21 December 2011

Stern's Lesson

National Review Online: The Agenda | Reihan Salam | Andy Stern’s Peculiar Idea

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.
(0) When you go to the PRC you get shown exactly what the regime wants you to see. No more, no less.

(1) The US produces almost six times as much per person as does China. Remind me again why we we are supposed to be taking lessons from them?

(2) Stern thinks we need more centralized control of the economy.  That's fantastic for Andy Stern, who naturally imagines we would get to be one of the lucky ones centrally controlling things. Did it occur to him that things would like different if he could be one of the impoverished agricultural peasants who gets denied permission to move off the farm and seek work in the city, and is instead doomed to a life of back breaking subsistence farming?

(3) Don't compare China-now to the US-now.  Compare China-now to China-then. You'll get a different conclusion than Stern.

(4) Put another way: The proper question isn't "How has China gotten richer recently?" The right question is "Why was China so poor for so long?"

They've got 1.3 billion people, have a staggering supply of physical resources, are largely ethnically and linguistically homogenous, enjoy a good geographic location, and have a solid societal tradition of business and trading. If you stop asking "what has China done in the last two decades to grow?" and instead ask "why didn't they grow for the fifty years before that?" you'll reach a very different conclusion than Stern.

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