Public Choice Perspective Study Of The Problem Of Income Inequality In China

Ever since1970s, income inequality has become a global trendwith the impulse of globalization and neo-technology revolution. Inearly1990s, the socialism market economic institution was officiallyestablished in China, when the power of market gradually took theplace of monopoly as the guide of people’s income and distribution.But income distribution problems attract evermore attention, sinceChina is likely to fall into vicious cycle between ever-expandingincome gap and imbalanced economic structure under the outsidepressure of globalization and the inside obstacle from monopoly. It ishigh time that China should narrow its income distribution gap tostep out of economic dilemma.The theory of public choice focuses on the decision of publicgoods referring both demand and supply, the relationship between thegovernment and market, as well as the rule of decision making.Public choice is a system of theories natured political economy,inheriting the tradition of market order from classical economics,including political transactions into its economic analysis with itsoriginal Homo economicus assume. Study on inner relations of publicchoice is of great help to establish a new theoretical minor-structureas an analyzing instrument.The purpose of this paper lies in the following two aspects:firstly, to apply public choice in depth through a newly-constructedsystem; secondly, to look into the enduring expanding income gap inChina in a new perspective, which presents creation in researchmethod and the way of argument with some new ideas. The approach of this paper includes three parts: to look into theexpansion of income gap in China historically and objectively; toestablish the system of public choice on the base of principle ofeconomics and to explain the mechanism of this system through theanalysis in way of economics, law and institutionalism; and to applythe system of public theory for the reasons of income gap expansionin China and the solutions.The research method of this paper is based on the principle ofmarket order and the paradigm of catallatics, which indicates thedisadvantages of public choice referring to effectiveness, just and theconsistence between effectiveness and fair compared with markettransactions through the inner relation among transaction, contractand market, and demonstrates that contract and market are the core ofincome gap reduce.It is concluded that the resolve of income gap expansion inChina brooks no delay, and we must update the relationship betweengovernment and market in the process of income adjustment and inthe process of construction of economic democracy to reverse thetrend of continuing expansion of income gap in China.