Putting a smiley face on the Chinese Communist Party

I won’t enjoy writing this post, but a recent defense of the Chinese government annoyed me on just about every level possible:

The world’s largest country and second largest economy has no tradition whatsoever of liberal democracy, says Zhang WeiWei, and many reasons for being wary of adversarial western political systems. He explains why Chinese see their own model as best suited to China’s needs.

In the subsequent article he doesn’t provide a shred of evidence that the Chinese people see their model as best suited to China’s needs.  Not one.  History is littered with dictators who thought they were popular, until rejected in elections (Pinochet, Ortega, etc.)  Here’s Zhang Weiwei:

China is often portrayed in the Western media as beset with social and political crises, awaiting only a colourful revolution to make it a liberal democracy. But China’s recent 18th Party Congress clearly demonstrated that this isn’t on the cards, and instead suggests that the country has found its own way to success, officially called “socialism with Chinese characteristics.”

Does he think China will develop its economy?  If so, then what other country failed to adopt national elections after becoming a highly productive economy?  (And no, extracting oil from the ground is not “highly productive,” it’s simply selling off one’s capital stock.)  He seems to think China has a bright future, yet doesn’t explain how China will avoid the iron law of democracy; when you get rich, educated, and productive, voters will want a say in governance.

1. Common sense. China’s population is larger than those of North America, Europe, Russia and Japan combined, and has no tradition whatsoever of liberal democracy and memories are still fresh of the devastating breakup of the Soviet Union.

Three misleading statements in one sentence:

1.  India has almost the same population as China, and is democratic.

2.  There is not a single liberal democracy on the face of the Earth that had a history of liberal democracy before it first became a liberal democracy.  Most (except Greece) had no history of democracy of any kind.  So this proves nothing.

3.  China is nothing like the Soviet Union.  China is 92% Han, and the vast majority of the non-Han are politically stable minorities who are well integrated into majority Han provinces.  Perhaps 2% of China’s population lives in areas that might become separatist.  Democratic India is far more diverse.

I’m sure you could go back 3 years and find “experts” on Burma assuring us that the government would never allow elections, and that Burma had no history of liberal democracy.  Yes, China is “special”, but then so is every other country (except Canada of course.)

Going further back, China’s more recent history saw chaos and wars, and on average from 1840 to 1978 a major upheaval every seven or eight years. So the Chinese fear of chaos is based on common sense and its collective memory, with very real fears that the country might well become ungovernable if it were to adopt the adversarial Western political system.

Yes and how many of those atrocities occurred under “liberal democracy,” and how many under autocratic governments like the Chinese Communist Party, which Zhang WeiWei believes should be entrusted with China’s governance?

And leaving China aside for a moment, not even the European Union as the birthplace of liberal democracy and with only one third of China’s population yet find it’s unable to afford its own liberal democracy model. If it chooses to retain popular elections as a way of selecting its top leaders, the EU may well end up facing chaos or even disintegration.

Let’s put aside the fact that Europe’s problems are trivial compared to the problems faced by China.  This is still a bit rich given that the Europe’s most serious problems are concentrated in the eurozone, a region that (like China) has decided to turn its governance over to unelected Mandarins.

Having myself travelled to over 100 countries, most of them developing ones, I cannot recall a single case of successful modernisation through liberal democracy, and there’s no better example illustrating this than the huge gap between India and China: both countries started at a similar level of development six decades ago, and today China’s GDP is four times greater and life expectancy 10 years longer.

How often do we hear this phony argument?  Once again, India is the most democratic country on the Indian subcontinent, and the most successful economically.  China is the least democratic economy that is ethnically Chinese, and is dramatically poorer than all the others (Singapore, Taiwan, Hong Kong.)  Comparing China and India is about as sensible as comparing Norway and Turkmenistan.

China has arguably performed better than most liberal democracies over the past three decades, especially in those domains that are of greatest concern to most Chinese.

Only in the sense that any statement is “arguable.”

And China has also performed better than all the transitional democracies combined, because the Chinese economy has grown 18-fold since 1979. Eastern Europe, for example, albeit from a very different starting point, has seen its collective economy only double in size.

That’s right, after the Chinese Communist Party made China poorer than India, poorer than Sub-Saharan Africa, so poor that 30 million of its citizens starved to death, it was able to grow faster than Eastern Europe, which was already a middle income region.

As well as performing better than many developed countries, China now has a huge ‘developed region’ with a population of about 300m, about the same population as the U.S., and in many ways it matches the developed countries in overall prosperity and life expectancy. China’s first-tier cities like Shanghai are today able to compete with New York or London, while its ‘developed region’ is engaged in a dynamic and mutually beneficial interaction with the rest of China – China’s ’emerging region’. This mutually reinforcing interaction explains to a large extent why China is able to rise so fast.

Yes, China has made lots of progress, but only after it began making its political and economic system more like that of those failed “liberal democracies,” as even Zhang WeiWei admits:

5. The China model. The economic successes of the China model have attracted global attention, but the model’s political and institutional ramifications have received comparatively little notice, perhaps for ideological reasons. Without much fanfare, Beijing has introduced significant reforms into its political governance and has established a system of what can be called ”selection plus election”: competent leaders are selected on the basis of performance and popular support through a vigorous process of screening, opinion surveys, internal evaluations and various small-scale elections.

So we are to believe that moving part way to liberal democracy has helped reverse the disasters of extreme autocracy, but moving further in that direction would somehow make China worse off?  Maybe, but where is the evidence?

In line with the Confucian tradition of meritocratic governance, Beijing practices – not always successfully – meritocracy across the whole political stratum. Performance criteria for poverty eradication, job creation, local economic and social development and, increasingly, a cleaner environment are key factors in the promotion of local officials. China’s dramatic rise over the past three decades has been inseparable from this meritocratic political model. Leaving aside sensational official corruption scandals and other social ills, China’s governance, like the Chinese economy, remains resilient and robust.

If the Chinese model is really so great, why does China have 60,000 riots every year?  Where is that “stability” that Zhang WeiWei refers to?  Why has the government allowed SOEs to block needed environmental reforms?  And why does the government feel it must lie to Chinese school children, and cover up the true history of Mao, the true history of the Communist Party?  And why claim that the problem is “sensational official corruption scandals?”  Isn’t the real problem that there aren’t enough “scandals?”  That most corruption is being covered up?  Is it “meritocratic governance” that allows those Chinese government officials, earning government salaries, to suddenly become billionaires?

China has learnt much from the West, and will continue to do so to its own benefit. It may now be time for the West, to use Deng Xiaoping’s famous phrase, to “emancipate the mind” and learn a bit more about, or even from, Chinese ideas and practices.

The West has much more to learn from Singapore, a tiny country of 5.5 million with a government recently re-elected with 60% of the vote, than it does from China’s 80 million-member Communist party.

Zhang Weiwei is professor of international relations at Fudan University, Shanghai, and the author of China’s recent best-seller “the China Wave: Rise of a Civilizational State”. He worked as English interpreter for Deng Xiaoping and other Chinese leaders in the mid-1980s.

I don’t doubt that the Chinese model works well for Zhang Weiwei, who lives in a relatively affluent city that is being built by “foreign workers” who are exploited for their labor.  Of course they aren’t really foreign, but they might as well be, as they are not even allowed to live in the city that they are building for the benefit of people like Zhang Weiwei.

PS.  Commenters; yes this post is 100% consistent with all my other China posts—thanks for asking.

HT:  Tyler Cowen.


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48 Responses to “Putting a smiley face on the Chinese Communist Party”

  1. Gravatar of marcus nunes marcus nunes
    31. March 2013 at 07:53

    And putting a somber mask on American capitalism:
    THE state-wreck ahead is a far cry from the “Great Moderation” proclaimed in 2004 by Mr. Bernanke, who predicted that prosperity would be everlasting because the Fed had tamed the business cycle and, as late as March 2007, testified that the impact of the subprime meltdown “seems likely to be contained.” Instead of moderation, what’s at hand is a Great Deformation, arising from a rogue central bank that has abetted the Wall Street casino, crucified savers on a cross of zero interest rates and fueled a global commodity bubble that erodes Main Street living standards through rising food and energy prices “” a form of inflation that the Fed fecklessly disregards in calculating inflation.
    http://www.nytimes.com/2013/03/31/opinion/sunday/sundown-in-america.html?pagewanted=1&_r=1&ref=opinion&&pagewanted=all

  2. Gravatar of Ashok Rao Ashok Rao
    31. March 2013 at 08:02

    If the RMB is to ever become a reserve currency, China needs to become a liberal democracy. The biggest trust investors have that a country won’t default on its loans is the idea that if it does the incumbent government will be thrown out. This doesn’t require full democracy in the American sense, but does require that most of the debt is owned by those with voting power…

    Plus, even if the comparison with India was well-founded (it’s not) that its (relative) economic lethargy has anything to do with liberalism is absurd. Socialist policies and mass nationalization of industry (at least during Indira Gandhi’s time…) severely throttled growth..

    What hurt India the most was precisely how illiberal its policies were. On the other hand, relative success in IT and outsourcing comes from an industry that’s relatively liberal.

  3. Gravatar of Suvy Suvy
    31. March 2013 at 08:29

    A couple notes about China that I think is extremely relevant. The assets owned by their banking system have jumped massively and are expanding at a very high rate. The size of their banking system is expanding at a rate of 35-50% of GDP a year and stands at around 300-400% of GDP. All of this has happened while the amount of non-performing loans(which have historically been running at 15-20%) has dropped(currently it’s below 1%). If some sort of shock hits China or something bad happens; things can go really wrong. What is this massive expansion in their banking system being used for? I’m not really sure, but I’m sure a good part of it is going to build those ghost cities and other project that probably can’t service the debt that’s being required to take on those projects.

    When you have the level of government intervention that you do in China in the way that they’re doing it(primarily through expanding loans via the banking system); it can easily create problems down the road. To give a good comparison, the assets of our banking system are around $13 trillion as our total GDP is above $15 trillion. I think our banking system is too big at 85% of GDP(I’d like to see it below 50%). In order to recapitalize our banking system, the maximum it would take(if you want a maximum leverage of 10%) is 8-9% if the assets of our banking system went from $13 trillion to $0 trillion. For China, it would take much, much more; on top of that, their banking system continues to grow at a rate of 35-50% a year. I have a feeling that they’re running a massive Ponzi scheme and it could cause some troubles down the road.

  4. Gravatar of TGGP TGGP
    31. March 2013 at 10:20

    I didn’t think Hong Kong was democratic at all. And Singapore of course is a one-party state which restricts political speech.

  5. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    31. March 2013 at 10:24

    Odd Kudlow column;

    http://www.nationalreview.com/articles/344207/another-round-goes-bernanke-larry-kudlow

    ———–quote————
    But at the moment, looking at the numbers, I’m going to give this round to Mr. Bernanke and his market-monetarist supporters. There is no massive printing-press money, no huge inflation jump, and certainly no overheated economy. With the U.S. economy rising at perhaps 2 to 3 percent in the first quarter, which is much better than the economies of Europe and Japan, and with the U.S. stock market hovering near record highs, I would have to characterize my stance as relatively optimistic, but certainly not irrationally exuberant.

    However, I continue to disagree with the Fed chair on fiscal policy. We need more government spending cuts coupled with serious tax reduction for large and small companies in order to boost this economy without injecting more and more money. This supply-side policy would deliver a much more predictable and reliable path to prosperity.

    But on monetary matters, it may just be that the Bernanke Fed is right where it should be.
    ———–endquote———–

    ‘his market-monetarist supporters’?

  6. Gravatar of Warren Warren
    31. March 2013 at 11:12

    “Yes, China is ‘special’, but then so is every other country (except Canada of course.)”
    – But doesn’t the fact that Canada is the only non-special country make Canada special?

    Also, this was a great post.

  7. Gravatar of Brett Brett
    31. March 2013 at 11:20

    @Ashok Rao

    Plus, even if the comparison with India was well-founded (it’s not) that its (relative) economic lethargy has anything to do with liberalism is absurd. Socialist policies and mass nationalization of industry (at least during Indira Gandhi’s time…) severely throttled growth..

    Strongly agreed. The whole “License Raj” era, plus the generally illiberal policies under Indira Gandhi and her son, set India back for decades in terms of growth. As soon as things started to get better, India’s economic growth soared, as you would expect from a poor country with a lot of potential for extensive economic growth.

    In fact, if India had been much more market-friendly in the 1960s and 1970s, they probably could have leaped right on the “outsourcing” boom back then and there, and become richer even faster. The cultural barriers compared to China and some of the other outsourcing places for english-speaking countries wouldn’t have been as high as in the case of a market-friendly India.

    @TGGP

    I didn’t think Hong Kong was democratic at all. And Singapore of course is a one-party state which restricts political speech.

    It was weird in Hong Kong’s case. They were being governed by the British government, but they also had stuff like freedom of speech and the press.

    Singapore is still definitely rather illiberal in terms of speech and human rights, even if it’s a “light” touch (meaning that they sue you for damages instead of jailing you).

  8. Gravatar of ChargerCarl ChargerCarl
    31. March 2013 at 11:34

    The China Model: Impoverish yourself for 50 years and then adopt the technologies developed by rich democracies. Then gloat when you converge.

  9. Gravatar of OneEyedMan OneEyedMan
    31. March 2013 at 11:36

    “There is not a single liberal democracy on the face of the Earth that had a history of liberal democracy before it first became a liberal democracy. Most (except Greece) had no history of democracy of any kind. ”

    Many European towns and cities had limited forms of self-governance and limited democracy as forms of guild or town governance long before they ever became true democracies, liberal or otherwise. Like most institutions, liberal democracy emerged gradually from similar institutions, in this case limited monarchy, semi-democratic governments (over local government) and illiberal limited franchise democracy .

  10. Gravatar of Brett Brett
    31. March 2013 at 12:13

    @OneEyedMan

    Many European towns and cities had limited forms of self-governance and limited democracy as forms of guild or town governance long before they ever became true democracies, liberal or otherwise.

    That’s why I usually point to countries like Taiwan, Japan, and South Korea first. South Korea had no democratic tradition, unless you count when it was ruled by Japan during the Taisho Era (1912-26). Japan was in the same boat – I think the only real “democratic” tradition that came before that was in the city of Sakai. Taiwan is probably the best example, since it neither had a democratic tradition before the reforms in the 1980s, and it actually is “Chinese Democracy”.

  11. Gravatar of ssumner ssumner
    31. March 2013 at 12:30

    Marcus, Another “easy money’ argument.

    Ashok, Good points.

    Suvy, Yes, bank bailouts are on the horizon.

    TGGP, Both Hong Kong and Singapore are obviously vastly closer to democratic liberalism than China, which is exactly what I said. So I don’t see what point you are trying to make.

    Patrick, Interesting quotation. Form the perspective of the hawks we seem like supporters, because we don’t think money is too easy. And until recently he was fairly hawkish. But you are right, we aren’t supporters.

    Thanks Warren.

    ChargerCarl, Yes, but it’s even worse. They are gloating before they’ve converged with Mexico.

    OneEyedMan, If he had made that argument, then we’d have something to evaluate. But he didn’t.

  12. Gravatar of Edward Edward
    31. March 2013 at 12:43

    could you clarify something Scott?

    Sometimes you say that the size of China’s economy has already surpassed the U.S. Other times you say that China is till a country poorer than Mexico. What gives?
    I only ask because the stats seem confusing. in terms of purchasing power parity per capita, has china already surpassed the U.S.?
    Thanks

  13. Gravatar of TallDave TallDave
    31. March 2013 at 13:26

    Good points Scott.

    I’m troubled by the fact the Chinese leadership shows little sign they will transition to liberal democracy, but comforted by the fact the leadership is often the last to find out that such a transition is imminent :)

  14. Gravatar of Jeff Lim Jeff Lim
    31. March 2013 at 13:49

    I am a Chinese from Malaysia presently living in the States. I am going to re-read the article since you apparently had a stronger negative reaction to it than I did. Personally, I don’t think the so-called State Capitalism model under Communist Party rule is the long-term stable solution for China politically or economically (I hew more to the Acemoglu/Robinson view). My feeling is China will likely transition (hopefully without too much violence) into the Singapore-style type democracy and then yet further unknown forms. Let me make these points.

    I actually found the article interesting and sobering. My take (after making room for the propaganda aspects) was that it was saying something like liberal democracy imported from the outside in the nation-building sense of “Democracy in Iraq” is fanciful thinking for China. I didn’t get the impression it was saying status quo was it (hence I will re-read). I took the message to be more cautionary for those with classical liberal mindsets, which include Westerners and Chinese alike.

    Don’t be surprised if this piece resonates with lots and lots of overseas Chinese and China Chinese. I was teaching in Malaysia last year and my feeling is it will resonate with many of the China Chinese (who nevertheless want greater individual freedoms) and Malaysian Chinese students there.

    I could bracket off the propaganda type points because the fellow was previously an interpreter for Deng.

    Thanks.

  15. Gravatar of Lorenzo from Oz Lorenzo from Oz
    31. March 2013 at 13:52

    Edward: an economy of over a billion people poorer than Mexicans on average can still be bigger than the US economy. “Rich/poor” is a matter of per capita income, “large/small” is a matter of total GDP. Australia is a (much) richer economy (GDP pc of c.$40,000 to c.$8,400) than China’s which is also (much) smaller than China’s (GDP of c.$1tr to c.$12.4tr).

  16. Gravatar of Lorenzo from Oz Lorenzo from Oz
    31. March 2013 at 13:56

    Great post.

    A well-known China-watcher joke is that the KMT (Kuomintang) is trying to become the DPP (Democratic Progressive Party) while the CCP (Chinese Communist Party) is trying to become the KMT.

    Here’s a question for history buffs. Whose vision does modern China more closely resemble — that of Mao Zedong or that of Chiang Kai-shek? Ah, the ironies of history.

    Finally, an Eastern European joke — what is socialism? The most painful and difficult road from capitalism to capitalism.

  17. Gravatar of Lorenzo from Oz Lorenzo from Oz
    31. March 2013 at 14:01

    On India, the “Hindu rate of growth” was a creation of the Permit Raj. In the argument over “rules versus discretion”, the Permit Raj is a great argument against discretion.

    Australia runs its land markets through permt rajs. Unsurprisingly, it is the most dysfunctional major market in Australia. Alas, we copied the postwar British system of land regulation. It would have been much better if we had adopted the German.

    (In US terms, California is permit raj land management, Texas is more rule-based.)

  18. Gravatar of Lorenzo from Oz Lorenzo from Oz
    31. March 2013 at 14:28

    Australia tends to pay a lot of attention to China, unsurprisingly. We have our voices urging “realistic” policy over Taiwan. Personally, I think it a bad idea for Australia to encourage the idea that the US should abandon a democracy of about 20m people on a large island off the coast of Asia …

    Besides, US support for Taiwan now looks like a canny strategic investment in the liberalising of China.

    Whether China pays the same sort of attention to its neighbours is a bit more doubtful. When the Dalai Lama visited Australia in 2007, the Chinese made such a fuss then PM Howard was given no real choice — he had to meet the Dalai Lama. He actually made a comment about not “kowtowing to anyone”. Translation: please don’t be so dumb as to force me into this position again.

    It is a reasonable argument that the insular, self-referential nature of the Chinese regime helps explain why it is so often so heavy-handed in dealing with its neighbours. Which makes life a lot easier for US diplomacy, but is a bit more worrying about possibilities of things going horribly wrong.

  19. Gravatar of johnleemk johnleemk
    31. March 2013 at 16:05

    Jeff,

    I’m also a Chinese Malaysian living in the US and I land somewhere in between you and Scott. I had a negative reaction to the article similar to Scott’s, but like you I didn’t read it as a total defence of the status quo. Two things about the article grated on me:

    1. Its sloppy reasoning in arguing that the Chines economic model must be superior to the West’s just because it’s had a much higher growth rate (always easier to achieve fast growth when you’re starting from a base depressed by decades of oppression)

    2. Its overly casual dismissal of the 1911 revolution’s implications for democracy (there are many reasons to believe that the failure of the revolution to achieve a more democratic China was more an accident of history than reflective of anything fundamental about the nature of Chinese society)

    Lorenzo,

    I have to say I’m quite curious now since I believe Malaysian land law is modeled after Australia’s. How is German land law superior?

  20. Gravatar of Will Will
    31. March 2013 at 16:52

    I’m no fan of China’s authoritarianism, but isn’t a non-democracy potentially far more able to protect personal and economic liberties than a democracy with universal suffrage? Absent very strong constitutional protections and a powerful judiciary, it seems that democracies will inevitably slide into various groups just trying to oppress each other in various ways (the war on drugs, runaway entitlement programs, massive over-regulation, etc.).

    China today, of course, is managing to combine many of the negative policies of Western democracies with even more of its own unique sins. But Hong Kong had a fantastic run under British rule without, I believe, any democratic rights.

  21. Gravatar of Paul Paul
    31. March 2013 at 16:59

    Burma/Myanmar was a British colony. Hong Kong, India and Singapore likewise. Taiwan and South Korea were under the military and economic umbrella and influence of the US (another former British colony) but still took a long time to become democratic. Furthermore Taiwan and South Korea are artificial recently created entities in the sense that they were created out of the battle between Communism and the West.Japan was nuked twice and generally laid waste, and occupied, but still is a strange case of democracy. Point being, outside Europe, with the possible exception of Thailand, there are none, not one, case of a never colonized or occupied country spontaneously and freely choosing to successfully adopt “liberal democracy”.

    This doesn’t mean that Professor Zhang Weiwei has all the good arguments. He glosses over the reasons the Chinese Republic came unstuck – under different circumstances it might have worked. Unfortunately liberal democracy was a casualty of the battle between the Communists and Nationalists. In the same way Russia might have become democratic were it not for world war one and the Bolsheviks. Who can say?

  22. Gravatar of Geoff Geoff
    31. March 2013 at 17:21

    Well this is quite a refreshing post, after the apologia post defending the Chinese government’s infrastructure boondoggles.

  23. Gravatar of Ashok Rao Ashok Rao
    31. March 2013 at 17:36

    Strongly agreed. The whole “License Raj” era, plus the generally illiberal policies under Indira Gandhi and her son, set India back for decades in terms of growth. “As soon as things started to get better, India’s economic growth soared, as you would expect from a poor country with a lot of potential for extensive economic growth.

    In fact, if India had been much more market-friendly in the 1960s and 1970s, they probably could have leaped right on the “outsourcing” boom back then and there, and become richer even faster. The cultural barriers compared to China and some of the other outsourcing places for english-speaking countries wouldn’t have been as high as in the case of a market-friendly India.”

    If India had adopted a market-system soon after independence, there would have been political benefits as well. For one, America wouldn’t arm Pakistan which would have made it all but irrelevant today. America would also ensure India had Kashmir for its border with then-USSR.

    However, to be fair, Rajiv actually liberalized India in subtle ways. In fact, there are good arguments that some of the most important liberalization happened under his time, before the PM Rao government.

  24. Gravatar of mbk mbk
    31. March 2013 at 19:13

    TGGP,

    Singapore has several political parties. The opposition sits in Parliament. The governing party got a bit over 60% of the popular vote. You can’t say any of these of China.

    Paul,

    “Point being, outside Europe, with the possible exception of Thailand, there are none, not one, case of a never colonized or occupied country spontaneously and freely choosing to successfully adopt “liberal democracy”. ”

    That’s a bit of a non starting argument. Outside Europe, besides Thailand and Ethiopia, there are none, not one, case of a never occupied or colonized country, period.
    [nitpick this if you must but globally speaking everyone on the planet has been colonized by Europeans at some point]

  25. Gravatar of TallDave TallDave
    31. March 2013 at 19:48

    “spontaneously and freely choosing to successfully adopt liberal democracy”

    Actually something like this did happen in a few areas, such as Botswana. And colonialists did set up some very bad power structures that outlived the colonists.

    The word “choosing” there is key. Acemoglu’s book on this is very good — he points out that the main reason countries don’t end up liberal democracies (even when most people want that) is that current elites benefit from the status quo, and new elites (who often come into power promising such reforms) are immediately confronted with enormous incentives to continue extracting wealth autocratically.

  26. Gravatar of Prakash Prakash
    31. March 2013 at 22:47

    The middle class in India does compare itself with China and finds the present situation as woefully inadequate. We ignored japan’s example for the longest amount of time, trivialising it by saying it is too small. Then South Korea happened, still no bells ringing. Then the other asian tigers, then China grew. India is now truly out of excuses.

    Unfortunately, a lot of Indians are taking the wrong lessons and want a period of dictatorship where economic policy can be stabilized, grow till a certain level and then re-implement democracy.

    There is still no broad based support for classic liberalism in India. Both prominent political parties are socialist. One looks at the economic reforms as a way to pay for boondoggles and the other seeks a form of economic autarky. If it were not for the remittance crisis, the economic reforms of the 90s would not have happened.

  27. Gravatar of Ashok Rao Ashok Rao
    1. April 2013 at 00:24

    Middle class Indians comparing themselves with Chinese should treasure all the freedoms they have, for god’s sake. They trash the government (rightfully so) with gay abandon on the Internet, have access to high-quality English newspapers, the right to organize and petition. And, most importantly, the right to throw their government out of office.

    China has done an incomparably better job bringing the poorest out of abject poverty, and lavishing its wealthiest in hedonistic opulence. But, I would so much rather be middle class (say between 10 and 50 thousand dollars a year) in India…

    People who flippantly want to discard liberal politics and move over to a “dictatorship” should just remember the Indira Gandhi years.

  28. Gravatar of Rien Huizer Rien Huizer
    1. April 2013 at 00:25

    Scott,

    Mr Zhang’s article is undebatable, so do not try it. His preferences are different and he lives in a country where his preferences are aligned with his opportunities. This is an excellent example of how lots of members of the Chinese elite feel about the situation in their country.
    But these musings are philosophically close to Singapore PAP writings in the early 1990s. It is not politically incorrect for many East Asians to question the benefits of having the whole adult population involved in gvt (and I remember that until not so long ago, the US was not convinced of that either).

    A meritocratically chosen sample should do better is the competing idea and it appeals to people who consider themselves to be part of that, or people who have lived under dysfunctional popular self-government for a long time.

    Plato and Aristotle dealt with this problem a long time ago, a little after when Kong Zi states his principles for benevolent government. I think the Chinese have a good point but of course, authoritarian systems are on the back foot technologically. If the Chinese can harness the social media, the meritocrats have little to fear.

    Incidentally, he referred to Chinese, not “the Chinese” when stating his views that the current regime has support. Zhang’s views are mainstream for his context and devoid of marxist jargon.. And very useful to know.

    Incidentally there is no proof that democracy is a automatic consequence of affluence, even of relative economic freedom, the driver of political change is social mobility fluctuations (which may have economic roots). Of course we like the idea that our vote counts, but very few people (at least in Europe see that as anything else but a means to occasionally send a maverick to the entrenched professional politics elite ). But whatever one may think of democracy, its meaning and the conditions under which it thrives and can produce effective government (lots of dark areas there) as opposed to popularly accepted forms of authoritarianism (China, Vietnam, Laos, Bhutan, DPRK) or long term dominant party politics (Japan, Spore, Taiwan) Or quasi-democratic chaos (Thailand, Indonesia, Philippines) one can be sure that Marx lost most of his fans. In fact if Marx were alive today, he would be a mainstream economics professor or a law professor at Chicago. And Lenin would be an executive in a pharma company.

    See Zhang as an openly post communist writer with some prestige in an important country that is less different from its region than 30 years ago. But still comfortably authoritarian.

  29. Gravatar of Prakash Prakash
    1. April 2013 at 01:50

    Ashok,

    That’s exactly what I tell my friends after their dictator loving arguments. I tell them India’s luck is such that even a dictator it gets will be more like Mugabe or Indira Gandhi rather than Lee Kuan Yew or Vikramaditya.

  30. Gravatar of Rien Huizer Rien Huizer
    1. April 2013 at 02:37

    Will,

    British HK was a true plutocracy, with an excellent civil service making sure that things were well organised and the Brits as a useful prop to mask the absence of governing by consent of the population. After the seventies, the population preferred what they had to the PRC model and there is probably a little more of democratic stirrings (especially among the Christians) although the PRC has never had a heavy hand, let alone bother the plutocracy. Some people would call HK an economically free, or capitalist country (without democracy). Those people should try to do business against the wishes of the people who really count..I prefer Singapore. There the plutocracy is the state that belongs to all citizens. No democracy either, but far from the police state it is made to look like. There also, do not cross the people who count and the public service is excellent. There is no better model, but it requires a certain lack of democracy. …

  31. Gravatar of Errorr Errorr
    1. April 2013 at 05:28

    Can we call this the broken windows fallacy writ large. If China trashes its economy and then reforms to make it to just poor because they can transfer almost a billion people from agriculture to industry/service that is nothing special. China will run out of poor farmers to employ, wages will rise, and the Social infrastructure will be destroyed by the demographic time bomb that the one child policy created as they realize they are barely middle income and already really old. This is also why I agree with Scott that over the next 50 years the fastest growing economy will almost have to be N. Korea.

  32. Gravatar of ssumner ssumner
    1. April 2013 at 06:00

    Edward, I believe that China’s PPP income is already higher than the US in total. (Others disagree.) But because China has 4 1/2 times the US population, their per capita GDP (PPP) is still below Mexico.

    Jeff, I agree that Singapore is a possible near term model for China, although I’d add that even Singapore will liberalize over time. (The opposition will eventually start winning elections.)

    I doubt a single person on the face of the earth thinks Iraq is a sensible model for China. If that’s the view he was attacking, then he was attacking a straw man.

    Lorenzo, All great points–love the joke about the KMT.

    Will, The key word in your post is “potentially.” Democracy will do much better on human rights on average, but autocracy will occasionally do better under a “philosopher king.” BTW, Britain itself was a democratic country with strong human rights when they (towards the end) did a good job of ruling HK. Singapore is your best argument for the philosopher king model.

    Democracy is a much less risky model. To be fair, as I and the author agreed, China is no longer the ultra-high risk dictatorship that it was under Mao. Power is somewhat decentralized among many individuals, and there is some merit involved in selection (also some corruption.)

    Paul, You said;

    Point being, outside Europe, with the possible exception of Thailand, there are none, not one, case of a never colonized or occupied country spontaneously and freely choosing to successfully adopt “liberal democracy”.”

    This strikes me as a bizarre argument, as almost every country in the world was at one point or another colonized by Europe. And as you point out, some of the few exceptions, like Thailand, have also become democratic. So I don’t see the point of your claim.

    I agree with your second paragraph, although saying he doesn’t have all the good arguments is being kind. He doesn’t have any good arguments. Not one.

    Geoff, You said;

    “Well this is quite a refreshing post, after the apologia post defending the Chinese government’s infrastructure boondoggles.”

    Another typical read-fail. I’ve never defended China’s infrastructure boondoggles.

    mbk, We think alike.

    Prakash, So India wants to become less democratic–like Pakistan and Bangladesh? Not a smart move. And how did the Gandhi “emergency” work out? (Of course I agree with you–this is aimed at those you cite.)

    Rien, When you talk about what “the Chinese” want, I presume you mean the majority, the rural peasants who’s land is being stolen from them by undemocratic governments, right?

    Of course there are degrees of democracy, and both Singapore and Switzerland have pretty good economic policies, despite vastly different levels of democracy. But certainly the more democratic parts of East Asia do better than the less democratic. Perhaps China will be the first country ever to violate the iron law of democracy, but I doubt it.

  33. Gravatar of Brett Brett
    1. April 2013 at 08:15

    @Scott Sumner

    Perhaps China will be the first country ever to violate the iron law of democracy, but I doubt it.

    You might even be able to spin the resistance of many local officials to central government edicts as part of that, although it’s also no doubt part and parcel of them enriching themselves through corruption and land speculation. Now if they could just get the ability to actually raise money at the local level . . .

  34. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    1. April 2013 at 08:15

    ‘Whose vision does modern China more closely resemble “” that of Mao Zedong or that of Chiang Kai-shek? Ah, the ironies of history.’

    Even more so since China only got on its path thanks to American communist economists (the most prominent being Harry Dexter White and Lauchlin Currie). Some interesting new info about the machinations of White and Sol Adler re; China during WWII, in Stanton Evans and Herbert Romerstein’s new, ‘Stalin’s Secret Agents’;

    http://www.amazon.com/Stalins-Secret-Agents-Subversion-Roosevelts/dp/143914768X

  35. Gravatar of TallDave TallDave
    1. April 2013 at 08:22

    One problem re India that hasn’t been alluded to much is the everpresent tension between democracy and liberty + rule of law.

    As Fareed Zakaria noted, much of India’s problems stem from too much democracy — there are few limits on gov’t power, so provinces tend to lurch from from one set of elected tyrants to the next with little regard for individual rights.

  36. Gravatar of LC LC
    1. April 2013 at 09:31

    Great post! One of the best I have ever read.

  37. Gravatar of Geoff Geoff
    1. April 2013 at 13:16

    Dr. Sumner:

    “”Well this is quite a refreshing post, after the apologia post defending the Chinese government’s infrastructure boondoggles.”

    Another typical read-fail. I’ve never defended China’s infrastructure boondoggles.”

    Another read-fail? Seriously, doesn’t imply you have shown it a first time? Where did that occur?

    This post:

    http://www.themoneyillusion.com/?p=20099

    was what I was referring to. It is a defense of China’s infrastructure boondoggles:

    “The Binhai financial district (Yujiagu) was described as “all but abandoned.” Does that mean not abandoned? Waiting for all the infrastructure scheduled to link it to downtown Tianjin in mid-2014? China has more than four times the US population, and Tianjin is expected to be the financial center of the north (just as Shanghai is the financial center of the east, Shenzhen in the south, and perhaps eventually Chongqing in the west.) Why shouldn’t China have 4 Wall Streets?

    “Chinese incomes are doubling every 7 years, and hundreds of millions of people will eventually move from the countryside to the cities. Given that housing is quite durable and China will be much richer in the future, should China be building lots of housing suitable for poor people making $2/day, or housing suitable for the China of 2035?

    “They pointed to a “ghost town” development in Zhengzhou, which is capital of a province of 90 million people. I’d expect its current population (4 million in the urban area) to grow to 10 to 20 million in a few decades. How much longer will that development seem unneeded?

    I read all of these comments as defenses of the boondoggles. I think most honest readers would see the same.

    If the US government built a huge ghost city in the middle of the Nevada desert, then an apologist could also claim “Yeah, NOW it’s perhaps excessive, but just you wait until the year 2075, after the population grows enough, and after business will likely booms in Nevada, and then you’ll likely see that city becoming populated.”

  38. Gravatar of johnleemk johnleemk
    1. April 2013 at 14:56

    If the US government built a huge ghost city in the middle of the Nevada desert, then an apologist could also claim “Yeah, NOW it’s perhaps excessive, but just you wait until the year 2075, after the population grows enough, and after business will likely booms in Nevada, and then you’ll likely see that city becoming populated.”

    The difference is there isn’t a substantial pool of people who might live in that city whose incomes are doubling every 7 years. If, say, poor people from around the world were allowed to live and work in Nevada, which would demonstrably increase their incomes dramatically, the value of its land would undoubtedly skyrocket. At the nearly unprecedented rate Chinese incomes are exploding, it isn’t unreasonable to expect currently unused infrastructure to become useful in the near future.

    An anecdote to illustrate: about a decade ago, two large malls were built near my home in Malaysia (right next door to the 4th-largest mall in the world, which had only recently built a new wing). My family thought this was a demonstrable boondoggle: the smaller of the two new malls had some decent success, but the other new one didn’t attract many tenants or shoppers. The new wing of the old giant mall also seemed a bit of a dud for similar reasons.

    This continued to be the case for some time, but this has gradually changed. When I last went back to Malaysia a few months ago, the big supposed white elephant mall was just as busy as the other two, and the new wing of the world’s 4th-largest mall was just as busy as its old wing had ever been. They’d even already torn down some restaurants and car dealerships which were built less than a decade ago to make room for expansions to this shopping district.

    There are all sorts of fundamental issues with the political and economic systems of different Asian countries, and Malaysia is no exception (I’ve spent more than my fair share of time ranting about it). But making ridiculously large bets on Asian economies continuing to grow doesn’t seem all that unreasonable considering that they’re just starting from a relatively low base. (By the way my Malaysia story probably isn’t even all that dramatic: its economic growth is generally anaemic by Asian standards, and consensus has been that we never really fully recovered from the 1998 financial crisis.)

  39. Gravatar of Jeff Lim Jeff Lim
    1. April 2013 at 15:40

    Hi John Leemk:

    Sorry for the late reply. Got drawn away to do something. I have re-read the article and I am still not as exercised as Scott was. You are right in criticizing his views on growth. That’s where his arguments are weak. This State Capitalism model is a synonym for inefficiency, corruption, and cronyism. The dynamism in growth derives from their private sector, not the State Enterprises. Innovation will be a problem for them down the road.

    I think there is something to the Confucian ethic in government but all that stuff about their selection process being Confucian meritocracy in action and the vaunted China political model, I just dismiss as hogwash and propaganda. Ridiculous.

    I am sort of more impressed by the implicit cautionary note regarding how deep-seated the 5000-long cultural traditions and habits are within the Chinese psyche. It sort of reminds me not to get too carried away by the frequent indulgences of the Western media in one or another quickie “Spring” uprising or other supposed flowering of liberal democracy in non-Western societies. After the Western media leaves, the locals then have to pick up the pieces (like for Egypt).

    Which state in Malaysia are you from? I am from Penang. Are you an economist too?

    Regards.

    Jeff

  40. Gravatar of Jeff Lim Jeff Lim
    1. April 2013 at 16:10

    Hi Scott: Thanks for your reply. I have re-read the article and I am not as upset as you seemed to be.

    Btw, I wasn’t saying that Iraq was the model he was criticizing. What I found useful was the article’s reminding me of the long history and cultural traditions of China, none of which informs the rural Chinese about liberal democratic ideals. China has had many many uprisings, revolutions, but virtually all had sought to replace one tyranny with another. It has not had anything resembling the series of wars and disruptions in England leading to the Magna Carta, gradual constraints on the autocrat’s power, and all the way oh so slowly (400 years(?)) to the Glorious Revolutions in Britain, the setting up of Parliament etc etc. Not that liberal democracy is inherently alien to the Chinese spirit; but the Chinese people will have to find its own long arduous way to the desired Chinese liberal democratic forms. The article’s usefulness to me was this implicit reminder. All the other propaganda stuff (points 3-5), I dismiss as hogwash.

    Yes, Singapore will over time develop more liberal democratic structures; but I do not think that process will be aided usefully by having the present Opposition parties win. These presently appear to me to be too much pro-welfare state parties, which will present (and then sour) the electorate with the wrong end (dirty under-belly(?)) of liberal democracy.

    Thanks very much for your blog. Learnt a lot from it.

    Jeff

  41. Gravatar of Rien Huizer Rien Huizer
    1. April 2013 at 19:27

    Scott,

    “Rien, When you talk about what “the Chinese” want, I presume you mean the majority, the rural peasants who’s land is being stolen from them by undemocratic governments, right?”

    I did not refer to “the Chinese” nor did Zhang. You did. Zhang merely talks about “Chinese people” (it would be interesting to take a look at any Chinese version of his article) and I suspect he refers to a widely heard suggestion in Asian politics a decade ago, that Chinese people (or Asians) look at politics and government not in the same way as Westerners. Mahathir Mohammed, former PM of Malaysia was famous for this sort of characterisations. I doubt he would refer to something as bourgeois as public consent, majority preferences etc. He is a post-communist elitarian, not a democrat. He belongs to Plato’s branch of political philosophy.

    I have no proof that there are deep cultural differences (between Asians and Westerners) as suggested by Dr M, but likewise, I spent a lot of time on democratization theories (especially in order to understand the Singaporean model and have a feel for its longevity) and, apart from the fact that globally the past fifty years are largely on the side of a nexus between rising standards of living and weakening of authoritarian structures, and very strongly, hard authoritarian rule and falling standards, there is little insight into what the underlying mechanisms might be, let alone what testable hypotheses might arise from that.

    The falling/hard authoritarian ones are more likely related to international effects (boycotts, no FDI etc) and the same applies to soft authoritarian ones crossing OECD thresholds, since OECD membership involves a conforming to certain societal standards (one possible reason why rich Singapore is not an OECD member).

    Another large group of democratizations: the fall of the Soviet empire for example caused power vacuums as well as sudden economic discontinuities so the obvious way for local elites was West (look at anywhere but the Czech Republic and Romania and you will find reprocessed political waste occupying the seats of power, democratically elected..). But in the comparative politics research, they count as cases of democratisation, while they are primarily cases of economic integration where the consolidator (eg the EU) makes the rules).

    Assuming a nexus between globalisation driven by Western democratic market societies (or large scale regional integration) and democratisation (bot left undefined..) a still authoritarian China (with the scale to be a regional consolidator in its own right) could tilt away from unrestrained Western globalisation (and it does so pretty well, witness the State and the social media) and focus primarily on domestic development (as reflected in official statements). They (the CCP as a fraternity organisation, largely stripped of ideology) survived the fall of communism and they appear to have survived the Arab Spring. I guess its stakeholders know what they are doing. They may have sub-Singapore levels of political liberty in the main cities for decades and much lower than that in the countryside, without risking macro-political discontinuity, as long as they stick to LKY’s prescriptions.

    It appears to me that that is exactly what the US expects the Chinese elite will try to do. If it happens, China will have done what the West wanted, focus more on domestic development and consumption and the consequence could consolidation of an elitist, soft authoritarian group in a very large country with very fast growing technological capabilities.

  42. Gravatar of Lorenzo from Oz Lorenzo from Oz
    2. April 2013 at 01:07

    johnleemk: sorry, visiting friends, only just got back. Common law is fine, as is Torrens title. I am referring to land use regulation, which is mostly a postWWII development.

    The German Constitution has a provision which blocks officials from stopping people doing things which are legal under general law. So, they have “rules not discretion” in their land use regulation. Oz adopted the postwar British model of requiring official permits to do practically anything re land use or building. It is a much worse way of doing things.

    A discussion is here.

  43. Gravatar of ssumner ssumner
    2. April 2013 at 05:09

    Brett, China really needs to improve it’s property rights, especially for peasants.

    TallDave, In my view India has far too little democracy–Switzerland is the model.

    Thanks LC.

    Geoff, I think you need to brush up on reading comprehension. Yes, I think that a country of 1.4 billion people who are mostly very poor could use more housing and infrastructure. That’s obvious. But I’ve also criticized specific Chinese boondoggles. I certainly wasn’t defending any specific project, just questioning whether there was a construction “bubble,” in the sense of too much housing and office space being built. If the Chinese government builds housing and it can’t be sold, it’s a boondoggle. But the vast majority of these projects have sold the housing–for a profit. Even in the “ghost towns.” I’m just as opposed to Chinese government boondoggles as any other economist.

    Jim, You said;

    “but the Chinese people will have to find its own long arduous way to the desired Chinese liberal democratic forms.”

    It seems like you and I both disagree with Zhang WeiWei. He doesn’t think the Chinese will do this.

    By the way there was also nothing in China’s 5000 year history that would have predicted the communist revolution, the Great Leap Forward, the Cultural Revolution, or the recent explosion of manufacturing in the Pearl River delta. So I wouldn’t put too much weight on that 5000 year history when predicting the future. The younger generation today are much more influenced by the internet than by the Zhang, Han or Qin dynasties.

    I will say that I like your arguments much more than ZW’s

    Rien, You said;

    “I did not refer to “the Chinese” nor did Zhang.”

    Umm, Yes you did, twice (from your previous comment):

    “I think the Chinese have a good point but of course, authoritarian systems are on the back foot technologically. If the Chinese can harness the social media, the meritocrats have little to fear.”

    I obviously don’t agree with your overall comment, as the evidence from other East Asian countries suggests that wealth pushes countries toward liberal democracy. I expect the trend to continue. Asian culture is different, and their political systems are not identical to ours. But liberal democracy is the wave of the future in all parts of the world.

    The current Chinese elite will have almost no say in what the country looks like in 40 years. I don’t doubt that they agree with your view of where things are going, and intend things to go in that direction. But their plan will fail, because a new generation of Chinese will be calling the shots (just as Mao’s group wasn’t able to prevent change once they got old.)

  44. Gravatar of Rien Huizer Rien Huizer
    2. April 2013 at 06:28

    Scott,

    That is contextually different. Anyway, my point is that authoritarianism may be more feasible (and democracy less inevitable) than we think. Not that I consider authoritarianism desirable. But, 40 years is a long time for an incumbent elite. The best comparative politics gives authoritarian systems a roughly 40 years lifespan. You are generous.

  45. Gravatar of johnleemk johnleemk
    2. April 2013 at 06:41

    Jeff,

    I’m from KL (well, PJ to be exact). I studied economics in my undergrad but am not a professional economist (though my current job does rather coincidentally involve interest rates and some Fed-watching). By the way, I’m helping organise a conference on Malaysian affairs this weekend — there are two US venues (MIT and UCLA), if you happen to be close to either one, do consider dropping by: http://www.malaysiaforum.org/nmf/

    Regarding Singapore, I think the country is arguably rich enough to support some expansion of its welfare state, even if that might be inefficient per se. I also do think the PAP has gotten complacent — probably not to the degree that the BN has in Malaysia, but the newest generation of PAP leaders are extremely disappointing compared to the country’s founding fathers, purely from a competency standpoint. With regards to the opposition, I’m more concerned about how they seem to be playing on nativist/anti-immigrant sentiment. It doesn’t seem very healthy.

    Lorenzo,

    Thanks, appreciate the primer! That Michael Warby article is something which OpenBorders.info may want to discuss…

  46. Gravatar of Lorenzo from Oz Lorenzo from Oz
    2. April 2013 at 13:47

    The Quadrant piece gets into a slight muddle over immigration. Except for Islamic and Pacific Islander immigration, migrants mostly have a considerably lower rate of incarceration than native born. The crime networks and trust effects are real, but do not imply that migrants themselves are more likely to commit crimes than local born.

  47. Gravatar of Geoff Geoff
    7. April 2013 at 16:37

    Dr. Sumner:

    “Yes, I think that a country of 1.4 billion people who are mostly very poor could use more housing and infrastructure. That’s obvious.”

    No it isn’t. You have no idea about that without asking what people want, given that they have to make choices with scarce resources. You have no idea if a Chinese person wants more food and medicine before they want more housing, if that was the choice. You have no idea if a Chinese person wants more housing over more clothes, or more vehicles, if that was the choice.

    For crying out loud, you’re so hopped up on defending China’s infrastructure that you’re pretending in your own mind that what they’re specifically doing is obviously not in excess.

    “But I’ve also criticized specific Chinese boondoggles. I certainly wasn’t defending any specific project, just questioning whether there was a construction “bubble,” in the sense of too much housing and office space being built.”

    What would the real estate and housing market in China have to look like for you to have concluded that there IS too much housing and office space being built?

    “If the Chinese government builds housing and it can’t be sold, it’s a boondoggle. But the vast majority of these projects have sold the housing-for a profit. Even in the “ghost towns.””

    So you are saying that the significant quantities of housing in the ghost towns that have not been sold, and significant quantities of office space that have not been sold, those are boondoggles?

  48. Gravatar of Geoff Geoff
    7. April 2013 at 16:42

    Also, you seem to be defining non-boondoggle projects as those that have been sold.

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