inequality up
Moreover, while economic inequality is on the rise in both countries, the Chinese and people from the US comprehend this very differently. In the US, widely called "the land of opportunity," the shame of being poor is unbearable, and there are no cultural resources to enable such people to maintain self-esteem, especially when the country is so successful overall.
As inequality deepens, many who fall behind struggle to save face, consuming in order to maintain the appearance of success. At the same time, those who rise from low economic status revel in their newfound wealth by engaging in spectacular displays of personal spending.
By contrast, poor people in China mostly view their personal situation as transitional. People still remember the Cultural Revolution and view themselves as survivors of a shared traumatic experience, underpinning a commitment to collective sacrifice in order to rebuild the country.
There is no shame in being poor in China if one reflects that one's children or grandchildren will be wealthy and successful. On the contrary, as in postwar Germany, it is a matter of pride that one is working hard through a difficult situation that will be remembered as a historic transition.
In the US, one's income is a dark secret that one might not reveal even to one's own spouse. In China, people tell each other how much they earn with relative ease. Especially in Chinese villages, people know how their neighbors are faring. Conspicuous consumption becomes less important when people already know your income.
Of course, Chinese increasingly consume fancy new cars and designer clothes. But there is relatively less pleasure in public displays of consumption at a time when the prevailing national story is one of triumph over adversity. More vivid in people's minds are the stories they will one day tell their grandchildren about their travails and their economic heroism.
China will most likely be saving more than the US for years to come. But, as the next generation takes control in China, this will change. Today's children will not view their own life stories from the perspective of the difficulties China has experienced. As this change unfolds, the enormous willingness to save, and to tolerate high-saving government policies, will fade.
Robert Shiller is professor of economics at Yale University and chief economist at MacroMarkets LLC, which he co-founded.
Copyright: Project Syndicate
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