (alternet.org)
- How The Wealthiest 400 Americans Got Rich [INFOGRAPHIC] (valuewalk.com)
- Gates, Buffett top Forbes’ list; Kochs, Waltons weigh in (kansascity.com)
- Forbes 400; wealth and politics in America (kansascity.com)
- Gates again tops Forbes list of richest Americans (cbc.ca)
- Mary Sanchez | To those ‘born on third base,’ wealth comes easily (kansascity.com)
- The ‘Self-Made’ Myth and Our Hallucinating Rich (ourfuture.org)
- The Forbes 400 (sustainingthenorthernplains.wordpress.com)
- Forbes Billionaires to Watch and Who Are the Real Job Creators:read Below to Find Out (bonjupatten.com)
It’s legal: cops seize cell phone, impersonate owner
by Timothy B. Lee - July 19 2012, 10:03am CDT
Everyone loves texting.
In November 2009, police officers in the state of Washington seized an iPhone belonging to suspected drug dealer Daniel Lee. While the phone was in police custody, a man named Shawn Hinton sent a text message to the device, reading, “Hey whats up dogg can you call me i need to talk to you.” Suspecting that Hinton was looking to buy drugs from Lee, Detective Kevin Sawyer replied to the message, posing as Lee. With a series of text messages, he arranged to meet Hinton in the parking lot of a local grocery store—where Hinton was arrested and charged with attempted possession of heroin.
Hinton wasn’t Sawyer’s only target. According to a court decision summing up the facts, “Sawyer spent about 5 or 10 minutes looking at some of the text messages on the iPhone; he also looked to see who had been calling. Many of the text messages that Lee’s iPhone had received and stored were from individuals who were seeking drugs from Lee.”
So Sawyer texted one of the individuals on the list and asked him if he “needed more.” The individual, Jonathan Roden, replied, “Yeah, that would be cool. I still gotta sum, but I could use some more. I prefer to just get a ball, so I’m only payin’ one eighty for it, instead of two Ts for two hundred, that way.” (The court helpfully explained that a “ball” is “a drug weight equivalent to approximately 3.5 grams.”)
But can cops legally do this with seized cell phones? When their cases went to trial, Hinton and Roden both argued that Sawyer had violated their privacy rights by intercepting, without a warrant, private communications intended for Lee.
But in a pair of decisions, one of which was recently covered by Forbes, a Washington state appeals court disagreed. If the decisions, penned by Judge Joel Penoyar and supported by one of his colleagues, are upheld on appeal, they could have far-reaching implications for cell phone privacy.
“No longer private or deserving of constitutional protection”
“There is no long history and tradition of strict legislative protection of a text message sent to, displayed, and received from its intended destination, another person’s iPhone,” Penoyar wrote in his decision. He pointed to a 1990 case in which the police seized a suspected drug dealer’s pager as an example. The officers observed which phone numbers appeared on the pager, called those numbers back, and arranged fake drug purchases with the people on the other end of the line.
A federal appeals court held that the pager owner’s Fourth Amendment rights against unreasonable search and seizure were not violated because the pager is “nothing more than a contemporary receptacle for telephone numbers,” akin to an address book. The court also held that someone who sends his phone number to a pager has no reasonable expectation of privacy because he can’t be sure that the pager will be in the hands of its owner.
Judge Penoyar said that the same reasoning applies to text messages sent to an iPhone. While text messages may be legally protected in transit, he argued that they lose privacy protections once they have been delivered to a target device in the hands of the police. He claimed that the same rule applied to letters and e-mail. (Police would still need to seize or search a phone or computer legally, and phones are much easier for cops to seize than computers, which generally require a warrant.)
“On his own iPhone, on his own computer, or in the process of electronic transit, Hinton’s communications are shielded by our constitutions,” he wrote, referring to both the state and federal constitutions. “But after their arrival, Hinton’s text messages on Lee’s iPhone were no longer private or deserving of constitutional protection.” Penoyar rejected Roden’s privacy arguments on similar grounds.
Mobile phones exist in a constitutional grey area. The law has well-developed doctrines protecting the privacy of our desktop computers, landline telephones, and filing cabinets. But modern cell phones perform all of these functions, and more. If the police are free to rummage through any cell phone that falls into their hands, every arrest would automatically give the police access to a treasure trove of private data that they would otherwise need a warrant, based on probable cause, to obtain.
The Washington State decision is not unprecedented. Last year, the California Supreme Court ruled that no warrant was required for the police to peruse a cell phone that was confiscated after its owner tried to sell ecstasy to an undercover police officer. In that case, the police obtained a text message that seemed to confirm the government’s case against the suspect. Two justices of the California Supreme Court dissented from the ruling.
One judge dissented from the Washington State rulings as well. “Sawyer engaged in a continuing search when he first searched the contacts list on Daniel Lee’s iPhone to find Hinton’s phone number,” wrote Judge Marywave Van Deren in her dissent. Sawyer “used Lee’s iPhone to send and receive messages from Hinton. Under these circumstances, I would hold that Sawyer was required to obtain a search warrant.”
In a slightly different context, the Obama administration has also held that the contents of cell phones enjoy constitutional protection. Earlier this year, the Department of Justice filed a brief in a Maryland case arguing that Baltimore police had violated a man’s constitutional rights—including his Fourth Amendment right against unreasonable search and seizure—when they seized his phone and deleted videos he had taken of the officers’ conduct.
- It’s legal: cops seize cell phone, impersonate owner (arstechnica.com)
- It’s legal: cops seize cell phone, impersonate owner (whptv.com)
- Judge says it’s OK to use your seized phone to impersonate you and entrap your friends (boingboing.net)
- Court Rules Cops Can Impersonate You With Seized iPhone Anytime They Want (cultofmac.com)
- If The Cops Get Your Smartphone, They’re Free To Impersonate You (appadvice.com)
- Yes, The Cops Can Text You From Your Drug Dealer’s iPhone To Bust You (forbes.com)
- How To Quickly Send Out A Text Message Instead Of An iMessage Directly From Messages App On iPhone (redmondpie.com)
- The Text Message Era (mycricket.com)
- Court: Cops can read suspect’s texts, spring text trap (news.cnet.com)
- How to Change iPhone Usage Statistics to zero without Reset Date ? (onhax.wordpress.com)
How To Create A Career Path When Your Job Doesn’t Have One
Image credit: Getty Images via @daylife
Lately I’ve been thinking about my next big career move. I know it’s a little premature. I’ve only been with Forbes on their Audience Development Team for a little over four months now, and I absolutely love it. The people are great, the work is always new and interesting, and I’m passionate about what I do — but I think it’s always good as a young professional to have a long-term vision in mind, to have a bigger goal you keep reaching towards, in order to keep everything in perspective and help you align your personal goals with the business goals of the company – as well as to keep from getting complacent (which is huge).
The problem with this, though, is that many companies today, like Forbes, that are trying to adapt to changing times have no clear career path for their young employees, especially those in newly created tech or online jobs.
This makes answering the question, “Where do I go from here?” very difficult. I may not always like the answer to that question. I may not always stick with the answer to that question. The answer to that question may change or evolve over time — but I must always have one. As a self-proclaimed high-achiever who has many things I want to accomplish in life (and as fast as I can) – I must always have an answer to that question, a singular vision towards something greater.
So I asked myself: what is that vision?
I was talking to one of my co-workers about it the other day who has been with the company for a year now, much longer than I have and perhaps much more deserving of a promotion, about what her next steps are in her career, and especially within the company. Turns out – I wasn’t the only one experiencing frustration. She also was uncertain about where she could possibly fit in at Forbes in the (hopefully not too far) future. The reason for this is because those new jobs, the next steps for me and my co-workers, have just not been created yet.
As the journalism industry begins to change, a new model for journalism is being put in place that I believe Forbes is at the forefront of. This new model includes my position as an Audience Development Associate – where I work to promote Forbes content daily and improve the quality of the site overall — and many of my good friends’ positions as Producers – who guide our contributors and help police and edit the site. Both of these positions have never existed before, especially not in journalism – and because these positions have never existed before, neither do the positions that would naturally or logically follow them.
There is no Audience Development Representative or Audience Development Executive to aspire to, which is the next logical step for many young professionals at entry-level positions in their companies. And gunning for someone else’s job – as say manager of the team or director – isn’t smart either. That kind of thinking becomes adversarial and counterproductive – hoping the person currently in that position fails or leaves, or maybe, just maybe gets promoted. And that boxes your talent in, makes you conform to a set of rules and standards that perhaps aren’t the best fit for your unique skills – but maybe are the best fit for the person currently in the position. It brings you down and leaves the future of your success in someone else’s hands instead of your own. It makes you feel as though you have no control. It’s not a good feeling.
As a result, I believe that it is up to you as the employee to create the job you want, to identify what the company is missing and what the company needs and be that.
The job I will have in the future, say one or two years down the line, doesn’t even exist yet. I’ll have to create it, to be entrepreneurial in my own company, to sell and advocate for myself like no one else (hence the name of this blog: Elevator Pitch – Going up?). And, luckily, that kind of thinking resonates with the Forbes mission of entrepreneurial journalism, which encourages people to pull themselves up by their bootstraps and build their own brand in person, online, or at work.
So, that’s my vision. That’s the position I’m gunning for – not my boss’ job or my boss’ boss’ job. It’s something different entirely, something that suits my interests, my passions and my talents uniquely, something that hasn’t even been created yet, which leads me to my advice for you and other young professionals: always look for the cracks in your company’s infrastructure. Always be thinking about what your company is doing now that could be done better – and, especially, how you can be that person to fix it. It’s there, if you just look hard enough.
Just how do you find it, though?
Look for problems. Focus on problems. Embrace and enjoy problems – because wherever there is a problem, there is a solution close behind.
Read in between the lines. Pay close attention to what your co-workers say, or don’t say. It’s usually the things that they are ignoring that need the most attention.
Think small. It’s about the little, practical things you can do to make you and your company look better. Once you’ve mastered that, look for bigger trends.
Get to know your people. Trust them, and make them trust you. Be very real and candid with them. Form alliances with them. If you do this, they will tell you their problems and the problems within the company – and they will help you to succeed in fixing them. (Producers: Thank you! I love and appreciate your advice, support, and friendship.)
Get to know yourself. What are your strengths and weaknesses? What makes you happy? What do you want? Even if what you want is completely different than what you are doing now, embrace it. There is a way to harness that tension to make you, your job and the company better. The magic is in figuring out what that way is.
And, once you’ve figured out that way, that job that only you are uniquely suited to do, that the company needs, set up a meeting with your boss to talk about it. Tell him what you think needs to be done and why – and especially why you are the best person for the job (and a pay-raise). If your boss disagrees with your conclusion or shows some resistance, don’t get discouraged. Adjust your thinking and try again – or find another company (or person in the company) that supports your mission. Chances are, though, your boss will admire and respect your tenacity – and help you to accomplish other great things in the future. After all, half of the battle to getting what you want is asking for it.
When are you going to ask for yours?
- How To Win In A Dead End Job (forbes.com)
- Congress: You’re Fired! (middlebrickroad.com)
- Is Forbes the model for a digital-first media entity? (gigaom.com)
- 44% Of Employees Are Unsatisfied (bizsugar.com)
- Best – And Worst – Paying Jobs in the United States (bargaineering.com)
- Dear Forbes: 20-Somethings Do Take Themselves Seriously (thedailymuse.com)
- Three Reasons Why Apple’s New Campus Is Ready For Anything – Forbes (nadernazemi.com)
- IT (Information Technology) Career Path Guideline (web-workathome.com)
- In journalism, what’s new is actually old… and ‘that’s the way it is’ (nextlevelofnews.com)
- Roundup: 20 Reads for Women Entrepreneurs, Part II (grasshopper.com)
China’s Missing Middle Class – Analysis
May 27, 2012
By Nan Chen
Two parallel narratives surround globalization and the trade imbalance between China and the United States. One side moans that competition with China has squeezed traditional U.S. manufacturing jobs and caused the middle class to disappear. The other side declares that a new Chinese middle class is riding the wave of China’s inexorable economic boom. A particularly hyperbolic headline in , for example, proclaimed the rise of China’s middle class to be “The Biggest Story of Our Time.”These statements are oversimplifications of a complicated relationship. Although the U.S. middle class has been squeezed and manufacturing has been outsourced to developing nations such as China, there has not been a corresponding rise in the Chinese middle class like that seen in the United States after World War II. Manufacturing jobs in the United States created a distinct middle class in the post-war years, but these now outsourced jobs do not appear to engender the same affluence in China.
Rather than a middle class of laborers in the manufacturing industry, China has seen disturbing levels of income inequality and the emergence of a new “elite” class at the same time that the United States is experiencing similar shifts. This has implications not only for China’s growth, but also for U.S. exports that stand to benefit from a healthy Chinese middle class of consumers. Moreover, the growing wealth disparity in China suggests that China’s embrace of free-market economics and unfettered globalization may result in the same social ills seen in the United States.
The Disappearing U.S. Middle Class
After World War II, the United States saw unprecedented and unreplicated growth stemming from the factories mobilized by war, suburbanization, and high consumption. Moreover, this growth was spread relatively equally among all sections of society. Mass production supported this economy as American workers, returning from the war and bolstered by federally funded job training and education, filled the factories and received relatively high wages. This meant that not only did the United States have a large manufacturing class; it had a large manufacturing class with disposable income – a consumer class. The cycle of high wages and high consumption spurred economic growth and prosperity.
However, the American middle class has shrunk in the past 30 years while income inequality has steadily grown as a result of both consumer and investor demands. Companies must balance the combination of competitive pressures, investors seeking to maximize returns on capital, and consumer demands for lower prices. In this balancing act, middle-skill workers tend to lose out. For example, in 2006, when the profitable Caterpillar, Inc. came under pressure from investors for higher earnings, new employee wages and benefits decreased by nearly $20 an hour. Caterpillar group president Douglas Oberhelman soberly, “there is a balance that must be struck between being competitive and being middle class.”
Studies on income inequality in the United States have shown a hollowing out of the middle class. For example, between 1970 and 2001, CEO pay from roughly 30 times to 350 times as much as the average income; the popular Piketty and Saez conclude that the top .01 percent of earners’ income share rose dramatically from 0.5 percent in 1973 to roughly 6 percent by 2007; and the Economic Policy Institute that income for the top fifth of earners grew by 49 percent between 1979 to 2009, compared to an increase of only 11.2 percent for the middle fifth and a loss of 7.4 percent for the bottom fifth. In conjunction with the low cost of wages and technological advances, globalized supply chains and cheap manufacturing provided another fix to the demands for cheaper, more profitable goods. Companies under constant pressure to reduce costs found an answer in overseas manufacturing.
Thus, it is little wonder that the United States has seen a precipitous decline in manufacturing jobs over the past 30 years. bemoaning the inexorable outsourcing of manufacturing jobs to China and other developing nations. While this will be cold comfort to those in the Rust Belt, optimists counter that the loss of jobs in the United States is balanced by the immense gains in developing nations. In other words, outsourcing represents a global rebalancing in which developing nations can now attempt to catch up to the more developed countries by underpricing them in goods and services. Although this view may hold some truth, evidence in China does not suggest the creation of a middle class of consumers similar to that of the post-war United States, nor does the evidence support the fast-paced rise of this class. recently published an
The Rumored Chinese Middle Class
Rumors of a rising Chinese middle class have been touted widely. However, the evidence supporting these claims remains conflicting at best. The “middle-class” jobs outsourced from the United States have not necessarily translated to “middle-class” jobs in developing nations, especially in China. Defining the middle class has always been a difficult venture, but on several fronts the Chinese middle class remains nascent.
Using wages as an indicator, the manufacturing jobs in China fall far short of providing a middle-class lifestyle. The that the average manufacturing wage in Shanghai in 2008 was 42,311 yuan ($6,723) annually, the highest in the country. The same article also listed annual wages in other parts of China (excluding Beijing and Shanghai, where the cost of living spikes) at roughly 19,500 ($3,098) to 25,000 yuan ($3,972) annually. Even in Shanghai, these wages are below middle-class.
A 2005 study conducted by the State Statistics Bureau of the Chinese government used an income range of 60,000 ($9,534) to 500,000 yuan ($79,444) for a three-member household as the primary determinant of middle-class status. This report places factory workers at far below middle-class status, or possibly at the bottom, for a two-income household, and calculated only roughly 20 percent of the Chinese population as middle-class (to be sure, this report has received some criticism by Cheng Li of the Brookings Institute). And while wages are rising, they won’t reach middle class wages any time soon. For example, Foxconn Technology, which makes an estimated 40 percent of the world’s consumer electronics, recently its wages to about 2,200 yuan per month ($350) after a rash of suicides and bad press. Even at these increased wages, workers lack the human capital, access to healthcare or education, and consumer behavior that are generally indicators of a middle class. Moreover, the salaries at Foxconn are likely higher than other manufacturers that are less assiduously monitored by the press. Migrant workers, many of whom work in these “outsourced” factories, about 1,690 yuan ($266.86) per month in income.
Perhaps a more important indicator of middle-class status is consumption behavior. A rising consumer class in China would drive economic growth and could also balance some of the trade deficit with the United States. The emergence of such a class would augur well for China’s purported goal of transforming its industrial manufacturing economy into a knowledge and services economy. However, a 2010 OECD using consumption as an indicator found that the Chinese middle class constituted only 12 percent of the population. This is simply not large enough to drive the shift from a manufacturing-export economy to an innovation economy.
The absence of a substantial consumer class in China is particularly significant for the United States, because this consumer class presumably would demand U.S. goods. But since China’s entrance to the World Trade Organization in 2001, U.S. companies have been disappointed by the lack of consumer spending in China. In recent years, although exports of certain products like computer components, automobiles, grain, and chemicals have seen an encouraging rise, the U.S. trade deficit with China remains high at roughly $272 billion. Thus, looking at consumption, the explosive growth in the past 30 years has yet to create a significant middle class.
China still has a long way to go before it can claim a legitimate middle class capable of driving healthy economic growth through its own consumption, rather than relying on exports to other countries.
China’s New Elite
If China has been experiencing near double-digit growth in GDP yearly but has yet to see a robust middle class, where has all the growth gone? In fact, rather than creating a new middle class in China, outsourcing has contributed to the rise of a new elite class. It that the disproportionate benefits of China’s near 10-percent annual GDP growth over the last 30 years have fallen on a minority elite (not entirely unlike the current situation in the United States). Though growth has benefited all Chinese citizens to some extent, wage inequality has exploded. China’s Gini coefficient (a measure of inequality) has increased to roughly 45.3, approaching levels of dangerous inequality (compared to the U.S. score of 46.8 in 2009). Thus, rather than replicating the middle-class growth of post-World War II America, China appears to have skipped that stage altogether and headed straight for a model of extraordinary productivity but disproportionately distributed wealth similar to the contemporary United States.
At the same time that the United States was responding to the oil and stagflation shocks of the 1970s accompanied by growing globalization, China was responding to the devastations of the Cultural Revolution. Since the late 1970s, both countries have pursued similar market-oriented economic policies, which appear to have resulted in wage inequality and the absence of a robust middle class in both countries.
China’s “rising” middle class remains nascent and tiny as a share of total population. In order to have a true middle class capable of driving economic growth, China must increase this population several-fold, reduce income inequality, and increase consumption. Otherwise, it will not be able to transform from a commodity export economy to an innovation economy. Likewise, if the Chinese middle class never materializes, then the United States will have lost an opportunity for growth in its own exports. The arrival of a new elite class in China does not come from the throngs of factory workers, but more likely on the backs of those workers.
Recovering The Middle Class
This is not to say that a middle class in China will never rise, or even that it may not appear in the next few decades. However, under the current policies, the emergence of such a class is less likely than the media suggests. There are no easy solutions for reinvigorating the American middle class in a post-industrial economy, or for creating such a class in China.
However, the United States can create a new middle class of skilled and well-compensated workers capable of driving innovation and production by enacting appropriate economic policies such as eschewing protectionist policies that prop up failing industries, increasing federal funding for education and addressing poverty-related achievement gaps, incentivizing innovation through subsidies, and, to the extent that manufacturing occurs domestically, focusing on high technology like computer components (which have seen a rise in exports to China). These workers will also be consumers that can purchase products designed and perhaps even manufactured, at least in part, in the United States. At the same time, a more robust middle class in China will also purchase more U.S. goods.
The middle classes of China and the United States are inextricably linked. The United States need not fear the rise of China’s middle class but should see it as the rise of a billion consumers and an opportunity to meet those consumers’ demands. However, despite the claim of optimists in the media, the verdict is still out as to whether China’s growth will create a robust middle class or just income inequality.
- End the Fed to help the poor and save the middle class and the economy (trutherator.wordpress.com)
- Path to riches is paved through cities (eco-business.com)
- Has China a viable middle class? – The debate (chinaherald.net)
- China’s middle class has UK food industry drooling (todayonline.com)
- If Nick Hanauer is right about the middle class, then America’s job creation engine is being destroyed (johnmalcolm.me)
- China PMI Slides as World Economy Cools – 24/7 Wall St. (mbcalyn.com)
- Rich Guy on How Middle Class Are the Job Creators (businessinsider.com)
- China’s urbanization unlikely to lead to fast growth of middle class (sinodaily.com)
- China’s urbanization unlikely to lead to fast growth of middle class: UW geographer (physorg.com)
- China’s economic crisis – The Washington Post (mbcalyn.com)
- Poverty…prosperity,,,what’s the Diff….: (brothersjuddblog.com)
- The geographical shift of the middle class will entail relocalization – World Economic Forum (jobmarketmonitor.com)