Monday, March 26, 2007

Viewpoint: China Ignores Wage Gap

By Andy Mukherjee (Bloomberg News)

Published: March 6, 2007 in the International Herald Tribune

This article is about what the Chinese government is doing to ease its growing economic disparities and arrest its rapid environmental deterioration. “Achieving a balance between investments and consumption, reducing the trade surplus, curbing growth of polluting industries, spending more money in rural areas and boosting incomes of low- and middle-income citizens are all well-known elements of China's policy wish list.”

For China to accomplish these goals, it will require government planners to figure out a way to reverse a steep decline in the share of wages in the economy. This is a fundamental challenge facing many countries, which is going to be tough to turn around.

This article is important because global economists are concerned that this marginalization of rich nations' workforces, like what has happened in China, may cause a political backlash against globalization. The threat to social stability from too much profit and too little benefit for the people is even more pronounced in China, but it is becoming a problem in most developed countries around the world.

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