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Our China who art in heaven, hallowed be thy growth rate

UPDATE 4: thanks to all the critics on this post, too bad I couldnt get Chinese censoring technology to work:)

UPDATE 3: 9:30am Sat 10/9: links to Nobel Peace Prize and Charter ’08

UPDATE 2: 1:30pm. New Yorker writer Evan Osnos generously replies to my criticisms (see end of post)

SCOREBOAD UPDATE 10 AM 10/8: understanding key to China’s future development: Nobel Committee 1, New Yorker 0; Liu Xiaobo 1, Justin Lin, 0.

A writer in the New Yorker has an article fawning all over China’s rulers and Chinese economist Justin Lin (currently the Chief Economist of the World Bank).

I’m saddened to see my favorite magazine publish an article seemingly in search of every possible fallacy about growth, the main one being that if you have a high growth rate, then the current autocrats and their economist advisors must be Gods.

(Sorry to be so harsh.  Can you tell that this time I am really annoyed to see so much gushing over a Party that kills, beats, and imprisons any Chinese citizens who are not quite as enthusiastic about their own government as a New Yorker writer? And recommends this approach to other countries?)

The New Yorker's caption: "The success of China's authoritarianism may make it a model for developing economies."

Let’s review the logic and evidence.

  1. See previous post on the myth of the benevolent autocrat. (To be fair to the New Yorker writer,  he mentions briefly at the very end of the article Dani Rodrik’s similar argument. But it comes as across as a CYA after the long hagiography.)
  2. Rapid growth episodes never last indefinitely, so forget all the nonsense about projecting today’s growth rate forward till China overtakes Japan, the US, God, etc.
  3. Especially considering (2), Growth is not a reliable indicator of performance, income levels are what matters:
    1. China’s per capita income is currently 13 percent of the US level.
    2. Remember growth is the CHANGE in income. A change is made up of two elements:
      1. The extent to which things are good now.
      2. The extent to which things were totally f’d up before.
        1. China performs really well on this second part of the CHANGE equation. Not even mentioning previous authoritarian emperors and political chaos, it had from 1949 to 1976 a totalitarian psycho in power responsible for the deaths of millions, the Great Leap Famine Forward, the Cultural Revolution.
    3. So compared to the official “complete wacko destructive” standard set by Mao, today’s citizens are free-er, but still not very free.
    4. Did I mention that I am really annoyed?

So another way of stating China’s rapid growth recipe would be something like the following:

Have a succession of crazy autocrats, political chaos, and war savagely repress one of history’s most inventive peoples, along with not allowing one of the most successful trading diasporas in history to operate in China proper.  Then have things calm down a bit and have somewhat less crazy rulers allow more of the people’s energy and creativity to burst out. Presto, the change from EXTREME NEGATIVE to LESS NEGATIVE is called a “growth rate,” and it will be high. Now accept worship from around the world.

UPDATE 1:30PM New Yorker writer Evan Osnos has a generous response to this critique:

Dear Bill,
Thanks for the twitter headsup to your post. I agree with your “logic/evidence” on China’s growth model. I also agree with you on the myth/fallacy that it’s a guaranteed (or democratic) path. I think we’ll have to disagree on whether this piece about Lin and his ideas is an endorsement of him – – or an effort to explain the background of an unfamiliar name in an influential job and why he got there. The story also relies on the critiques from Yang Xiaokai, Yawei Liu, Yao Yang, Wu Jinglian, and Dani Rodrik, but only one of those five was referenced in your post. Fair enough: I suspect you found the overall mix to be unpersuasive. As I said, I agree with much of your take on the overall approach to growth.
Best,
Evan

UPDATE 3: New York Times on Nobel Peace Prize for Liu Xiabo.

The English translation of Charter ’08 that Liu Xiabo signed along with 300 other Chinese intellectuals.

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24 Comments

  1. terence wrote:

    Hear hear, Bill. Well put!

    Posted October 8, 2010 at 2:02 am | Permalink
  2. geckonomist wrote:

    and why only thinking back until 1949? China was probably the only country in the world that was richer in 1000 AD than in 1949…

    Posted October 8, 2010 at 3:33 am | Permalink
  3. Temu wrote:

    you may be attempting to be provocative but in so doing your blog post has become almost as idiotic as hailing the CCP as gods.

    To write off Mao as a ‘wacko’ is ahistorical – you cannot ignore context. Also, to ignore any contribution that state action 1949-78 has subsequently made to growth in favour of the ‘energy and creativity of the people’ is selective use of evidence.

    Posted October 8, 2010 at 5:29 am | Permalink
  4. joe wrote:

    Hang on a second, I thought a while back your conclusion to the ‘crap factory vs starvation’ debate was that work was better even if the benefits were small. Isn’t China just your argument writ large, Bill? Are not those workers experiencing an improvement in their economics, even when their situations are far worse than the standards we might expect for ourselves and our children? Isn’t China ‘improving’ even though none of us would chose to experience life as a worker at the bottom of the heap?

    I don’t get it. Please explain the logic – is any development worth it, whatever the cost, or not?

    Posted October 8, 2010 at 5:41 am | Permalink
  5. William Easterly wrote:

    Joe, in the “crap factory” debate, my argument was based on the idea that workers had freely chosen.

    The criticism of China includes the reality that its citizens are still not allowed to freely choose in many areas. Authoritarian “development” is not “worth it whatever the cost”, because “development” should be freely chosen, otherwise we are not even sure if it is really “development”, and who are we to decide for other people that it’s “worth it”?

    So for once, no self-contradiction going on here.

    thanks for your comment. Bill

    Posted October 8, 2010 at 7:33 am | Permalink
  6. joe wrote:

    Mmm. I think we’re arguing the same point – I don’t believe the ‘choice’ to work in a crap factory is a free choice, in China or anywhere else. OK, in China there are obvious limits to freedom, but that doesn’t mean the choices of factory workers are free elsewhere. Indeed, my experience of meeting clothing factory workers on low wages is that they work there because they are out of other choices.

    Posted October 8, 2010 at 9:26 am | Permalink
  7. fundamentalist wrote:

    Good post! I was afraid that the Communist party would take credit for China’s amazing growth. This is the beginning of the end for that growth. The left tends to either 1) ignore China’s amazing growth and the lessons for development (free markets) or 2) they get the wrong lesson – authoritarianism is best.

    Posted October 8, 2010 at 9:43 am | Permalink
  8. William Easterly wrote:

    Joe, yes and economic development always goes with a rise in unskilled wages (including non-wage benefits). The building where I teach Intro Econ at NYU formerly housed the Triangle Shirtwaist Factory. US economic development facilitates transformation: worst sweatshop fire in US history ==> investing in skills by which people can realize even more improvements in income.

    Posted October 8, 2010 at 10:27 am | Permalink
  9. James wrote:

    Thank you Bill!

    Hype around China is like hype around social media: its novelty distracts from sound analysis and perspective.

    Posted October 8, 2010 at 10:38 am | Permalink
  10. William Easterly wrote:

    Temu, I am not quite sure what you mean by “ahistorical”. According to many historical sources, Mao killed more people than almost anyone else in human history (competing mainly with Hitler and Stalin), so what context do you have in mind by which he was NOT “wacko”?

    Posted October 8, 2010 at 11:22 am | Permalink
  11. kevvy wrote:

    Bill, you sound like a hater. Or maybe you’re jealous or both. America has imploded due to the greed that we call capitalism. And our government is becoming increasingly dysfunctional with self-serving politicians out numbering true statesmen. Chinese growth is seen as a correction in world order, not a phenomenon, by economists. China has experienced a lot more as a country, from the grip of colonial powers to aggressive foreign invaders. Not to mention 4x the population. They New Yorker article says it should be a model for developing economies. America is not a developing economy so therefore, it does not apply to us. So shut your face.

    Posted October 8, 2010 at 11:28 am | Permalink
  12. I don`t knowing that currently the Chief Economist of the World Bank was chinese…
    But for real “success” china has few reason. First is that this cantry was and still is very poor. People are poor. So they can work for a little cash. Thats all

    Posted October 8, 2010 at 1:11 pm | Permalink
  13. William Easterly wrote:

    kevvy,

    thanks for your frank comment.

    Not a hater, I’m a lover. I love freedom from oppression. I love people who deserve to be free, which is everyone.

    Posted October 8, 2010 at 2:33 pm | Permalink
  14. Sina Motamedi wrote:

    I agree with everything in this post

    Posted October 8, 2010 at 4:52 pm | Permalink
  15. Sina Motamedi wrote:

    also, f*** the people’s republic.

    long live freedom.

    Posted October 8, 2010 at 4:57 pm | Permalink
  16. kevvy wrote:

    Sorry for being an a-hole. If I could take back the last statement, I would. Their government is not perfect but at least they collectively have the people’s best interest at heart. An authoritative government gives them the ability to make swift decisions which is crucial for devloping countries. Poor countries cannot afford the overhead of elections and debates. We can stand on the moral high ground and say “freedom for all” but freedom to vote is not as important as paved roads and running water, electricity and schools. This is what China has been doing for their people at a remarkable rate. Yes, peoples’ homes and villages have been bulldozed but in return they got shopping centers and Internet. Meanwhile, our government cannot even agree to disagree. India is a democracy and their country is still a shit hole. They can’t even get it together for the Commonwealth games. Getting people out of poverty is more important than letting them vote. One thing at a time. Thanks for reading. That’s all I have to say.

    Posted October 8, 2010 at 6:54 pm | Permalink
  17. Stephen Jones wrote:

    According to many historical sources, Mao killed more people than almost anyone else in human history

    He did have more people to kill than anybody else did; there are rather a lot of Chinese. And nobody is seriously suggesting he planned the Great Famine

    Posted October 9, 2010 at 2:56 am | Permalink
  18. Justin Kraus wrote:

    Although I would never defend the Chinese government’s abuses of power, I think Westerners (Bill) do need to accept the fact that many people in this world do value other things above freedom and democracy as we Westerners define it.
    As a Westerner myself wish this were not the case, but my experiences tell me otherwise.
    In South Korea where I currently live, and which had its own “benevolent” dictator, Park Chung Hee, the vast majority of Koreans value democracy and fought very hard for its realization, but they also look back on the Park era as a necessary evil and even with considerable nostalgia. In their own words, Korea for most of the later half of the 20th century “was not ready for democracy.”
    Make of that what you will, but I suspect that most Chinese (to my and your dismay) probably have a similar mindset, they don’t like their lack of freedom, but they have other concerns as well and so long as economic growth continues and freedoms increase, even if excruciatingly slowly, then they are going to put up with their government for now. This will not go on forever, Korea had its democratic revolution, and so will China, but it is likely going to be a lot farther off in coming than either you or I would like.

    Posted October 9, 2010 at 3:17 am | Permalink
  19. Jim wrote:

    Leaving aside all the intemperate screaming that seems to be a standard component of your posts (did the New Yorker really recommend that governments kill their people, or was that just another silly exaggeration which felt good at the time but you will subsequently end up apologising for?), I have an issue with this:

    “Growth is not a reliable indicator of performance, income levels are what matters”

    But as you say, income levels reflect history and the performance of past governments. Current governments can’t do anything about that, but they can do something about growth rates, and since it’s current ‘performance’ you’re concerned with then growth rates must be a better indicator than income levels.

    So yes, in terms of economic ‘performance’ China’s government looks pretty good. In terms of democracy and human rights it looks appalling. But they’re not the same thing. As Justin says, the Korean and Chinese people are certainly aware of that.

    Posted October 9, 2010 at 10:12 am | Permalink
  20. William Easterly wrote:

    Jim,

    In criticizing hyperbole, you engage in even more hyperbole — I did not accuse the New Yorker of recommending that governments kill people, only of writing a favorable portrait of a government that had killed dissidents.

    On your other point attributing China’s growth rate more or less entirely to the government, I’m afraid you are committing yet another fallacy that I alluded to tangentially in the post — that whatever rulers happen to be in power when growth happens spuriously get the credit for the growth.

    Posted October 9, 2010 at 12:57 pm | Permalink
  21. Debbie wrote:

    Wow, I just read the Osnos article and found no hagiography; I thought it was evenhanded (bordering on skeptical) in its presentation of Lin’s ideas and gave plenty of space to those who disagree with him. His response to you was quite gracious, even though he might have been “really annoyed” too.

    Posted October 9, 2010 at 2:44 pm | Permalink
  22. China’s per capita income is 13% of US levels? I thought it would be much higher.

    Posted October 9, 2010 at 10:29 pm | Permalink
  23. Jim wrote:

    Well, I didn’t attribute Chinese growth entirely to the government, but was merely picking up on your point about income levels being a ‘performance indicator’. Since present income is a function of past growth, growth must also be an acceptable ‘performance indicator’. You can’t have one without the other.

    You also can’t simultaneously claim that the previous government held down incomes AND that the association of growth with particular regimes is ‘spurious’. If the previous regime’s policies were suppressing growth, then the new government’s actions in repealing those policies helped bring about higher growth.

    In summary, growth matters. And policy matters for growth, even if it is just the removal of restrictions.

    Posted October 10, 2010 at 7:03 am | Permalink
  24. Temu wrote:

    William,

    As someone else has already stated, Mao did not plan the great famine on the basis of which you seem to primarily deride him.

    Your use of the word wacko seemed to me to imply he was a freak occurrence, or a moment of collective insanity – as were any subsequent policies. This is why i objected to your characterisatoin as ahistorical.

    China was susceptible to Maoism as a result of its recent experiences, basically the complete collapse of an economic and social system in the hundred years to 1950. Falling from approximate equality of income in 1850, to arguably being the poorest country in the world by 1950.

    Furthermore, I believe ‘wacko’ implies irrationality. For sure his ideological views were counter-productive for China and its people. However, there is a case that some of the investment in highly capital intensive industries was as much a strategic military decision as economic. Not that this justifies those decisions, but there are other factors on which politicians must make decisions than just ‘economic rationality’.

    Posted October 10, 2010 at 10:19 am | Permalink

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