Yao Yang: To achieve common prosperity, we must accurately improve the people's income capacity

Source: Global Times

"Common prosperity" is a hot word at the moment. What is common prosperity, and how to take the road of common prosperity? There is a lot of discussion in society.

Egalitarianism is not the goal of common prosperity. In the era of the planned economy, we have suffered losses from egalitarianism and "big pot rice". Under the "big pot rice" system, doing good and doing bad work is the same, doing more and doing less is the same, the people's production enthusiasm is not high, and the economic system is inefficient. We can't repeat such mistakes.

At present, a small number of people not only have suspicious wealth sources, but also show off in a high-profile manner, causing social disgust. However, "killing the rich and helping the poor" is not the way to promote common prosperity. Entrepreneurs are also the creators of social wealth, bear the risk of enterprise failure, social public opinion is easily swayed by the "survivor bias", only see successful entrepreneurs, and it is easy to forget those entrepreneurs who fail. In fact, the high income of successful entrepreneurs is based on the loss of failed entrepreneurs, so that potential entrepreneurs can equalize their expected returns and investment costs at the level of society as a whole.

The author believes that there are two goals of common prosperity, one is to "support the bottom" and the other is to "improve". "Support" is to provide the necessary social security for all people, so that people can get rid of the fear of aging, unemployment, disease and want; "promotion" is to enhance the people's income capacity, so that everyone can rely on their own ability to get more income. Social security is not only a social welfare, but also promotes the people's enthusiasm for production, because it reduces the risk of falling into the poverty trap, and the people can free their hands and feet to engage in production activities with certain risks but higher rates of return, such as opening a small shop, inventing a new technology, or starting a business. Improving people's income capacity is to "teach people to fish", so that low-income groups can rely on themselves to obtain higher incomes, and narrow the gap between them and high-income groups. In other words, common prosperity is not about pulling the incomes of high-income groups down, but about raising the incomes of low-income groups.

Such a goal is consistent with the morality of the Chinese. China's ancient society had a social security mechanism. Various ethnic fields have long existed in the southern region, providing basic welfare guarantees for their own members. The Song Dynasty began to have a welfare system undertaken by the government to help the old, weak, sick and disabled, and to a certain extent, to achieve the Confucian ideal of "the old and the old, the young and the young and the young". On the other hand, the Chinese view of fairness is based on the ancient principle of proportionality. This principle was the principle of fairness upheld by the Axial philosophers, and Confucius, Mencius, Mozi, and Aristotle all believed that a man's reward should be proportional to his ability and effort. The Confucians and mojia even put forward the idea of political meritocracy, believing that the selection of meritocrats was the principle of allocating political positions. These principles are still recognized by today's Chinese and are implemented in practice.

The tenth meeting of the Central Financial and Economic Commission held recently proposed to build a basic institutional arrangement for the coordination of primary distribution, redistribution and tertiary distribution. The principle of one-time allocation is to allocate by feature. In the era of planned economy, distribution according to work was emphasized, but it was not strictly enforced, but mainly "big pot rice". One of the secrets of the success of reform and opening up is to abandon the "big pot of rice" and implement distribution according to factors, and labor, capital and other factors of production are paid according to their marginal contributions. Theoretically, distribution according to factors is a broad form of distribution according to work, because all factors other than labor power are, in the final analysis, the product of the accumulation of labor. Distribution according to factors can not only improve the production enthusiasm of various factors, but also allow the market to form a reasonable factor price, guide the flow and allocation of resources, and improve the efficiency of the economic system.

Secondary distribution is the main body for achieving common prosperity. Distribution according to factors should respect the ability and efforts of the individual, but at the same time it is not immune to factors other than capacity and effort, which inevitably leads to inequality in the distribution of income and wealth. This requires the government to re-regulate income and wealth through taxation and redistribution. But regulation is not simply "cutting the peak and filling in the valley", the tax received from enterprises and high-income earners is distributed to low-income people, but to accurately improve the people's income capacity, so as to obtain sustained common prosperity.

In today's China, getting a good education is key to earning power; the era of reckless heroes who became rich overnight is over. However, China's education level is unevenly distributed, and higher education in large cities has become more popular, while the average education level in the vast rural areas has just surpassed junior high school. The hierarchical solidification of education is also becoming more and more serious, and the correlation between the level of children's education and the education level of parents has returned to the level of the 1930s. Families' educational inputs diverge. Middle-income groups pay more and more attention to their children's education, "chicken babies" and anxiety have become the norm; low-income families have fallen down and given up their children's extracurricular tutoring.

The most important thing for common prosperity is to equalize educational resources. The author believes that the implementation of a ten-year consistent compulsory education system of five years each for primary and secondary schools is not only conducive to reducing the ineffective competition of primary and secondary school students, but also conducive to the equalization of government investment in education. Improving the treatment of teachers in rural areas and attracting outstanding teachers to take root in rural schools for a long time is also one of the effective measures to achieve equalization of education.

Three-way distribution is a concept that Mr. Li Yining put forward more than 30 years ago, and voluntariness is its principle. In this regard, some entrepreneurs have set an example, they are actively involved in the philanthropy of our country and are the main force of charitable donations. But in terms of promoting common prosperity, three distributions can only be the icing on the cake, because their numbers are limited after all; they are more a reflection of the spirit of mutual help and mutual assistance in society than a forced redistribution. The most suitable places for the three distributions to play a role are the relief of areas of poverty that social security cannot reach, the funding of higher education and scientific research, and the cultural and artistic undertakings that lead society. (The writer is Dean of the National Institute of Development Studies, Peking University)