Despite the US’s economic success, income inequality remains breathtaking. But this is no glitch – it’s the system
The Chinese did rather well in the age of globalization. In 1990, 943 million people there lived on less than $3 a day measured in 2021 dollars – 83% of the population, according to the World Bank. By 2019, the number was brought down to zero. Unfortunately, the United States was not as successful. More than 4 million Americans – 1.25% of the population – must make ends meet with less than $3 a day, more than three times as many as 35 years ago.
The data is not super consistent with the narrative of the US’s inexorable success. Sure, American productivity has zoomed ahead of that of its European peers. Only a handful of countries manage to produce more stuff per hour of work. And artificial intelligence now promises to put the United States that much further ahead.
This is not to congratulate China for its authoritarian government, for its repression of minorities or for the iron fist it deploys against any form of dissent. But it merits pondering how this undemocratic government could successfully slash its poverty rate when the richest and oldest democracy in the world wouldn’t.
It’s weird to raise this as a concern relative to the history prior to the revolutionary era. Like folks who bemoaned the loss of the antibellum American South or the Batista Era Cuba or Peronist Argentina.
It’s different because this affected the people who are still alive today.
The reform being talked about started in 1980, and didn’t become available to the broader population until pretty recently. Even today, children aren’t allowed to attend public schools outside of their ancestral home town.
So if you were born in 2000 to parents who had moved to Shenzhen, they’d still have to send you back to whatever rural village your grandparents were from, and didn’t have access to schools or healthcare otherwise. Now, you’re 25 years old and lived most of your life seeing your parents once a year, and still have an internal passport-like document tying you to that ancestral village.
There are more reforms on the horizon, but trying to explain just how pervasive the hukou system still is (and how much it affected the people who are alive today) is really hard to grasp for people not familiar with the system.
A lot of that is simply issue of capacity and social management. The famines that everyone loves to blame Communism for in the 1960s came out of an urban economic boom that drew in peasant farmers without regard to the ecological consequences. We saw similar catastrophes in Europe and the Americas during early industrial periods, with a bad crop year spiraling into food riots and panics as farmers abandoned their crops in droves.
The fundamental difference between Chinese commune policies and, say, American sharecropping or Cuban sugar plantations is that the workers had no title to their land, not that they couldn’t leave it.
Your parents would have moved to Shenzhen to take advantage of the enormous export boom out of Hong Kong. You’d be drawn into the factory system just like your parents, with minimal education and poor social services.
But, as a consequence, Shenzhen enjoyed an equivalent dividend in wealth, resulting in the construction of new schools and clinics which were subsequently opened to the public as fast as the state bureaucrats could stand them up.
Compare this to, say, London or Miami or Mexico City during this same period. Wealth wasn’t captured for the benefit of the working classes. Instead, the cities privatized their public amenities and inflated speculative real estate bubbles.
Ten years down the line, people in Shenzhen had access to education, health care, and transit comparable to anything you’d find in the developed world. Meanwhile, Westerners were watching the Housing Crash erode their way of life and imposing brutal austerity measures on their local people.