Is Þis the Moment My Long-Run China Growth Pessimism Will Be Right?; & BRIEFLY NOTED: For 2021-12-08 We
Things that went whizzing by that I want to remember:
For 40 years now, I have been a short-run China bull and a long run China bear.
It has seemed clear to me, at every point in time, China has a working short-run development model, and that the legacy of the Maoist version of really-existing socialism had left it with enormous but easily correctable economic deficiencies—deficiencies that could be quickly and straightforwardly repaired to give China a much more prosperous economy over the next five years. But it has also seemed clear to me that the systemic and governance deficits of China would make successful continuation of that development model beyond a 10-year horizon very unlikely indeed. Thus I have, at every point in time, thought I saw clearly that the odds were that, within a decade in what was then the future, China would join the typical emerging-market economy, and find itself unable to make significant further progress in convergence toward the global north norm.
It is, of course, very clear and obvious that at each stage in the past I have been wrong.
China has, since 1980, at every point in time, not only had a successful short-run development model, but has also managed to avoid the factors that might bring its progress to a halt. It has been able to successfully rejigger its development model at each stage to continue economic progress. I think Barry Naughton’s periodization of post-Mao China is the most useful way of thinking about the stages of this process:
Labor-intensive manufactures in the Chinese countryside via TVEs
China’s cityscapes via retail decontrol
The drastic and painful 1996 to 2002 shrinkage of SOE work force by more than 40 percent— the flip side was that alternate businesses and ownership forms had reached sufficient scale to absorb the workers, land, and structures
Greatest of all: 200 million migrants flooded into the urban economy
The decision in 1998 to privatize urban housing
Finally, the decision to enter the WTO—the China-export shock
But I find myself, right now, still holding to my own opinion: that of a long-run China bear. And right now I think the odds are very high that the long-run has arrived: that China is about to hit its version of the middle-income growth slowdown. Question: MI, once again, wrong and fooling myself? Or, as Bullwinkle J. Moose says, “this time for sure?”
Robert Armstrong & Ethan Wu: Will China Have to Loosen Policy?: ‘The Chinese authorities seem to be trying to do with Evergrande what they did successfully (to date) with the over-extended insurer Anbang: some sort of orderly, break-upy, liquidationy thingy which will not require a general bailout of the sector, or fiscal and monetary juicing of the economy. This will involve state-owned entities taking Evergrande’s assets and liabilities at prices that will not require big losses to be recognised. The government’s goal is “to reach a balance between short-term stability and long-term reforms”, as Chaoping Zhu, of JPMorgan Asset Management, put it in the Financial Times today. Which is, if you think about it, what we’re all trying for in life, isn’t it? But this balance requires discipline, and there are a few signs that China might engage in a general easing of financial conditions, of the sort that encourages rather than discourages risk-taking, but which eases the short-term pain — and supports markets…
Forthcoming September 6, 2022 from Basic:
Slouching Towards Utopia: A History of the Long Twentieth Century: Paragraph 3: My strong belief that history should focus on the long twentieth century stands in contrast to what others—most notably the Marxist British historian Eric Hobsbawm—have focused on and called the “short twentieth century,” which lasted from the start of World War I in 1914 to the fall of the Soviet Union in 1991. Such others tend to see the nineteenth century as the long rise of democracy and capitalism, from 1776 to 1914, and the short twentieth century as one in which really-existing socialism and fascism shake the world.
Once again, absolutely gonzo:
Sharon Jones & the Dap-Kings: White Christmas <https://www.youtube.com/watch?v=eDotN6Azk1o>:
An ex-communist looks at his cult-enthralled ex-comrades, and tries—unsuccessfully—to talk them into sense, and humanity:
Leszek Kolakowski (1973): My Correct Views on Everything: Reply to E.P. Thompson: ‘Your “sense of politics of those years” is obviously subtler and more differentiated than mine…. You say… a part (a part, I do not omit that) of responsibility for Stalinism lies upon the Western powers. You say… “to a historian, fifty years is too short a time in which to judge a new social system.”… You say, “times when communism has shown a most human face, between 1917 and the early 1920s and again from the battle of Stalingrad to 1946”…. Your second comment is revealing, indeed. What is fifty years “to a historian”? The same day as I am writing this, I happen to have read a book by Anatol Marchenko, relating his experiences in Soviet prisons and concentration camps in the early 1960s (not 1930s)…. He got only six years of hard labour in a concentration camp. One of his stories is about three Lithuanian prisoners who tried to escape from the convoy in a forest. Two of them were quickly caught, then shot many times in the legs, then ordered to get up which they could not do, then kicked and trampled by guards, then bitten and torn up by police dogs (such an amusement, survival of capitalism) and only then stabbed to death with bayonets. All this with witty remarks by the officer, of the kind “Now, free Lithuania, crawl, you’ll get your independence straight off!” The third prisoner was shot and, reputed to be dead, was thrown under corpses in the cart; discovered later to be alive he was not killed (de-stalinization!) but left for several days in a dark cell with his festering wound and he survived after his arm was cut off…. What is fifty years to a historian? Fifty years covering the life of an obscure Russian worker Marchenko or of a still more obscure Lithuanian student who has not even written a book? Let us not hurry with judging a “new social system”….
I do note that the formation of the CIA, & c., did not, in the end, do much good. Consider the Eisenhower administration’s failure to believe in the late-1950s Sino-Soviet split, after all:
Robert Farley: How Pearl Harbor Changed America Forever: ‘The attack on Pearl Harbor was psychologically shattering for a generation of American policymakers. The success of the attack resulted from careful Japanese planning and a series of American intelligence failures…. The US immediately appreciated the need for a centralized, professionalized intelligence service, but had little experience in operating one. In part on the basis of advice from the British, the United States established the Office of Strategic Services in June 1942. This organization would become the forerunner of the Central Intelligence Agency (CIA), formally inaugurated in 1947. The OSS would primarily act as an operational intelligence organization, leaving intelligence collection and analysis mostly to the services. In the wake of the war, the United States government was determined to anticipate and prevent another surprise. Much else had changed. The Army and Navy remained at levels of mobilization unimaginable in the years before the war. In 1947 the National Security Act broke the Air Force away from the US Army, created the Department of Defense, and founded the CIA. Many of the intelligence reforms would focus on the process of aggregating and integrating intelligence collection…
Across a singularity-like divide:
E. E. Smith: First Lensman: Chapter 10 : ‘“I am Virgil Samms, a Tellurian,” he sent out slowly, carefully, after he made contact with the outer fringes of the creature’s mind. “Is it possible for you, sir or madam, to give me a moment of your time?”… “‘Madam’ might be approximately correct,” the native’s thought went smoothly on. “My name, in your symbology, is Twelfth Pilinipsi; by education, training, and occupation I am a Chief Dexitroboper. I perceive that you are indeed a native of that hellish Planet Three, upon which it was assumed for so long that no life could possibly exist…. ”All I can understand of your occupation is the name you have given it. What does a Chief Dexitroboper do?” “She—or he—or, perhaps, it … is a supervisor of the work of dexitroboping.” The thought, while perfectly clear, was completely meaningless to Samms, and the Palainian knew it. She tried again. “Dexitroboping has to do with… nourishment? No–with nutrients.” “Ah. Farming–agriculture,” Samms thought; but this time it was the Palainian who could not grasp the concept. “Hunting? Fishing?” No better. “Show me, then, please.” She tried; but demonstration, too, was useless; for to Samms the Palainian’s movements were pointless indeed. The peculiarly flowing subtly changing thing darted back and forth, rose and fell, appeared and disappeared; undergoing the while cyclic changes in shape and form and size, in aspect and texture. It was now spiny, now tentacular, now scaly, now covered with peculiarly repellent feather-like fronds, each oozing a crimson slime. But it apparently did not do anything whatever. The net result of all its activity was, apparently, zero. “There, it is done.” Pilinipsi’s thought again came clear. “You observed and understood? You did not. That is strange—baffling”…
Smart thoughts on land-use planning:
Addison Del Mastro: Going Nowhere Fast: ‘An intersection, and a Rorschach test…. What is going on here?… A land-use pattern that virtually requires car trips for nearly everything…. What we’re seeing at this is really the opposite of overcrowding. It’s a little like one of those noisemaker toys with a couple of marbles inside a sphere. If you shake it, the marbles are everywhere and it feels like it’s full of them. But there are still just two. They’re going nowhere fast…. Total people and total car trips are not directly related, and it’s largely poor land use that makes them appear to be…
And here, from last spring, is my first—unsatisfactory—cut at my thoughts on China, in three parts:
I will revise and rerecord it… sometime. But, hopefully, not until I have a better grasp of the issues, and a more-justified more-true belief and understaning of the situation.
The problem's Xi Jinping. He's a power-hungry, ego-fragile idiot. He's fundamentally not *competent*.
The "sewer socialist" party machine under his two predecessors could have carried on economic growth and a prosperous transition indefinitely, but they were hijacked by Emperor Xi.
Will China stumble economically? Depends, fundamentally, on how much damage Xi does before he's ousted, and how quickly he's ousted, and the manner in which he is ousted.
The problem with those horror stories about the abuse of prisoners, inhuman punishments and state licensed sadism is that they have little to do with the prevailing economic ideology. They much more depend on the prevailing political ideology. N----r Jack was sentenced to death by a jury, doused with turpentine and burned alive in the good old capitalist US of A. The good capitalists, being good capitalists, kept the receipts for the shackles and turpentine. That story of was not peculiar to the USSR. There are countless similar stories from the days of the tsars, and I expect we will see more from modern Russia as the information dribbles out.
On another note, you may be right about China's long term growth prospects in the sense of capitalist metrics. Whether Xi and his successors will be able to continue to manage urbanization and raise living standards is another matter. Capitalists measure economic growth in terms of investment payoffs and opportunities. Such things as improved health, higher literacy, indoor plumbing, increased leisure, potable water, comfortable retirements are irrelevant except insofar as one can make money off of them. Private enterprises can't capitalize an employee's strong bones, but a state can count a citizens strong bones as an asset.