One similarity between China and the US is that both countries are experiencing an increasing income gap between the rich and the poor. I have read that income gaps are inherently bad for an economy. Taking the US as an example. The top 1% is getting richer and richer. There are more millionaires than ever before. At the same time, middle class and lower class are getting poorer. The argument is that there is so much one can spend. In other words, the rich is taking away money from the poor (who would have used it on consumption)… thus national consumption will fall over time as income gap widens.
The story in China is a bit more complicated. As the rich certainly gets richer, the poor also, arguably, gets richer at the same time. Almost everyone is consuming more. The national as a whole will be consuming more as well. It thus seems that income gap is only bad for national economy if the rich starts to rob the poor. Even if it is so, is necessary (or even beneficial) to have widering income gap in a developing economy? Were the Rockefellars and the likes essential for economic development?
