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March 4, 2011Income Inequality and unemployment amongst white collar workers is a massive growing under-appreciated problem in India and China.These countries despite growing tremendously have built in severe distortions which are only becoming bigger by the day.Graduates in both countries increasingly find a massive demand deficit for their services while income inequality grows bigger as billionaires build billion dollar houses amidst people earning less than $2 day.
The rule of law is not very strong in the countries and it takes a special kind of luck and connections to be decently wealth in China.In China “guanxi” and “jugaad” in India are essential for a citizen to rise above stark poverty.These words have a broad meaning which is mainly “being connected” and the ability to get things done through non-official channels.These frequently involve illegal acts and bribing to get work done.While the current unrest in Middle East and North Africa are not about to be replicated in China & India soon,the problem is getting only bigger.China always fear unrest and has vice like grip on the Internet,while India’s Naxalite problem keeps on growing as the business and political elite continue to loot resources.
From sports cars to slums: China’s huge wealth gap
Li Fu is 29, owns five cars including a Ferrari and has a diamond-encrusted cell phone. Wang Qingzhan is 44, works as a cleaner and lives with his family in a tiny room that is about to be torn down.
“The gap between rich and poor is a totally normal phenomenon in China’s economic development, which only began 30 years ago,” Li says.
“It’s not like in the West, where more than 200 years of development has allowed for a vast accumulation of wealth.”
In a country where “guanxi” — connections with high-level officials or businessmen — are seen as vital to moving up the ladder, Li nevertheless insists his success is the product of pure determination and simple hard work.”I don’t make much money — about 1,500 yuan ($230) a month, without an allowance for food or lodging,” Wang told AFP at his home in the city centre.
“If I don’t do odd jobs, I can’t take care of anything here — my kids’ schooling, food, accommodation…. One person has to have two jobs. Only then can we get by.”
Wang — wearing a heavy cloth jacket with threadbare sleeves, his hair in complete disarray — lives with his wife and two teenage sons in a room with crumbling walls that measures about 10 square metres (107 square feet).
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[…] Income Inequality in India has been rising at an unprecedented rate in the last couple of decades.The opening of the Indian economy has led to even starker levels of income disparity among the very rich and majority of the Indian citizens.The Crushing Income Disparity is seen in the world’s most expensive $2 Billion House set amongst 42% of the world’s hungry children.The latest Forbes report lists 50 Indian Dollar Billionaires with 2 in the Top 10.A 2007 report by the state-run National Commission for Enterprises in the Unorganised Sector (NCEUS) found that 77% of Indians, or 836 million people, lived on less than 20 rupees (approximately US$0.50 nominal; US$2 PPP) per day.The living conditions of the majority have already fallen further with food price inflation between 10-20%.While revolutions have already broken out in much higher per capita countries like Egypt,Libya etc. India remains relatively dormant with a only the large Naxalite movement reflecting the massive income disparity.Makes you question whether capitalism in India has made much sense especially as there has been no spreading of wealth from the top to the bottom. […]