Kevin Zeese and Margaret Flowers, two long-time Occupy Washington D.C. activists, posted an essay today at Counterpunch entitled, “Time for an Economy Of, By and For the People.” Upon reading it I was immediately struck by a certain sense of familiarity. Then I realized, the economic policies they advocate are exactly what those awful Chinese Communists are pursuing. It never ceases to amaze (and amuse) me that the US Left refuses to take China seriously as a source of knowledge and information about how to build socialism in a poor underdeveloped, rural society, nonetheless learn any lessons about how socialism actually works in a developing, transitional economy. Instead the American Left seems to be enthralled by the Corporate media in depicting China as a rapacious, hyper-capitalist, human rights abuser and super global polluter. Let me disabuse the reader of this miss perception as it applies to China's current economic policy, particularly as it relates to disparities in income distribution, the wage structure and other such jobs related issues. Since this topic actually would require a book, I will focus on the article written by Zeese and Flowers as a template for discussion.
As Zeese and Flowers state, “the White House and Congress have not put in place policies to create a real recovery. Their focus on reducing the deficit, which has proven to not be based on sound research or an understanding of economic history, starved the country of what it needed most – job creation and rising wages. Instead the people got policies that caused stagnant wages and budget cuts that the IMF this week called “senseless and ill-designed.”
How does this compare to China's response to the global economic crisis? They have done the exact opposite. China has been raising both average and minimum wages by between 10% and 20% over the last few years and they intend to continue to do so until the minimum wage is at least 40% of the average wage by 2015 (Reuters: China sets target of average 13 percent annual minimum wage rise). As Zeese and Flowers prescribe, “Indeed, a global minimum wage that is at least half the median income of a country and above its poverty level, would end poverty and provide a foundation for the global economy.” So it seems that China is well on its way to meeting that goal, one which will continue to spur economic growth by raising the living standards of millions of the lowest paid workers in China.
Zeese and Flowers state further that, “In addition to raising wages, as there is certainly no wage inflation, there is a desperate need for job creation programs by the government.” In China, however, wages are rising much faster than inflation. Inflation in China in May 2013 was reported to be 2.1% per annum whereas wages are increasing at a double digit annual rate. So in China there is obviously considerable wage inflation which increases consumer purchasing power and is a long-time spur to economic growth. Moreover China has been building infrastructure and investing in alternative energy at breakneck speed (e.g. a fledgling Cap and Trade system is being rolled out), creating jobs as a result, both prescriptions for economic growth advocated by Zeese and Flowers.
In addition to the above China's current 5 Year Plan endorsed by both the recent Communist Party and People's Congresses envisions increased spending on social programs including enhancements to the Chinese equivalents of Social Security, Medicare, subsidized low-income housing and increases in other social safety net expenditures. This is to be funded by requiring State Owned Enterprises (SOEs) to contribute 5% more to the State (Reuters: China OKs sweeping tax reforms to tackle inequality). This is meant to free up consumer spending by reducing the high savings rate which Chinese rely on as insurance for unfunded health care and retirement expenses.
This brief review is to attest to the fact that China is actually putting into effect everything that's being advocated by Zeese and Flowers as part and parcel of an economy that is of, by and for the people.
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