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China and US have the same problem: inequality

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After all, why would the wealthy and politically powerful who control the state machinery and reap massive benefits from the current status quo have any incentive to democratize?

Some estimates of the fortunes that top Chinese officials have been able to amass through corruption and cronyism are staggering. According to the New York Times, the family of China’s current Prime Minister, Wen Jiabao, has “controlled assets worth at least $2.7 billion,” with shares in banks, jewelers, tourist resorts, and telecommunications and infrastructure projects. Moreover, Xi Jinping, the man expected to ascend to China’s presidency in March, has accumulated total assets worth $376 million for his own family.

As this sort of corruption and political patronage becomes endemic, and at the same time news of widening economic inequality incessantly trickles out to the masses, the threat of social and political instability will loom ever larger. 

The last serious show of mass discontent in China was last year's Jasmine protests that happened in response to the revolutions in Tunisia and Egypt. These protests were instantly -- almost preemptively -- stamped out by the Chinese authorities. Indeed, a CNN reporter on the ground during the Jasmine protests states that the government's inordinately harsh crackdown, "show[s] how incredibly terrified and paranoid the Chinese authorities are of any anti-government movement forming in China."

The American Secretary of State, Hillary Clinton, said it best. When a journalist mentioned to her that the Chinese government seemed scared of the Arab rising, Clinton said, "Well, they are. They're worried, and they are trying to stop history, which is a fool's errand. They cannot do it. But they're going to hold it off as long as possible."  

The question is not whether political reform will happen in China. Average incomes in China are rising rapidly [though unequally], and history shows us that when incomes rise high enough the people will begin to demand greater political freedoms. (In East Asia alone the histories of Japan and South Korea, among others, confirm this.) Instead, the question is whether political reform will happen peacefully or violently.

If inequality remains unaddressed by the CCP for too long, violence is much more likely than peace. Ultimately, rising inequality could bring about the revolution that Cheng Li wrote of in his memo to President Obama. 

There's a slight irony in Li's memo to Obama: rising inequality also plagues the US, as evidenced by the Occupy Wall Street movement and that oft-used Republican epithet, "class warfare." In fact, inequality was a key theme in President Obama’s Second Inaugural Address on Monday, January 21.

In his speech Obama proclaimed, "For we, the people, understand that our country cannot succeed when a shrinking few do very well and a growing many barely make it.”

It seems as though the world’s two most powerful countries have more in common than they think.


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