Trickle Down

The Chinese government has just announced a new plan that “aims to not only upgrade the economic environment, but also to reduce bureaucracy and enhance entrepreneurial spirit as well as innovation.”

The plan?

“The main step has been the substitution of the Business Tax with the Value Added Tax” and also “a cut in labour costs to decrease contributions for social security.”

Imagine an Australian government trying to sell a zero tax rate on corporations, a doubling of the GST, and a complete cut to corporate contributions to superannuation?

Clearly the Chinese government types are big believers in the trickle down effect and their own unassailable grasp on power.

Which is a bit of a paradox really; former communists with an authoritative clientelism political structure adopting self-serving neoliberal policies.

They are either right, and the trickle down effect is their best bet, or they are wrong and that gap between the rich and the poor will bite them in the bum one day very soon (my bet).

It is fascinating to ponder whether this approach is genuinely considered the best course of action (by the very soft-minded), or whether it is just greedy people getting even greedier.