China law of the day

by on April 13, 2016 at 2:08 pm in Economics, Law, Web/Tech | Permalink

The government of Shanghai says that under new rules residents who fail to visit their elderly parents will get black marks on their credit records.

A new set of regulations released recently by the government of the eastern city says that adult children living apart from their parents should “visit or send greetings often.” Parents who think their children are not fulfilling this responsibility can file lawsuits against them for neglect.

If the offspring still refuse to follow through with their obligations after a court tells them to, they will have their credit standing negatively impacted, Luo Peixin, deputy director of the city government’s law office, said on a news conference on April 6.

The policy, which takes effect on May 1, is part of the central government’s efforts to promote filial piety, an important aspect of Confucianism, as the country’s population rapidly ages.

Beijing enacted a law in July 2013 aimed at compelling the children of parents older than 60 to visit their parents “frequently” and make sure their financial and emotional needs are met.

Here is the story, and for the pointer I thank Jesse Reynolds, as well as a source on Twitter.

1 Jan April 13, 2016 at 2:13 pm

The tragedy of American society is its lack of aggressively enforced filial duty laws.

2 Harun April 13, 2016 at 2:22 pm

Its called Nudging, and Progressives really like this idea, except they don’t want to use credit scores.

Tom Friedman will probably admire this, but propose it be used against those who don’t donate to NPR.

3 Joan April 13, 2016 at 2:36 pm

Unlike conservative Mark Rubio who wants us to support his mother but also change SS so we will need our children’s help.

4 kevinII April 13, 2016 at 4:13 pm

conservatives, progressives, Chinese communists… all luv big government and its broad intrusive powers — they just differ a bit on the specific emphasis and scope desired.

credit-scores are a new twist, but those humans exercising government power will ultimately abuse any powers they have. the U.S. has many many examples of such abuse… for example most States now requiring Selective-Service/Draft Registration as an eligibility requirement for an ordinary drivers license (what does the Draft have to do with the basic safety rationale for a drivers license?)

5 Harun April 13, 2016 at 6:51 pm

True. Everyone has a little Inner State Planner in them.

6 cowboydroid April 13, 2016 at 7:55 pm

No rational person believes there is any real difference between Democrats or Republicans.

7 Mark Thorson April 13, 2016 at 11:01 pm

But these people are Communists. They don’t run for elections. If they perceive a way to improve society, they can do it without worrying about blowback at the polls. Obviously, a system that needs to be crushed and utterly eradicated.

8 anon April 14, 2016 at 1:55 pm

That’s a common refrain from the uninformed, and a convenient justification for not bothering to try.

9 Jan April 13, 2016 at 3:59 pm

And now Harun will lead us in the 10 minutes of Hate for Progressives.

10 Harun April 13, 2016 at 6:53 pm

Its two minutes of hate, last time I checked.

Or have they increased the hate rations?

11 Nathan W April 13, 2016 at 4:53 pm

That’s a stick, not a nudge. https://en.wikipedia.org/wiki/Nudge_theory

12 Harun April 13, 2016 at 6:58 pm

I’m trying to come up with a nudge for this, and I can’t.

That’s why they had to use the stick, Nathan.

13 Thor April 13, 2016 at 11:22 pm

What’s wrong with the carrot? (Lightly sautéed in sesame oil. Delicious!)

14 Nathan W April 14, 2016 at 12:22 am

Social sanction is a pretty strong nudge. But in a country with 1.3 billion people, that’s still a few million elderly people falling through the gaps, even at a rate of, say, 3-5% ignoring the elderly parents.

I see lots of elderly people playing cards, chess, singing songs, dancing in large groups to a public sound system, and in general hanging out with other elderly people, in public parks every day. It’s not for a lack of social options, I think – I think it’s really about the money – if you come home to visit and hang out with the parents a little, there’s the opportunity to say that you need help with money stuff.

15 anon April 14, 2016 at 11:04 am

Really weird that people who hate coercion misapply their energy against nudges. A nudge is always a choice. It is always a less harmful intervention than coercion, the stick. Now, you can say you don’t want anything, even a guided choice, but you’ve got to be pretty hard core to prefer the old world of bad choices. I mean, would you prefer that cigarettes have no government warning? That tobacco companies still pay doctors to say they are good?

16 rayward April 13, 2016 at 2:19 pm

The irony is that “Communist” China doesn’t have a national social security program; a big reason why China has such a high savings rate (50%) is the absence of social welfare programs. This “China law of the day” suggests China isn’t going to adopt a national social security program any time soon. It makes a difference to us because the absence of social welfare programs discourages consumption – more consumption in China would spur economic growth everywhere.

17 Cliff April 13, 2016 at 5:14 pm

You mean it encourages investment?

18 cowboydroid April 13, 2016 at 7:57 pm

Keynesian are unfamiliar with this “investment” concept of which you speak.

19 mulp April 14, 2016 at 1:36 pm

Yeah, because you think of investment as something you do to limit production to enable rent seeking and monopoly profits.

Keynes policy statement on investing:

“I feel sure that the demand for capital is strictly limited in the sense that it would not be difficult to increase the stock of capital up to a point where its marginal efficiency had fallen to a very low figure. This would not mean that the use of capital instruments would cost almost nothing, but only that the return from them would have to cover little more than their exhaustion by wastage and obsolescence together with some margin to cover risk and the exercise of skill and judgment. In short, the aggregate return from durable goods in the course of their life would, as in the case of short-lived goods, just cover their labour costs of production plus an allowance for risk and the costs of skill and supervision.

“Now, though this state of affairs would be quite compatible with some measure of individualism, yet it would mean the euthanasia of the rentier, and, consequently, the euthanasia of the cumulative oppressive power of the capitalist to exploit the scarcity-value of capital. …”

In other words, Keynes argues for the most efficient economy by eliminating all profit from capital by ensuring so much capital is created that competition drives returns down to the long term cost of capital.

Of course, that is contrary to the interests of capitalists who want to own scarce capital to extract high monopoly profits.

20 mulp April 14, 2016 at 1:26 pm

You mean buying apartments in cities for hundreds of thousands that have only a few thousand residents is great investment that should be embraced in the US?

Or buying stocks and creating huge exponential growth in stock market prices for corporations that are at best breaking even due to a global slowdown cutting exports is great investment?

Or buying debt used to build twice as much high speed passenger rail as exists in the entire rest of the world is fantastic investing?

It seems everything Chinese savers invest their savings in is attacked by US economists as wasteful stupid investment that will result in bankruptcy.

21 Kunal April 13, 2016 at 6:20 pm

This is false. China does have a national social security program and it is mandatory.

22 rayward April 13, 2016 at 7:50 pm

Actually, it’s controlled by provincial and municipal governments, not the national government. Which means it’s fraught with inequities not least of which is that it discourages migration (one of Cowen’s favorite themes). I’m not criticizing China; indeed, I often express optimism about China.

23 ricardo April 13, 2016 at 7:52 pm
24 Axa April 13, 2016 at 2:36 pm

Is it a coincidence that retirement age for men is 60?

25 Nathan W April 13, 2016 at 2:43 pm

In the public sector.

26 Axa April 13, 2016 at 2:46 pm

Do you know about factory workers? In subsistence agriculture you never retire, you just die.

27 Nathan W April 13, 2016 at 3:24 pm

It depends on your hukou status. There’s actually a lot of variation, so I’m not sure what’s the more general story. But there’s a new sort of retirement fund tax … urban workers pay in at the urban rate and receive at the urban rate, migrant workers pay in at the urban rate and receive at the rural rate where they’re from (they get screwed) and in rural areas I think mostly you don’t have to pay in unless you’re in certain categories of businesses but you get a very very small pension (not nearly enough to live on, but you should have savings and also there is very strong family responsibility, and also, from land redistribution times, basically any old person will have access to some plots which they can plant).

I think retirement is not mandatory for factory workers, but there is eligibility at age 60 (varies?) which depends on some combination of what has been paid into the retirement fund in addition to a very small amount of what you would call social security in the US. But since a lot of the new retirement fund stuff is so variable across municipalities and provinces, it’s hard to say anything definitive, and the government doesn’t tend to release information which makes this stuff easily comparable, so a lot of work would be needed to assess the current variety of situations. (I edited a paper on some of the retirement fund situations a couple years ago for a Chinese researcher and so am loosely aware of the experimentation that is going on across jurisdictions within China.)

As can be said about most places, China is not at all monolithic. Because there is a lot of policy experimentation going on, perhaps this applies even more so than most other countries.

28 Harun April 13, 2016 at 7:01 pm

A lot is done at the provincial or even city level in China.

But really savings and real estate probably are the actual mechanism for retirement.

29 Axa April 14, 2016 at 7:41 am

Thanks for the info.

It’s curious that other countries with similar population life expectancy (75 years) have retirement ages around 63-65 years old. Who’s going to work to sustain the old population?

30 Nathan W April 14, 2016 at 1:34 pm

Axa – yeah, I was stunned when I learned how low the retirement rate is in the public sector. Even city bus drivers get it. Clearly, a lot of resources are going into their early retirement, but it’s not exactly like there are a lot of ways to raise a big stink about it.

31 Boonton April 13, 2016 at 2:51 pm

Why does this matter? If I’m a lender, my concern is getting paid back. If someone has an excellent payment record but a ‘black mark’ for not visiting their parents, well I’m still eager to have him as my customer unless the court is also going to put monetary judgments against him, in that case I might be slightly more worried since he may not have the funds to pay both me and the judgments/fines….

32 Turkey Vulture April 13, 2016 at 2:59 pm

A lot of the lenders are subject to some amount of state control, right? So they’ll care for that reason.

And arguably it does indicate something about your creditworthiness. If your culture considers something a duty and you fail to undertake that duty, then you may fail to undertake other duties (such as paying back your lender).

33 cowboydroid April 13, 2016 at 8:00 pm

Totalitarian diktat deserves to be mocked, not rationalized.

34 Boonton April 13, 2016 at 8:43 pm

Is it more totalitarian to require kids to provide some care for parents than it is to tax them and provide social security to parents? I think we don’t know enough about culture here to make such an easy call.

35 Nathan W April 14, 2016 at 12:30 am

For another comparison, I think most people consider it less totalitarian to tax people at 30% than to require being drafted into 10 days a month worth of services to various levels of government. Among other things, it allows for greater specialization. But I think the cultural aspect is very relevant here, so perhaps the analogy is not very relevant.

36 Thomas April 14, 2016 at 10:47 am

Interesting thought.

37 Boonton April 13, 2016 at 8:42 pm

Let’s say state controlled lenders have to use the credit score only. OK that’s like leaving $10 bills on the street. If the regulated guy isn’t allowed to bend over and pick them up, the unregulated guys will be more than happy too.

If your culture considers something a duty and you fail to undertake that duty, then you may fail to undertake other duties (such as paying back your lender).

In that case your credit score will already reflect that…if stiffing mom and dad means you stiff your credit card then you already have a dinged credit report.

I could see the opposite happening. This means more information will be on credit reports. It may very well be that people who stiff mom and dad are actually better at paying off their lenders (these people may put business over family after all). That means if the info is in credit reports lenders will be able to discover the correlation.

38 Harun April 13, 2016 at 7:08 pm

Its not clear if the credit rating agency is government run. If so, they may have “social goals” and not just be worried about the bottom line.

39 rayward April 13, 2016 at 3:23 pm

Chinese are savers not borrowers.

40 AlexR April 13, 2016 at 3:34 pm

For decades the communist regime brutally enforces a one-child policy, then grows concerned that the parents aren’t getting enough support from their child(ren)?

Piercing through the government veil, I suspect the apparatchiks are engaging in some induced mood affiliation to deal with an increasingly restive populace. I.e., the government is upholding traditional Chinese values of piety, motherhood and lichee nut pie, so if you’re discontented you’re un-Chinese and have only your own moral failings to blame.

41 anon April 13, 2016 at 4:01 pm

And here I thought paternalism was an overused term.

42 Bill April 13, 2016 at 6:15 pm

This is a form of Chinese social insurance, in lieu of Social Security.

If you visit your parents, you are expected to bring a gift.

Also, if they are sick, you are expected to pay their medical bills and attend to their healthcare needs.

43 Bill April 13, 2016 at 6:25 pm

Another way you can look at this is that it is a tax on workers who come in from another provence, who are then forced to go back home, while workers who grew up in Shanghai can visit their parents locally.

If you were trying to discourage workers from coming from rural areas to Shanghai this would be one way for local Shanghai citizens to raise their rivals (newly arrived rural workers) costs.

Similar to Prop 13 in California which favored established locals at the time of enactment over those who arrived later and would have to pay higher taxes because they were not grandfathered.

44 Anon April 13, 2016 at 7:04 pm

I thought prop 13 is the same for all ; those who buy later when prices are higher pay more , whether long-term residents or not. More on % increases year-over-year limited to 2% or less , no ?

45 Bill April 13, 2016 at 8:04 pm

The effect of Prop 13 is not the same. Say in year one you own a house and pay property taxes, in year two, your property tax increase is capped, but a new entrant’s tax is not in the year they purchase because assessed valuation changes.

There is a very good piece on the effect of prop 13 on outsiders and the distortions it created.
“Proposition 13 sets the assessed value of properties at the time of purchase (known as an acquisition value system), with a possible 2% annual assessment increase. As a result, properties of equal value can have a great amount of variation in their assessed value, even if they are next to each other.[4] The disparity grows when property prices appreciate by more than 2% a year. The Case-Shiller housing index shows prices in Los Angeles, San Diego, and San Francisco appreciated 170% from 1987 (the start of available data) to 2012 while the 2% cap only allowed a 67% increase in taxes on homes that were not sold during this 26-year period.[33]”

I had a lawyer friend in SF pay ridiculously low property taxes on his appreciated house, while his new neighbor paid a small fortune in property taxes in a house next door.

46 Anon April 13, 2016 at 10:26 pm

Understand. Agree this distortion is there but perhaps better phrased as “favored established home-owners at the time of enactment over those who purchased later .”

47 Harun April 13, 2016 at 7:13 pm

I want to apologize for my anti-progressive snark. The whole communist China aspect made leftism pop into my mind. But this concept is far more so-con than progressive.

I mean, where is the wealth redistribution angle? Where are the free travel vouchers for the poor?

No, this is not progressive at all.

48 Anon April 13, 2016 at 8:02 pm

So the opposite of progressive is con-gressive? That explains the dysfunction of Congress.

49 cowboydroid April 13, 2016 at 8:04 pm

This is social engineering in the eugenicist tradition of Progressivism.

50 Nathan W April 14, 2016 at 12:41 am

Eugenicist views in the present day are basically exclusive to the right. Not that people on the right are generally eugenicist or anything. It goes hand in hand with hating on the poor, hating non-whites, and all that.

51 mulp April 14, 2016 at 1:44 pm

Progressives came out of the Republican Party – Teddy Roosevelt was the iconic progressive contemporary to eugenics.

52 chuck martel April 13, 2016 at 8:11 pm

Interesting that the Chinese would look at it that way. In the US, while parents are legally bound to provide support for their children until majority, children have zero legal obligation toward the parents that fed, clothed and housed them for at least eighteen years and in many cases paid for their higher education as well. A father deserted by the mother of his children, who is invariably awarded custody and child support, has his paycheck garnisheed and faces prison time if he doesn’t come across with the cash. Later, in his dotage and unable to shift for himself, his children can ignore him, including financially, without legal penalties or even the censure of their peers. The Chinese are more civilized but its sad that an odd form of coercion is required in some cases.

53 Mc April 13, 2016 at 9:46 pm

good comment chuck!

54 Anon April 13, 2016 at 10:23 pm

True to some extent in some other Asian countries also , though its changing with the homgenization of value systems. What we gain on the swings oetter expression of indivduality, we lose on the roundabouts of taking care of the older generation.
It was Mahmood Mamdani who pointed out that poorer people having larger families wa s a rational decision from the point pf social security in old age. Two hands vs one stomach.

55 Ethan Bernard April 13, 2016 at 10:54 pm

It’s very asymmetric, as it should be. The parents chose to have the kids; the kids had no say in the matter.

56 Noumenon72 April 14, 2016 at 4:25 am

Forcing the kids to exist and make their way in the world already borders on cruel; if you also plan to subsist on their labor you’re basically breeding your own milk cows.

57 chuck martel April 14, 2016 at 5:58 am

Well, EB, since none of us has had any choice in our own existence, how can any of us bear any responsibility? It’s thinking like yours that has produced a strain of nihilism in modern society that borders on madness.

58 dux.ie April 13, 2016 at 8:46 pm
59 Daniel Weber April 13, 2016 at 9:57 pm

The print-friendly icon is really broken on my computer:

http://i.imgur.com/woNaFO2.png

60 Dmitri Helios April 13, 2016 at 11:44 pm

It’s not broken, that’s how it is.

61 Daniel Weber April 14, 2016 at 9:11 am

Did someone lose a bet?

62 Thor April 13, 2016 at 11:26 pm

In Communist China, you visit your parents. In America, parents visit YOU!

63 Travis Wiebe April 14, 2016 at 9:09 am

Let’s say a certain percentage of the population represents ‘bad kids who want freedom from their parents’. Let’s say another segment of the population represents ‘psychopaths’. What happens to the parent(s) when these two groups overlap in the form of their one child once this rule comes into effect?

64 Nathan W April 14, 2016 at 1:38 pm

That would definitely be a problem.

But there are also lots of people who just move to the city, get caught up in all the stuff about career, getting married and having a kid, etc., and some may resent the obligation to have to spend every Chinese New Years with the family in some backwards village when what they really want is a holiday, which they probably deserve.

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