Urbanization in China

by John Quiggin on June 16, 2013

The NY Times has an interesting, but unsatisfactory, article, on government attempts to promote urbanization in China, with a target of 70 per cent by 2025. The story is mostly about farmers whose land has been acquired by fiat, which fits into well-established journalistic frames. The bigger issue, buried right near the end, is the fact that, under the hukou system of registration, people classed as rural can’t legally live in the city. So, while about 35 per cent of the population is legally urban, the true figure is more like 53 per cent. That makes nonsense of the figures quoted at the beginning of the article, and the suggestion of forced urbanization on a historically unparalleled scale. In reality, the announced target implies a modest slowdown in rural-urban migration, which occurred despite official disapproval.

The big question, at least from the viewpoint of rural Chinese, is whether China can shift to a universal social welfare and retirement income system to replace the workplace-based system of social welfare, of which hukou was part, and which made sense with comprehensive state ownership. This topic is touched on in the NYT article, but in a fragmentary and confusing way, and it’s one about which I know little. I’d be grateful if anyone could point to a more comprehensive treatment.

From an Australian point of view, the continued construction of high-rise apartment buildings, highlighted in the article, is a big deal, since it drives much of the demand for steel, and therefore iron ore and coking coal, that has underpinned our amazing run of good economic fortune, along with the willingness of both Australian and Chinese governments to implement large-scale fiscal stimulus at the time of the global financial crisis.

Update Paul Romer makes much the same points, from a more informed perspective than mine.

Annals of anti-egalitarian hyperbole

by Chris Bertram on June 16, 2013

Remember when Robert Nozick wrote in Anarchy State and Utopia that income taxation is akin to forced labour? Well it turns out that that is far far worse than that. Taxing the 1 per cent would be like the state forcibly ripping out their spare internal organs! At least that’s what Gregory Mankiw thinks. His paper, forthcoming in the Journal of Economic Perspectives also includes a thinly-disguised rehash of the Wilt Chamberlain parable, but no proper acknowledgement to Nozick (suprising that the referees or editors at JEP didn’t make this point).