Andy Stern believes that the Chinese economic model is superior to what he calls the “conservative-preferred, free-market fundamentalist, shareholder-only model.” Having spent the day in Chongqing, Stern sees the sprawling city as indicative of China’s success. Those of you who are familiar with the political economy of Chongqing, and the devastation of its rural economy and its environment, might find this somewhat peculiar. The fact that China’s rural interior actually saw decreases in literacy levels and life expectancy for long stretches of the boom years might also be of interest. He points to rapid annual wage growth and the creation of specialized industrial zones as other promising signs, while others see rapid inflation as a consequence of its currency peg and a future source of economic vulnerability. He also seems to believe that China’s current growth rates are sustainable as the country transitions to a more service-oriented economy, which is an interesting view, and he seems to have missed the extensive evidence that growth slowdowns tend to occur sooner in countries with undervalued real exchange rates. Then, of course, there is the fact that China’s post-1979 catch-up growth followed several decades during which large numbers of Chinese died of starvation and the remnants of its pre-war industrial economy languished.
Stern writes:
America needs to embrace a plan for growth and innovation, with a streamlined government as a partner with the private sector. Economic revolutions require institutions to change and maybe make history, because if they stick to the status quo they soon become history. Our great country, which sparked and wants to lead this global revolution, needs a forward looking, long-term economic plan.
To be clear, Andy Stern believes that the United States needs a Chinese-style central plan to flourish, one that will be executed by a streamlined government.
To really learn from the Chinese, and to enjoy such staggering growth rates, we should go about things differently: let’s have a Maoist insurrection followed by a civil war that lasts for several years. Then let’s destroy most of the wealth in the country, and drive out millions of our most enterprising and educated citizens by launching systematic terror campaigns during which millions of others will die in violence or of starvation. Next, let’s have a modest economic opening in coastal regions: impoverished citizens will be allowed to launch small-scale township and village enterprises and components will be assembled in a handful of cities by our stunted descendants. Then let’s severely curb those township and village enterprises because they represent a potential political threat and invite large foreign multinationals and state-owned enterprises [let's not forget those!] to work our population to the bone at artificially suppressed wage rates, threatening those who complain with serious reprisals up to and including death. Let us also initiate a population control policy designed to improve our dependency ratio for a few decades. As large numbers of workers shift from low-value agricultural work to manufacturing, we will experience … rapid growth! Mind you, getting from here to there will involve destroying an enormous swathe of our present-day GDP. And that sectoral shift from rural to urban work will run out of gas pretty fast, as will the population control policy that will guarantee rapid aging.
Another way to grow the American economy is to embrace Brink Lindsey’s “Frontier Economics” approach. Recognizing that advanced economies are different from other economies — it is easy to replicate the institutions and practices pioneered in the leading economies; it is harder to create new practices and products that take off — we need to facilitate experimentation to achieve growth, and even then we won’t match growth that flows from conditional convergence.
"Then let’s severely curb those township and village enterprises because they represent a potential political threat and invite large foreign multinationals to work our population to the bone at artificially suppressed wage rates, threatening those who complain with serious reprisals up to and including death."
This is why I am always mystified by conservatives' love of Wal-Mart. Its entire business model is predicated on the communist Chinese government's centralized control of the economy. Always low prices means always low wages, and the best way to achieve that is for an authoritarian government to make it so. And as a liberal, I'll side with Lindsey's utopian vision over Stern's utopian vision any day of the week.
Reply to this commentLinkReport AbuseWhat is even more mystifying is the near-universal belief among the Left that Wal-Mart is this huge enterprise based n the selling of the products of Chinese slave labor; when, in fact, nearly ALL the products that Wal-Mart sells are the same brands that one finds in nearly every other retail chain store. So why are these products cheaper at Wal-Mart? It's simple. Wal-Mart is able to influence their own purchasing costs due to their huge size. It's really not all that complicated; a company that purchases a million pair of jeans will pay less per pair than one that purchases a thousand.
Reply to this commentLinkReport AbuseBeyond that, I find it somewhat insulting to be lectured by anyone on the topic of where I am to be spending my limited resources in order to meet my family's needs. The whole 'against their own best interests' bushwah may play like a symphony in the echo chambers of HuffPo and Kos, but in the real world, but the rest of us know better.
Shop at Wal-Mart to your heart's content. I find it odd though when people who love the low prices denounce the countries that facilitate these low prices as authoritarian (which they mostly are). Wal-Mart isn't simply given a break because they buy in bulk. They tell manufacturers what they will pay, and it's a race to the bottom to get goods made at artificially low costs. To a large extent merchants now control production. Seeing as the prices of materials aren't all that flexible (ask Rubbermaid about this), labor costs are reduced on both the front and back ends. In the US, we are free to complain about paltry wages, and we occasionally can even get a company to pay its employees more, but this isn't the case in most places, including China. I agree with you that their government is appalling. But to act as if it operates in a vacuum is disingenuous. Western consumers have helped prop up this government one action figure and one DVD player at a time. We can't have our cake and eat it to.
Reply to this commentLinkReport Abusetoo.
Reply to this commentLinkReport AbuseThe trule interesting thing to me is, no matter how many of Obama's associates OPENLY express their admiration for Mao, their ideological ties with the Viet Cong, their desire to see our country transformed into another Communist China, and their utter disgust with capitalism, any mention of this is greeted by the chattering class as little more than warmed over 'birtherism', akin to 'flat earth' idiocy.
Reply to this commentLinkReport AbuseI get the impression you're not familiar with the history of Walmart, which was founded and which flourished before China's opening. Labor-intensive manufacturing has flourished in other emerging economies that do a better job of securing the human rights of their citizens.
Reply to this commentLinkReport AbuseI am actually very familiar with the history of Wal-Mart, enough to know that their emergence as a national and international player was directly tied to the opening of China, which allowed them to surge ahead of Sears and other older chains that were later to the China party. Before the early-90s, Wal-Mart was still largely a Southern chain, unheard of by many folks on the coasts. While I agree that Wal-Mart has since diversified its manufacturing base as Chinese workers are demanding more than pennies a day and barrack-style living, the Wal-Mart we know today was built on the backs of workers who were by just about any Western measure treated terribly. China and Wal-Mart had a symbiotic relationship for year, and the fact that this does not upset more anti-communists mystifies me.
Reply to this commentLinkReport AbuseAndy Stern made the fairly bland observation that China's economic success lately may in part be from the fact that the government is able to formulate a set of goals for there economy and achieve them. After a financial crisis brought about by the creative destruction of poorly regulated financial markets our own government's inability forge a consensus on an economic plan and our allergy to any sort of industrial policy other than military R&D and spending seems hapless in comparision.
Clearly you think that there are other factors beyond the recent succession of 5 year plans behind China's growth. Those kinds of insights are why I read you.
A hyperventilating rush to start raving about Maosim is what Glenn Beck is for and disappointing coming from you to say the least.
Reply to this commentLinkReport AbuseThe praise for a communist economic model speaks to the magnitude of China’s bubble and how far it has to fall, akin to the praise for Japan amid the xenophobia in the ’80s, right before Japan embarked on a two decade slide – a fall that is poised to accelerate when they pay for the decades of money printing and faux stimulus spending.
The editorial brought to mind an Obama speech where he expressed jealousy over the high speed rail rollout in China, right before the tragic wreck and news the Ministry of Railways finances were in dire shape. Never mind that there are only small handful of intercity rail lines that are economical in the entire world. New York to Washington is one. I suspect Amtrak would not be paid for by the taxpayer if not for it’s frequent use by politicians and lobbyists.
It’s not the first time people on the left have expressed envy over the Chinese government’s ability to dictate decisions without debate, approval, and accountability to people. At the heart of the liberal, socialist, and communist mindset is a belief that the collective intelligence of the people is substandard to the intelligence of the anointed ones found in academia and politics.
Communists, socialists, and the liberals believe people are impervious to incentives. People will work just as hard and take just as much risk even if there is no corresponding payoff. People are the way they are.
It explains why they feel they should be allocating capital and playing parent to the people, since the people are incapable of making decisions for themselves. They believe the poor do not have the capacity within them to move up, so you should take from one group and give to them.
Those that advocate economic and political freedom believe in the growth mindset, that people are capable of doing great things with the right incentives, no matter their existing circumstance.
This belief in fixed intelligence and DNA for the Democrats versus a growth mindset and incentives for the Republicans are core philosophical differences from which all policy emanates.
Reply to this commentLinkReport AbuseChina is becoming a mash of communism (Mao-style, not Marx) and national socialism. Their means of production are either owned and run by the government (communism) or by "private" business people who are "chosen" or "approved" by the government.(national socialism). Their utopian society has a lot of rules and regulations to create paradise, but the rules and regulations are allowed to be ignored if it gets in the way of the government's agenda. Hence we have lead contaminated children's products and apple juice (and who knows what else). Child labors laws that aren't enforced. We have cloud seeding to temporarily clear their air. No respect for property rights (especially intellectual property, and even more especially intellectual property owned by those outside of China). Etc. Etc. Etc. If American businesses were allowed to operate like that our economy could be humming along at 12% growth. If America just reduced its regulations back to 2000 levels and imposed a regulatory moratorium for five years, we could probably produce ourselves out of this recession.
Reply to this commentLinkReport AbusePerhaps Stern likes government in control of everything with his union in control of the politicians. That way he and other union bosses get to call all the shots over a subservient populace.
Reply to this commentLinkReport AbuseI had the pleasure of working in southeast Asia for three years where I had the opportunity to watch and learn about China for a while. After that, I worked in China for seven years. During that recent decade I was astounded by the number of people who visit China for a short time and make all manner of sage pronouncements after they depart. They are woefully ignorant.
Everything in China happens on multiple levels, even in the poorest of provincial villages. The truth is never what is obvious, what one can see at first glance. One must question and dig and pry to (perhaps) see the truth. It is essential to question and check everything before arriving at a conclusion and acting on it. Think of China as a country of layers of Potemkin villages.
Regarding what Mr. Stern saw, did he see the substandard materials used to construct the eye-catching edifices? Did he notice the paint liberally applied over unprimed surfaces that would peel and rust through in a short time? Did he count the number of industrial injuries and deaths that occurred on the construction sites? Did he measure the tons of toxic effluents ejected into the air, soil, and water? Did he look into the corner-cutting on subway and railroad safety systems? Did he learn about the under-the-table money used to seal deals? Mr. Stern has very much to learn about China before he can engage in the luxury of pontificating.
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