Mexico and China

I wrote this a while ago and probably shouldn’t post it. “Not scientific.”  But I will anyway.  Don’t have time for anything new.

During the week of turmoil in Boston, I was on vacation in the Yucatan.  It was slightly surreal watching CNN and seeing the police stake out an area just a mile from where I live.

I’ve travelled to Mexico off and on since 1970, and like the country.  But there are some annoyances.  We were scammed several times while using credit cards (Pemex, Dollar Rental Car, etc)  I’d suggest using cash.  I should have been more careful, as the gas stations used to scam us back in the 1970s, although then it was by not setting the gauge back to zero before pumping gas.

This is one area where Mexico seems to lag China, where we’ve had far fewer problems with scams (although I don’t doubt there are plenty there as well.)  Here’s another difference I noticed recently.  In Mexico the teachers are upset that the government is going to try to improve the education system.  It seems teacher positions are bought and sold, and can even be handed down from one generation to the next.  That’s the sort of practice that is more common in low income countries like India than middle income countries like China.

If you go to the Yucatan, I’d stay in the Tulum area (or Merida), rather than Cancun.  Rent a car and you can explore the interior.  We went to Valladolid, which seemed virtually unchanged since I drove through in the 1970s, indeed it probably doesn’t look much different from the 1870s, or the 1670s. BTW, I recommend reading Stephen’s two books on the Yucatan (from 1840), if you plan to visit.  We didn’t have time for Merida and Campeche, but I saw them on an earlier trip and they are both worth visiting.

I was struck by the differences with China.  If you went to a small city in China today, it would look totally changed from the 1970s, indeed from 2003.  This trip made me more convinced than ever that China will blow right by Mexico in terms of GDP/person.

That’s not to say that China is “better” in any overall sense.  Mexicans seem very friendly and happy (and surveys confirm that it scores high in “life satisfaction.”) It’s full of charming old colonial cities and the climate is delightful.  China . . . well . . . not so much.  In utilitarian terms China may never catch Mexico.  And I’m a utilitarian.

But anyone who travels from Mexico to China can’t help but notice the vast differences in economic momentum.  Despite all its very real flaws, China has a system that generates ever higher GDP at an awesome rate, even in towns the size of Valladolid.  It’s not pretty, but it’s relentless and grimly effective.

The “disappointing” 7.7% RGDP number from Q1 (distorted by lack of adjustment for leap year) has led some to wonder if the China boom is over.  It isn’t.

PS.  I was originally going to entitle this post; “speed bumps on the road to prosperity.”  The argument was that Mexico has far more speed bumps than China, because it’s a more lawless society.  But then I realized that some commenter would probably point out there are speed bumps in Norway or Switzerland or some other rich country.  Hence my schlock theory got relegated to a footnote.

PPS.  The “lawless” nature of Mexico does have its charms.  In the 1970s we could go anywhere in Chichen Itza; I stood on top of one of the hoops in the ball court.  Now everything’s roped off—it’s getting more like the US.  But they still don’t close down entire cities of a million people because one 19 year old killer is on the run.  Thank God.

PPPS.  I saw that Matt Yglesias recently got into trouble by daring to tell the truth about Bangladesh:

It seems like the entire Internet has registered its objections to this piece I wrote on the Bangladesh factory disaster. And I have to say that my overwhelming personal response, as a writer and as a human being, is to be annoyed by the responses that I’m getting. But let me try to be mature about it instead and say””what happened in Bangladesh is a tragedy and a human disaster, and to the best of my knowledge it’s also quite literally a criminal disaster under the existing laws of Bangladesh.

It also seems like “the entire internet” lets feelings trump reason.  Don’t let them push you around Matt.  The Paul Krugman of the 1990s would have said the same thing.


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38 Responses to “Mexico and China”

  1. Gravatar of AldreyM AldreyM
    19. May 2013 at 09:02

    My new response to the article of Paul Krugman “The Smith/Klein/Kalecki Theory of Austerity”:
    “The Most Misleading Article I’ve Ever Read”
    http://marketmonetarism.blogspot.com/2013/05/the-most-misleading-article-ive-ever.html

  2. Gravatar of Saturos Saturos
    19. May 2013 at 10:11

    But… but.. but… the cartels! How on earth do Mexicans have high life satisfaction? That’s like an automatic reason not to be a Mexican!

  3. Gravatar of Benjamin Cole Benjamin Cole
    19. May 2013 at 21:33

    As a longtime Angeleno, that makes me a de facto expert on Mexico. You end up in Mexico a lot, and interacting with Mexicans the way Romans interact with Italians. That is, every day and at length.

    Yes, Mexicans are incredibly friendly, and hardworking. Why they are so poor is a puzzle, and must have to do with gong-show government and monetary policy in Mexico.

    My take is Latin American will always bungle government the way Ralph Cramden handled business ventures. It is like asking a German string quartet to play authentic American blues.

    China seems to have the Northern Asian thing going on, and that is one way to prosperity. Or not, if you notice N Korea

  4. Gravatar of Liberal Roman Liberal Roman
    19. May 2013 at 21:39

    I know I have mentioned this before, but what happened to that Krugman of the 90s? Where was he abducted to? And who has taken his place?

    Now he writes incredible things like this:

    Was there a better way? Ideally, we should have been able to get all the relevant parties in a room and say, look, this inflation has to stop; you workers, reduce your wage demands, you businesses, cancel your price increases, and for our part, we agree to stop printing money so the whole thing is over. That way, you’d get price stability without the recession. And in some small, cohesive countries that is more or less what happened. (Check out the Israeli stabilization of 1985).

    Hmm…I wonder how many “relevant parties” make up the US economy in the 1970s. And how big of a room it would have to be. It’s disturbing what’s happening to Krugman.

  5. Gravatar of W. Peden W. Peden
    20. May 2013 at 01:31

    Krugman also now thinks that 1978 Keynesianism was ok. He’s not even a New Keynesian anymore.

    I suppose it wouldn’t be surprising if a left-wing sociologist, who almost constantly moved in socially conservative circles and got praise for saying socially conservative things/questioned for saying socially liberal things, started to become increasingly socially conservative even if it’s contrary to their earlier sociological work.

  6. Gravatar of Vivian Darkbloom Vivian Darkbloom
    20. May 2013 at 02:02

    What I suspect that Yglesias was trying to bring across was the notion that a country like Bangladesh cannot, and should not be expected to, go from nothing to OSHA and 10 cents per hour to $10 dollars per hour overnight. There are many out there “feeling” that this should be the case, but my rational (and compassionate) mind tells me that likely ensures that underdeveloped economies stay that way indefinitely. I suspect that some who make the argument that these counter effective leaps should be made are really disguising their *own* protectionism rather than expressing an unmitigated and unconditional concern for others. But, that last sentence should not be taken too far, either. I strongly believe (on the basis of thinking, of course) that most of those who use predominately “feelings” and those who use predominately “reason” to argue policy solutions are all generally equally well-intended. Unfortunately, the education system over the past several decades, being controlled as it is by “feelers”, has conditioned persons to use their feelings over rational judgement and the pre-dominate mood seems to be that the former is morally more defensible. It was no accident that Krugman refers to his blog as “The Conscience of a Liberal” rather than “The Reason of a Liberal”.

  7. Gravatar of ChargerCarl ChargerCarl
    20. May 2013 at 02:34

    I think Karl Smith owns Cowen on the Eurozone here:

    http://www.forbes.com/sites/modeledbehavior/2013/05/17/the-ecbs-liquidity-leak/

  8. Gravatar of marcus nunes marcus nunes
    20. May 2013 at 02:40

    ChargerCarl
    I thought so too:
    http://thefaintofheart.wordpress.com/2013/05/19/ryan-avent-and-karl-smith-get-it-tyler-cowen-not-so-much/

  9. Gravatar of J J
    20. May 2013 at 03:58

    Vivian,

    Actually, Krugman’s book/column is named to be a counter to Goldwater’s ‘The Conscience of a Conservative.’ http://en.wikipedia.org/wiki/The_Conscience_of_a_Conservative

  10. Gravatar of Vivian Darkbloom Vivian Darkbloom
    20. May 2013 at 04:11

    J,

    Believe it or not, many conservatives do not use reason predominately in their arguments, either, and I certainly did not suggest otherwise. In fact, it has been my observation that the “feeling” crowds tend to congregate at the opposite ends of the political spectrum. So, whether it was in response to Goldwater, or whomever, is of little relevance to the issue of “reason” versus “feeling”.

  11. Gravatar of Vivian Darkbloom Vivian Darkbloom
    20. May 2013 at 04:14

    And, I neglected to tag the following on to the last sentence of the prior comment:

    Doesn’t the fact that Krugman presumably uses the title of his blog as a foil to Goldwater add credence to the penultimate sentence above? I’m speaking here to facts, not feeling.

  12. Gravatar of Patrick R. Sullivan Patrick R. Sullivan
    20. May 2013 at 06:26

    The Mexicans I know are almost all very entrepreneurial and hard working. Very talented at craft type businesses like painting, carpentry, landscaping. Strong family ties.

    It can’t be saying anything good about Mexican governance that so many of them flee their own country for better opportunities here.

  13. Gravatar of J J
    20. May 2013 at 06:47

    Vivian,

    I don’t really know what Goldwater’s book was about, so I can’t really know what Krugman’s intention was when naming his book/blog after Goldwater’s book. Nonetheless, Krugman’s book/blog, were and are about politics as much as economics. In this realm, when thinking about normative economics and social policy, I don’t see ‘reason’ and ‘feeling’ as opposing forces.

    I agree if by ‘feeling’ you mean unexamined intuition (this policy ‘feels’ like it makes sense). But, since you associate ‘conscience’ with ‘feeling’, it sounds like you also mean emotions and morals. We can’t have reason in normative economics and social policy without this type of ‘feeling’. Do we focus on GDP or do we care about the distribution of wealth/income? Do we sacrifice resources to help poor people? These are questions that simply cannot be answered without a moral framework. Once we have a moral framework and have chosen our goals, I agree that ‘reason’ is the correct approach to achieve those goals.

  14. Gravatar of Hoosier Hoosier
    20. May 2013 at 07:27

    Mexicans have very little trust in their government and institutions in general. I’ve found most people in Latin America are incredibly cynical as to where political and economic power comes from and who gets to use it. I always thought that this is why socialism was so prevalent in the regions. They don’t trust that you’re own hard work will be rewarded. To believe so is considered very naive. So instead you use political power to divy up the ‘national pie’ and try to secure as much as you can.

    Zingales book last year on crony capitalism touched on something similar with his comparisons of Italy and the US.

    As a specific example, a successful small business owner I knew in Mexico City told me he refused to pay taxes, and pretty much got away with it. The reason was that the government was so corrupt, inefficient and inept that he felt no obligation to do so. Overall tax collection rates are very low in Mexico as they were in Greece, another country with low quality government.

  15. Gravatar of Vivian Darkbloom Vivian Darkbloom
    20. May 2013 at 08:12

    “I agree if by ‘feeling’ you mean unexamined intuition (this policy ‘feels’ like it makes sense). But, since you associate ‘conscience’ with ‘feeling’, it sounds like you also mean emotions and morals. We can’t have reason in normative economics and social policy without this type of ‘feeling’. Do we focus on GDP or do we care about the distribution of wealth/income?”

    Actually, I’ve nothing at all against intuition which I consider to be subconscious reasoning. It is our subconscious drawing on everything we know, but have yet to articulate. As such, it is several levels above ordinary “feeling”. I do agree though that this level of subconscious reasoning should be checked during waking hours (I’m often amazed how much heavy “reasoning” our minds are doing when we are supposedly unconscious) but that we have a duty to ourselves and others to articulate and justify that intuition when it deals with policies that affect us all. (I’m not going to go through that rigmarole if I sense a snake in the grass).

    So, yes, I’m referring more to the moral slash emotional element of “feeling”. Unfortunately, as I see it, this level of “argument” (to demean the term) is neither based on conscious or subconscious reason. I’ve witnessed many a classroom in which the teacher 1) turns the class over to “discussion” to burn time and mask the teacher’s ignorance and incompetence which inevitably results in a chorus of “I feel that…” comments (without further justification; 2) teacher then justifies those “feelings” as legitimate (if politically correct, of course); and the proper emotional/moral sentiment translated to a policy stand is rewarded as legitimate despite the inevitable disastrous and unintended consequences completely contrary to any desired goal. This classroom ritual has, unfortunately, spilled over to other arenas.

    It is not clear to me what you mean by “we can’t have…. without this “feeling”. If by feeling, you mean what I’ve referred to above, I disagree and I have an aversion to the whole idea of “normative economics”. What I most dislike, and here I reserve special disdain for “progressive” economists, is the tendency to intentionally or unintentionally confuse their “feelings” (aka “normative economic stance”) with “straight” economics. If, for example, the choice may affect the level of GDP, I believe the following *steps* are appropriate:

    1. As economist give me the straight dope on how policy prescription A will affect GDP;

    2. *Then and only then* bring in your normative economic moralizing and convince me why we should sacrifice lower GDP for some more important goal.

    As to #2, I believe that’s what we call politics and should usually be left to voters and not economists to decide (although economists are entitled to vote, too, like everyone else of appropriate age and sound mental capacity). This is a generalization, but my experience (and indeed intuition) tell me that progressive economists are somewhat more likely to confuse these two (often deliberately) and put greater emphasis on the “normative aspect”. I’m writing here about economists and not politicians generally. This is why, for me, the admitted “mix” of Krugman’s politics and economics in his blog and elsewhere unsettling.

    Now that this lecture is over, you may feel free to discuss your feelings.

  16. Gravatar of Vivian Darkbloom Vivian Darkbloom
    20. May 2013 at 08:27

    A minor footnote:

    Goldwater was strictly a politician, not an economist. I believe he had one year of college. So, AuH20, while an interesting, but to my knowledge impossible combination, did not really have the effect of polluting supposedly academic economic teaching with “conscience”, however you might define the latter.

  17. Gravatar of J J
    20. May 2013 at 09:40

    Vivian,

    I agree with most of what you say and I agree that, in general, people should stick to their area of expertise. I’m always bothered by David Brooks assuming that he knows anything about economics just because he has a column in the NYTimes.

    But, that’s not really related to my point. My point is simply that ‘reason’ and ‘feeling’ are not opposed but rather work together to guide society. ‘Feelings’ tell us what to care about. Without ‘feeling’ we might as well go around killing each other. There’s nothing logically wrong with that if you take out our moral aversion to killing and death and violence. ‘Reason’ tells us how to achieve our goals.

    If Krugman is asked a question such as ‘What will be the effect of a higher income tax on GDP?” then he should answer as an economist using the tools of positive economics. All ‘reason’. But, if Krugman decides to write a blog, then of course he will be choosing topics to write about. Just because he allows his morals and ‘feelings’ to dictate the types of causes he chooses to take up and questions he chooses to investigate, doesn’t mean he isn’t approaching those questions with ‘reason’. I can want to figure out how to help the poor because of my ‘feelings’ but then use ‘reason’ to determine the best course of action.

    Sometimes, ‘feelings’ get in the way of ‘reason’ because we get caught up in certain actions ‘feeling’ wrong even if they lead to a greater good. But, it does not follow that ‘feelings’ should not influence our ‘reason’. Without ‘feelings’ there is no objective function to maximize with ‘reason’.

  18. Gravatar of Morgan Warstler Morgan Warstler
    20. May 2013 at 10:35

    Proving once again the most rational realistic problem solver here abouts is little old me…

    http://www.morganwarstler.com/post/35346903657/manifest-destiny-mexico

    Currently the most important legislation in Mexico’s history is winding its way thru to alter their constitution.

    At which point 10M Americans will buy beachfront condos, employ teams of low cost doctors, and millions of service workers, and the MX government will have some real money get behind pushing the drug stuff to the interior.

    The border will be something that gets in OUR way when we all want to fly down and visit grandpa and grandma in the #NEWFLORIDA.

  19. Gravatar of TravisV TravisV
    20. May 2013 at 10:47

    Despite its challenges, Mexico is still making progress. See this post from Noah Smith:

    http://noahpinionblog.blogspot.com/2013/04/superior-mayan-engineering.html

    “Mexico’s exports have exploded since NAFTA and more than doubled since 2003. Most of those exports go to the U.S., but Mexico is diversifying its markets to places like India. Nor are those exports things like fruit and oil and minerals; Mexico is a booming manufacturer of cars, electronics, aircraft, and appliances. In fact, Mexico exports more manufactured products than the rest of Latin America combined. Mexico – not China – is now the world’s leading exporter of flat-screen TVs and fridge-freezers. Those are high-tech products, and those factory jobs are good jobs. Mexican engineering is powering the world…or this corner of it, anyway.

    So what’s the point of this post? “Yay Mexico”? Well sure, but actually it’s a lot deeper than that. It’s about two competing narratives of how countries become rich and happy……”

  20. Gravatar of Ashok Rao Ashok Rao
    20. May 2013 at 11:14

    Travis, I think Noah got that one (partly) wrong: http://ashokarao.com/2013/04/03/the-end-of-export-driven-growth/

    When Korea grew, the real income of the USA grew more each year (in absolute, not percent terms), so we could absorb their new exports quite readily. With India and China that is absolutely not the case, and just China is accounting for huge percents of international growth.

    American stagnation (not to mention European depression) is bound to dampen any dreams of export growth as it was in the 70s and 80s.

  21. Gravatar of TallDave TallDave
    20. May 2013 at 11:16

    All interesting but the big difference is China has ten times as many people — if Mexico had a billion people and no elections they too could build shiny Shanghais and Shenzhens.

    I think a lot of smart people are getting sucked in by the absolute size of the economic surplus that resulted from forcibly moving 1.2B people from a North Korean economy to that of a poor banana republic. That surplus is being badly invested today in vanity projects (where it isn’t just being stolen) and I haven’t seen a lot of reason to be optimistic about the medium-term in China.

  22. Gravatar of ChacoKevy ChacoKevy
    20. May 2013 at 12:24

    J, Vivian,
    I don’t think it changes anything either of you are saying, but “Conscience of a Liberal” was first a book penned by Sen. Paul Wellstone not too long before he passed.
    http://www.amazon.com/Conscience-Liberal-Reclaiming-Compassionate-Agenda/dp/081664179X/ref=sr_1_3?s=books&ie=UTF8&qid=1369080312&sr=1-3&keywords=conscience+of+a+liberal

    My understanding is PK took up the torch.

  23. Gravatar of errorr errorr
    20. May 2013 at 16:37

    If China is middle income what does that make Mexico? The answer is that it is the most dysfunctional and poor high income country.

    There is a problem using the Yucatan or any other southern part of the country to talk about Mexico. When you visit the North the general feel is a country on the verge of something greater but inhibited by crime and corruption. The thing that is changing is that the middle class has emerged as the major political block and is pushing through changes slowly. Corruption is getting better and the drug war is so severe because of the increased pressure from the US and the military.

    The recent killings in Monterey was a line that was crossed by the cartels and the rich Mexicans will no longer accept a dysfunctional government allowing things to get in the way of development and exports. Of course many of those wealthy Mexicans have moved to the US.

    I think China will stall when they run out of people who move from low productivity agriculture to manufacturing and they are suddenly stuck with a prematurely aging population.

    I hope Mexico can help show a way for India to get out of the low income corruption trap.

  24. Gravatar of Russ Anderson Russ Anderson
    21. May 2013 at 05:32

    Scott writes “I saw that Matt Yglesias recently got into trouble by daring to tell the truth about Bangladesh.”

    No, Yglesias did not get into trouble for “daring to tell the truth about Bangladesh.” Yglesias got in trouble for doing a terrible job of trying to explain his point. Yglesias seems to have figured that out (in his further thoughs) “But at a certain point as a writer, if you feel like everyone’s misreading you, you have to consider the possibility that you’ve miswritten”.

    I get the point that Yglesias was trying to make, but reading what he wrote he did not explain clearly why he thinks lower safety rules in Bangladesh are a good thing. That was the real problem.

    It is a credit to Yglesias that rather than blame his readers, or make up excuses like “feelings trump reason”, or getting huffy about readers “push”ing him around, he recognized that he needed to do a better job explaining his position. It is a lesson for all writers.

  25. Gravatar of ssumner ssumner
    21. May 2013 at 07:07

    Talldave, If no elections is an advantage, how come Taiwan is much richer than China?

  26. Gravatar of Scott Sumner Scott Sumner
    21. May 2013 at 07:12

    Russ, No, people should try a bit harder to figure out what Yglesias was saying, before throwing personal insults at him.

    Travis, The data in Noah’s post was inaccurate, so it’s a moot point.

  27. Gravatar of o. nate o. nate
    21. May 2013 at 07:21

    Who is the “Stephen” who wrote the books on the Yucatan you recommend? Sorry if I’m being dense.

  28. Gravatar of Morgan Warstler Morgan Warstler
    21. May 2013 at 10:41

    Matty shouldn’t be such a wimp, but that’s where his bread is buttered.

    He’s a young man in conflict.

  29. Gravatar of copans copans
    21. May 2013 at 12:32

    o.nate:
    I’m sure one of the books was my father’s favorite book:
    Incidents of travel in Central America, Chiapas, and Yucatan (1841) by Robert L. Stephens

  30. Gravatar of Rob Rob
    21. May 2013 at 18:53

    I am not sure if someone waved a magic wand and made China a democracy today that it would be an improvement. If you look at the median voter even in a rich educated city like Beijing they are going to be more against the sorts of reforms that make growth in percapita GDP likely. In the rural countryside the median voter scares me to death. While there is more corruption than people would like(though how much would change if you made it a democracy is debatable) there is also a lot more pro market reforms than people would like. Democracy will happen eventually, but hopefully only when people are more educated and richer. I don’t think the CCP is as good as Singapore’s government, or most democracies, but I believe given the current views of the people that the CCP which relies on continued growth in order to maintain its mandate from heaven is about the best we can realistically hope for in the near term. Living in Beijing I have been quite surprised with how responsive the government is when enough people get angry about something.
    I think China will catch up and pass mexico in terms of Utility per person (due to population they already have mexico on the total utility front). The main drag from what I can see on current utility other than the lack of sane environmental regulations is the fact that people work so much, which I am confident will change with continued growth and after there is a generation that no longer remembers what starving feels like.

  31. Gravatar of Rob Rob
    22. May 2013 at 00:13

    The biggest gain from current democratization would be the near immediate end of the hukou system, though I doubt in ten years the hukou system will be anything more substantial in most places than some annoying paperwork even under continued CCP rule.

  32. Gravatar of ssumner ssumner
    23. May 2013 at 17:37

    Rob, You said;

    “I think China will catch up and pass mexico in terms of Utility per person (due to population they already have mexico on the total utility front).”

    How do you know that China’s aggregate utility is a positive number?

    I agree about the hokou system.

    Russ, I never suggested that Yglesias should get huffy about readers pushing him around. I had no trouble understanding his point the first time around. Those that didn’t understand should have refrained from insulting him.

    Talldave, You said;

    “I haven’t seen a lot of reason to be optimistic about the medium-term in China.”

    I’d guess you don’t travel to China very often.

    TravisV, Noah’s post has serious factual errors.

  33. Gravatar of Rob Rob
    23. May 2013 at 20:58

    I am not sure what having overall negative utility would mean I find it a theoretically fuzzy concept, the only way I could really think of defining it would be if the person preferred death to their current circumstance. In this case negative utility is quite rare, suicide is always an option. Very few people would say that their lives are not worth living, the idea that the vast majority of the country has negative utility is I think a little absurd, and I think most Chinese would find it insulting. I can’t be “sure” they don’t but I also can’t be “sure” America does not have negative total utility especially since I am unclear as what negative overall utility really means.
    Even people I have meet from little country towns talk about being happy and spending time with family and friends, eating good food, loving each other. Despite long hours and little pay(many come to Beijing to work 80 hours a week for 2000 or so å…ƒ a month, saving about half to send home, they still manage find ways to be “happy” human happiness is fairly resilient given basic needs are met and there is some autonomy). What is more most people think the future will be brighter than the present which has a large effect on current utility as well(often they view themselves as working towards future prosperity for themselves or their descendants).

    I am not a CCP apologist it is a machinery that runs primarily on rent creation and extraction, I could think of a million ways their policies could further improve life in China both now and in the future, the west has nothing to learn from the CCP. That said, it doesn’t matter if a cat is yellow or white, so long as it catches mice. I just happen to be of the opinion that for right now the CCP will catch more mice than democracy would, though that will likely change in the not so distant future.

  34. Gravatar of Rob Rob
    23. May 2013 at 21:24

    Sorry, I had accidently hit enter before I had edited the grammar to make it readable. Please read this comment instead unless of course you already read the first one(in which case sorry for subjecting you to my heinous grammar).

    I am not sure what having overall negative utility would mean. I find it a theoretically fuzzy concept, the only way I could really think of defining it would be if a person preferred death to their current circumstance. If this is the case, negative utility should be quite rare, as suicide is always an option. Very few people would say that their lives are not worth living, the idea that the vast majority of the country has negative utility is a little absurd, I think most Chinese would find it an insulting claim. I can’t be “sure” they don’t but I also can’t be “sure” America does not have negative total utility either, especially since I am unclear as to what negative overall utility really means.
    Even people I have met from little country towns talk about being happy and spending time with family and friends, eating good food, and loving each other. Despite long hours and little pay(many come to Beijing to work 80 hours a week for 2000 or so å…ƒ a month, saving about half to send home, they still manage find ways to be “happy”, human happiness is fairly resilient given basic needs are met and there is some autonomy). What is more, most people think the future will be brighter than the present which has a large effect on current utility(often they view themselves as working towards future prosperity for themselves or their descendants).
    I am not a CCP apologist, it is a machinery that runs primarily on rent creation and extraction, I could think of a million ways to change their policies to further improve life in China both now and in the future, the west has nothing to learn from the CCP. That said, it doesn’t matter if a cat is yellow or white, so long as it catches mice. I just happen to be of the opinion that for right now the CCP will catch more mice than democracy would, though that will likely change in the not so distant future.

  35. Gravatar of Sean Brown Sean Brown
    24. May 2013 at 08:11

    Without heavy state influence over credit and banks (not to mention yuan convertibility), China would not even be printing near +8% growth in GDP. Therefore, I don’t think China will blow right past Mexico. Low-ROI gov’t-driven investments will boost current-year GDP, but without these investments generating significant FCF and retained earnings in the wider economy, the economy will eventually ground to a halt (loans will go bad, businesses will lack retained earnings/excess profits to reinvest, money will be printed to recapitalize banks, massive inflation/rationing will happen, etc.). Soviet Union learned this pretty well in the 1960s-1980s and North Korean did from the 1970s-today. While Chinese growth was largely “legitimate” from 1980s-early 2000s, I think they have been making very stupid but GDP-boosting investments for quite awhile now. At some point, that will come home to roost. Mexico is free of such problems and thus I view their growth as much more sustainable.

    Mexico has a lot more problems with organized crime and criminals with heavy arms, though. So I am not sure happiness is so much better nationwide vs. China (though freedom of speech/expression/Internet is much better). In China you may have somewhat less recourse in the court system if a friend of the Party screws you on a business deal, but at the same time the triads do less damage than the cartels and there is not fear among the general populace or businesspeople that somehow the triads may harm them, as their is about the cartels in much (most?) of Mexico.

  36. Gravatar of Brett Brett
    24. May 2013 at 16:20

    @ssumner

    TravisV, Noah’s post has serious factual errors.

    Like what?

    In any case, it’s easier for China to post phenomenal growth numbers. The coasts are finally getting up into middle-income territory, but the vast internal country is still incredibly poor – far poorer than Mexico outside of places like the Yucatan and Chiapas.

    As for the Teachers’ corruption and strike, that’s because the PRI used them as a political arm for decades. They may have been brought on board to teach (and they did raise most students up to a perfunctory level), but their first priority was to turn out for the PRI in elections and mass movements.

  37. Gravatar of ssumner ssumner
    25. May 2013 at 06:27

    Rob, Lot’s of unhappy people don’t commit suicide. Perhaps all countries have negative utility.

    Sean. China is very different from the old Soviet economy. It’s closer to Western state capitalism before the neoliberal revolution.

    Brett, He reported a RGDP growth rate for Mexico that is much higher than their actual growth rate. The actual growth rate since 1980 has been quite slow.

  38. Gravatar of Rob Rob
    25. May 2013 at 19:27

    I don’t think of unhappy people as having negative utility, and I don’t think most people are unhappy most of the time. Do you care to define the term further? And give evidence that most people fit this definition?
    In terms of happy/not happy I actually sometimes get the feeling that the poor people in the little country towns and cities are happier, they work less and spend more time with family and friends with their *basic* needs still met(food, shelter).

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