The redistribution of wealth – housing policy, demographics, and labor shortages (Part 2)

(For Part 1 – see the blog entry below this one, or go to the following link: https://ravendragon.wordpress.com/2010/05/30/the-redistribution-of-wealth/)

With people hungry for manufacturing work, there was no incentive for the Government to create low-cost public housing.  However, over the past few years, not only has the demographic balance begun to create a labor shortage, but the prices of coastal real estate have rocketed.  The result is to push workers into worsening living conditions, often provided by the company itself.

In addition there is now competition to the well-known coastal areas: inland based industry is on the rise, in places like Chongqing.  (By the way, on the subject on Chongqing I highly recommend Peter Hessler’s book River Town: http://www.amazon.co.uk/River-Town-Two-Years-Yangtze/dp/0719564808/ref=sr_1_1?ie=UTF8&s=books&qid=1275294276&sr=1-1)

These three dynamics (labor shortage, bad living conditions / increasing coastal property prices, and inland competition for labor) looks set to lead to an increasing trend in local governments establishing public housing.

As well as making economic sense (i.e. attract workers and all that goes with them and industry), there are political incentives too to establishing public housing.  With major shifts in Government (local and national), party officials keen to progress their careers (and even move to Beijing) will be keen to show their ability to build industry, and keep the peace – after all, peace and prosperity are the unspoken quid pro quo for the one party state.

Building public housing is also likely to buoy GDP, help employment, and prevent downward pressures on the prices of raw materials.

It looks like the coming together of demographics; political ambition and economic good might also help in the farer distribution of growth, and improve the lot of the Chinese migrant worker.  It’s a win-win situation for everyone. Power to the people!