China’s spoilt brats and America’s disappearing middle class

She's got her own BMW too

Regular Insights blogger Brian Keeley is in Beijing, from where he sends this dispatch.

A recent afternoon brought one of those classes that all lecturers dread: Glazed eyes from one side of the room to the other, and mouths opening and closing in syncopated yawning. Time to tear up the lesson plan and throw out a question: “Hey, did you see the story about the rich kid who beat up that nice couple?” Dull eyes sharpen, slack jaws tighten. Yes, the students have heard about it and, what’s more, they have something to say.

In case you missed the story, here’s what happened: On a recent evening, a middle-class couple was driving home in Beijing. Quite reasonably, they slowed to take a corner, forcing a couple of cars behind them to stop. Incensed, the drivers of the two following cars got out and beat them up.

Road rage, but that was only the half of it: It turned out that one of the drivers was just 15 years old, which meant he was driving his car – a BMW – illegally. Not only that, he warned onlookers against intervening: “Who dares to call the police?” he supposedly shouted. His cockiness can probably be explained by his family connections: The boy is the son of a celebrity army general, Li Shuangjiang, who shows up regularly on TV to sing patriotic ditties.

In the wake of the incident, Major-General Li was put through the media wringer. He visited his son’s victims in hospital, apologized abjectly, and said of the boy, “I didn’t him give a good upbringing.” As for Li junior, Chinese media reports that he’ll go to a correctional facility for a year, but will escape criminal charges because of his age.

The affair was startlingly reminiscent of another incident last year, when the well-connected son of a senior security officer knocked down and killed a university student. That young man, too, shouted a warning to onlookers: “My father is Li Gang.” His words became a national catchphrase, epitomizing what many Chinese seem to feel is the attitude of an arrogant elite that feels itself above the law. 

Certainly, that was the feeling of most of my students. But there was a second strand of opinion: They felt that media reporting of these incidents, and subsequent online commentary, was sensationalist and served no bigger purpose than stirring up bitterness and resentment. “The media should ask itself, ‘why are we reporting this?’,” said one student. “It should think about the bigger social question, and try to make China better.” That, of course, was one of the traditional role assigned to the media by the Chinese Communist Party. But in today’s China, it’s sensationalism – not worthiness – that sells papers.

As for the “bigger social question,” the student isn’t alone in seeing the incident as symptomatic of more than just Beijing’s awful road manners. Many in China worry about the impact of widening inequality on social stability, even if these concerns are expressed in careful language. But whenever you hear China’s leaders referring to the need for a “harmonious society,” it’s usually inequality that’s being talked about.

China was not the only country that got a reminder last week of the risks of “unharmoniousness”. In the United States, there was fresh evidence of how society there has been reshaped over the past decade or so. The middle class, once the solid core of American life, is being hollowed out, leaving a class structure that’s now shaped more like an hourglass. Indeed, some retailers have reportedly rejigged their product lines to focus on either the top, or the bottom, of the economic pile.

The impact of this social shift goes beyond determining what’s on Walmart’s shelves. As the historian John Gray notes, there’s a real danger in undermining the middle class (a risk first identified by Karl Marx): “In the process of [capitalism’s] creative destruction,” says Gray, “the ladder has been kicked away, and for increasing numbers of people a middle-class existence is no longer even an aspiration.” The result, he argues, is the destruction of “the way of life on which capitalism in the past depended”.

That’s not true of China, or at least not yet. The middle class may be under pressure in many developed countries, but in China it’s growing by leaps and bounds. But as Gray suggests – and as the financial crisis of the past few years has shown – the economic impact of capitalism’s forces are less easy to tame than we might wish. And as recent news from both China and the United States suggests, their effect on our societies can be just as tricky to manage.

Find out more

OECD work on income distribution and poverty

Growing Unequal

Perspectives on Global Development

Chavs, chulitos and the pursuit of happiness

Next time you see her pouting, arms crossed,  brow furrowed as the knot of nasty grows bigger and bigger inside her little tummy because you got her the 16GB version and she’d specifically asked for the 64GB, remember, she’s miserable,  especially if she’s British. Well, according to Unicef anyway, in a study on the role of inequality and materialism in children’s happiness.

Unicef UK commissioned Ipsos Mori and Dr Agnes Nairn to do some qualitative research after the organisation’s Report Card 7 said the UK was the worst place for a child to grow up in of the 21 developed countries covered. They asked Dr Nairn to try to find out what lies behind the statistics and to compare the situation with Spain and Sweden, countries that scored higher.

Researchers interviewed hundreds of children in the three countries, using an approach that’s similar in philosophy to the OECD’s award-winning Better Life Index: they asked the kids what was important for them and what made them happy.

The researchers examined how children perceived inequality and materialism, for example by asking them to imagine that a new pupil had joined their class and point out the different groups in their school and say whether any of these groups were happier than others. Spanish and UK children seem to be the most sensitive to this, distinguishing  rich and poor on the basis of the brands they possess and often using insulting terms like chavs or chulitos for the poorer kids.

The main finding though is that in all three countries what children really, really want is time with their family, good friends and to be able to do things outdoors.

Most children in the countries surveyed agreed you shouldn’t get everything you want, and they had no respect for “spoiled” kids. Moreover, the vast majority of children had high regard for the notions of waiting, saving up for and earning material rewards. Like the 10 year-old Swedish boy who wanted a special toy: “I had to lay out my own clothes for the morning. I had to make my own breakfast as well as giving my mother breakfast in bed… I wasn’t allowed to complain and I had to do this for a month”. (Do try this at home. Better policies for better lives isn’t just an OECD slogan, you know.)

So if kids in the three countries seem to share similar values, why are little Britons unhappier? Children in Sweden and Spain had far more chance of getting time with their parents and playing outside. Speaking on Yougov, Anita Tiessen, deputy director of Unicef UK, blamed the long working hours of British families: “Parents have a much greater pressure in fulfilling the commitment to their children. They try to make up for this by buying their children branded clothes, trainers, technology.”

Given the cost of many of these products, the parents have to work even more to pay for them, and thus find themselves locked into a system of consumption they know is pointless but find hard to resist. This is reflected in how inequality is viewed in the different countries. In Spain, parents who have no time with their children are “the deprived”, while in Sweden a deprived neighbourhood is one where children can’t play outside. In the UK inequality is firmly related to money and consumer goods.

Unicef’s solution for breaking the cycle of compulsive consumerism is threefold: ban adverts that target under-12s (as Sweden has done); raise the minimum wage; and don’t close playgrounds or other facilities for children as part of budget cuts.

I wish them good luck getting that approved in the present climate.

Useful links

Wikichild – the child well-being portal on Wikiprogress

Let the world know what would make your life better. Click on the image to create Your Better Life Index

Peacebuilding and statebuilding come before the Millennium Development Goals

 Guest post by Donata Garrasi of the OECD’s Development Co-operation Directorate and Co-ordinator of the International Dialogue for Peacebuilding and Statebuilding

Imagine you can’t take your child to the doctor because the clinic is on the other side of a bridge it’s too dangerous to cross. Imagine you’re trying to get an education but you can’t read after sunset because there’s no light. Imagine the only people who’ll protect you from an armed gang are the members of another armed gang. Imagine you’re a government trying to deal with problems like these after a civil war or invasion that’s lasted for years and destroyed your country and you’ll easily understand why no fragile state has achieved a single Millennium Development Goal, or is likely to do so by the 2015 target date, even though these states receive over 30% of development assistance.

If the MDGs set the bar impossibly high, what should fragile states aim for? The International Dialogue on Peacebuilding and Statebuilding was created in 2008 after the Accra High Level Forum on Aid Effectiveness to devise a set of realistic peacebuilding and statebuilding objectives that address the root causes of conflict and fragility. The first Dialogue, held in Dili, Timor-Leste in April 2010, saw the formation of the g7+, “an independent and autonomous forum of fragile and conflict affected countries and regions”. At the second global meeting in Liberian capital Monrovia last week, delegates from over 40 countries, international agencies and civil society organisations had a “frank and open exchange of views” on what has worked, what hasn’t and what can be done starting now.

“The problem is, you guys don’t trust us,” Timor Leste’s finance minister Emilia Pires told the donor countries, urging them to lose their control freak attitude. But delegates from fragile states were just as harsh regarding their own responsibilities, with one Togolese speaker suggesting that citizens of donor countries would refuse to spend another penny on aid if they knew where most of the money went. There was disagreement on using the term “fragile”, with some arguing that it stigmatised countries, other that it was simply being realistic and could be useful in determining whether particular kinds of assistance should be granted. One participant claimed that fragile would be an improvement on the state his country was in at present. Olivier Kamitatu, DR Congo’s planning minister, summed up the majority feeling, and the ambitions of the Dialogue, when he said that “The g7+ is extremely useful in giving us a common voice in international discussions, but it’s a club we’d like to leave as quickly as possible”.

The “Monrovia Roadmap”, agreed on by the whole range of development partners, defines five practical objectives for peacebuilding and statebuilding. “Establish and strengthen citizen security” is one of the five. Without security and the assurance that people can go about their daily lives in safety, the rest is meaningless. But who should implement objectives, and monitor progress? If the state hasn’t functioned for years or is seen as defending special interests, then political processes have to start by building trust among groups who may be hostile to each other, including the government and civil society. Therefore the Roadmap calls on states to “Foster inclusive political settlements and conflict resolution”.

Reggae legend Peter Tosh understood another of the objectives when he sang that he didn’t want peace but “equal rights and justice”. It is vital to “Address injustices and support increasing citizen access to justice”. Unemployment is a source of tension and can fuel conflict when joining an armed group may be the most attractive job available, or the only one. The objective to “Generate employment and improve livelihoods” will require a mix of labour-intensive public and community works, increased agricultural productivity, and domestic private sector development. All this costs money, and although international partners will continue to finance some activities, the objective is to “Manage revenues and build capacity for accountable and equitable social service delivery”. It’s an ambitious set of objectives, but as Liberian President Ellen Johnson Sirleaf pointed out in her closing remarks, “The challenges are huge, but they’re not bigger than challenges we’ve faced in the past”.

Useful links

OECD work on conflict and fragility

Tax: who pays what?

How much you pay in tax depends on personal allowances, tax rates and brackets, social security contributions and benefits; the numbers can start to get confusing.

One way to cut through the muddle is to think in terms of the tax wedge. In basic terms, this is the difference between the net earnings that a worker takes home at the end of the year and what it costs to employ that worker. On the employer’s side, this cost includes the worker’s salary as well as employer contributions for social security (e.g. healthcare, pensions); on the worker’s side, the negatives are income tax and employee social security payments, while the positives include the salary and, possibly, cash benefits, for instance.

The tax wedge ranges from just over 15% in Mexico for a single worker on an average wage, to just over 55% in Belgium.