As we export jobs to China, is their middle class getting stronger? Amid the happy-face stories of a new generation of Chinese buying cars and designer sneakers, Andy Mukherjee offers a grim glimpse of ordinary Chinese families living with risk. He tells about patients in hospitals wearing stickers to identify “how much they can pay to get well” and parents paying illegal bribes to keep their children in schools that are nominally public.
State owned businesses once provided the social safety net — lifetime employment, education, health care and pensions. Mukherjee observes: “Those days are over. As part of their ‘reform,’ the state enterprises have been curtailing their social responsibilities.”
Ah, the familiar question of who should build the safety net.
Mukherjee locates the Chinese penchant for savings in the context of risk. With no one filling the financing gap in health care, education and old-age security, there’s an increasing propensity among workers to save. When Chinese workers save, they produce goods for sale but don’t buy as much as they produce causing an imbalance in foreign trade. The trade connection is the reminder that domestic economic policy and international impact are only a short blink apart.
In this latest small-world example, both China and the US face the question of whether employers or the state should provide the basic safety net. And both seem to be pursuing similar responses: employers can cut back, and the state won’t step up.
Middle class Americans have not followed their counterparts in China. Families are not coping with risk by socking away savings. Instead, the American middle class has dealt its growing risks by going deeply into debt, which further multiplies the risks that any negative event will cascade into a complete financial collapse. But whether the response is hypersavings or hyperdebt, Mukherjee’s analysis suggests that the gaping holes in the social safety net — jobs, health care, education — will ricochet around the world.
