Macroeconomic Regulation Not the Answer to Rocketing Housing Prices

Resident income inequality has widened drastically within a short timeframe in the process of transition. From a static point of view, there is a combination of three factors underpinning the widening of the resident income gap. Such factors include a) the variation in quantity of factors of production accumulated during the planned economy era; b) the difference between localities in respect of starting points at different historical stages along their varying paths of evolution; c) the illegal and abnormal income stemming from institutional loopholes and policy deficiencies. From a dynamic point of view, there are three root causes underlying resident income gap expansion. Firstly, the privileged group has been continuing to benefit from an increasingly large share of institutional transition returns by exerting influence over the path of evolution; secondly, the underprivileged group has lost their ability to capture income on a sustainable basis due to the lack of a mechanism to express their interests; thirdly, public policies are not designed or enforced well enough to regulate income inequality. Given the significant effects of excess income disparity on economic performance and social stability, it is thus imperative to hold the income gap in check in light of the societal reality of the transitional stage.