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Common Prosperity Requires Targeted Measures to Improve People’s Earning Power

Sep 02-2021   



Egalitarianism is not a goal of common prosperity, nor is ‘robbing the rich to relieve the poor’ a path for achieving common prosperity, says Prof. Yao Yang, Dean of the NSD, in a media commentary.

 

He believes that common prosperity has two goals: provide essential social security for all and improve people’s ability to earn a higher income. The role of social security, besides provision of welfare, is to enhance people’s participation in productive activities since they will be relieved of the worry of falling into poverty trap. Low-income groups should be taught the “fishing skills” so that they can rely on themselves to earn more and narrow the income gap. In other words, Prof. Yao believes that common prosperity is not about pulling down the income of high earners but rather pulling up that of low-income ones.

 

Such goals dovetail with the moral views of the Chinese people who have long valued basic welfare provisions for the underprivileged, observes Prof. Yao. Moreover, the Chinese idea of fairness, passed down from Confucius, Mencius and Mo Zi, holds that one’s remuneration should be in proportion to his abilities and endeavors. As an extension, meritocracy has long been the guiding principle for allocating political positions. Such principles are still valued and practiced by the Chinese people.

 

The recent 10th meeting of the Central Committee for Financial and Economic Affairs put forward a foundational institutional arrangement consisting of primary distribution, (secondary) redistribution, and tertiary distribution. According to Prof. Yao, the primary distribution centers on productive-factor-based principle, which has the benefit of letting the market form reasonable factor prices and improving the efficiency of the economic system. The secondary redistribution constitutes the mainstay for achieving common prosperity through taxation and redistribution as well as targeted measures to improve people’s earning power. The tertiary distribution is based on the principle of freewill and some entrepreneurs have set a good example through active participation in charitable causes.

 

Good education remains a critical way for people to increase earning power. Taking into account the various issues besetting the education system, Prof. Yao advocates ten-year compulsory education for all. In the rural areas, better incentives should be offered to attract and retain high-quality teachers.

Common Prosperity Requires Targeted Measures to Improve People’s Earning Power

Sep 02-2021   



Egalitarianism is not a goal of common prosperity, nor is ‘robbing the rich to relieve the poor’ a path for achieving common prosperity, says Prof. Yao Yang, Dean of the NSD, in a media commentary.

 

He believes that common prosperity has two goals: provide essential social security for all and improve people’s ability to earn a higher income. The role of social security, besides provision of welfare, is to enhance people’s participation in productive activities since they will be relieved of the worry of falling into poverty trap. Low-income groups should be taught the “fishing skills” so that they can rely on themselves to earn more and narrow the income gap. In other words, Prof. Yao believes that common prosperity is not about pulling down the income of high earners but rather pulling up that of low-income ones.

 

Such goals dovetail with the moral views of the Chinese people who have long valued basic welfare provisions for the underprivileged, observes Prof. Yao. Moreover, the Chinese idea of fairness, passed down from Confucius, Mencius and Mo Zi, holds that one’s remuneration should be in proportion to his abilities and endeavors. As an extension, meritocracy has long been the guiding principle for allocating political positions. Such principles are still valued and practiced by the Chinese people.

 

The recent 10th meeting of the Central Committee for Financial and Economic Affairs put forward a foundational institutional arrangement consisting of primary distribution, (secondary) redistribution, and tertiary distribution. According to Prof. Yao, the primary distribution centers on productive-factor-based principle, which has the benefit of letting the market form reasonable factor prices and improving the efficiency of the economic system. The secondary redistribution constitutes the mainstay for achieving common prosperity through taxation and redistribution as well as targeted measures to improve people’s earning power. The tertiary distribution is based on the principle of freewill and some entrepreneurs have set a good example through active participation in charitable causes.

 

Good education remains a critical way for people to increase earning power. Taking into account the various issues besetting the education system, Prof. Yao advocates ten-year compulsory education for all. In the rural areas, better incentives should be offered to attract and retain high-quality teachers.