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A fascinating result from China about economic mobility

Summary:
As we all know the Chinese communist revolution entirely appropriated all private wealth. As we all also know it has been possible once again, for these past few decades, to make private wealth again. We've thus a good test of that old question, is it simply happenstance that some people have more wealth than others or not? That is, once the redistribution has happened do we get the same old people accumulating the wealth again or is it some completely different group that then prospers? A claim at least of an answer out of China:Virtually every Chinese millionaire or billionaire is self-made because capitalist reforms to the centrally planned communist economy only began in the early 1980s and did not really take off until the 1990s. But the modern super-wealthy often turn out to be

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As we all know the Chinese communist revolution entirely appropriated all private wealth. As we all also know it has been possible once again, for these past few decades, to make private wealth again. We've thus a good test of that old question, is it simply happenstance that some people have more wealth than others or not? 

That is, once the redistribution has happened do we get the same old people accumulating the wealth again or is it some completely different group that then prospers? A claim at least of an answer out of China:

Virtually every Chinese millionaire or billionaire is self-made because capitalist reforms to the centrally planned communist economy only began in the early 1980s and did not really take off until the 1990s. But the modern super-wealthy often turn out to be descended from an earlier capitalist class. Richard [Liu] is no exception. Before the 1949 revolution his family were wealthy shipowners who transported goods along the Yangtze river and the ancient imperial canal from Beijing in the north to Hangzhou in the south. They lost everything when the communists took over and were forcibly resettled at least twice. One academic survey found more than 80 per cent of Chinese “elites” (those with income at least 12 times higher than the average in their area) are descended from the pre-1949 elite. Richard puts this down to “family culture”.

“My parents and grandparents taught us a lot — not Chinese or maths but a sense of values, of how you should be and how you should treat others,” he says. They also drilled into him the knowledge they had once been very rich but everything had been taken away — a lesson all too relevant even now.

Do note that no one is saying that it's genetics or anything so immutable, only that it is the basic culture, the familial upbringing if you prefer.

It's an answer to the question, one of the very few that we've got in any empirical sense, so sad that it's not the one that the redistributors are likely to want to hear. That there is something distinctly non-random about who ends up with said wealth.

Tim Worstall

Tim Worstall is a British-born writer and Senior Fellow of the Adam Smith Institute. Worstall is a regular contributor to Forbes and the Register. He has also written for the Guardian, the New York Times, PandoDaily, the Daily Telegraph blogs, the Times, and The Wall Street Journal. In 2010 his blog was listed as one of the top 100 UK political blogs by Total Politics.

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