The Gini Is Out Of The Bottle: Did China "Outcapitalism" The US, Or Did America "Outcommunism" China?

Tyler Durden's picture

In several days, the ornate theatrical spectacle that is the Chinese Communist Party's 18th Congress (captioned here) will come to a triumphal end, with a new leader, Vice President Xi Jinping, carefully hand-picked after the Bo Xilai fiasco, from among the equal of equals, with just one thing on his mind. No, not how to transfer $5 billion from that Swiss bank account to Singapore without being noticed.

The patriotic thing preoccupying the lucky successor to President Hu Juntao will be a simple one: how to promote well-being and equality among the people. After all, caring about the people is the primary preoccupation of any good communist country. As such, key concern for the new leader and his government, at least as has been televised, will be the income distribution inequalities and corruption among the Chinese population, something outgoing leader Hu himself stressed. Indeed, as the most recent Chinese Gini coefficient (the measurement of inequality of income in a given society) reading shows, in China this has risen from 0.42 in 2007 to 0.48 in 2009.

It is this reason why the Chinese society will have to engage in far more effective wealth redistribution because the last thing the country with no real social safety net can afford is social unrest and upheaval in a time of declining economic growth.

So far so good.

Where there does arise some confusion, is when juxtaposing Chinese social inequality with that of the US. Recall that China is a de facto communist country, whose society is, at least on paper, equal. One wonders, then, how it happened that US society now has a Gini coefficient that is lower than that of China: did communist China "outcapitalism" the US, or has the US simply, and quite successfully, "outcommunism" China?

We expect to find out soon, just as we expect to see what happens if either China or the US fails to address this rather stunning divergence away from propaganda ("China is a communist country"; "The US is capitalist") and into reality.