
China's 1989 Choice: the Paradox of Seeking Wealth and Democracy - signor_bosco
http://wilsonquarterly.com/stories/chinas-1989-choice-paradox-seeking-wealth-and-democracy/
======
wallflower
An 4-yr old but still relevant cogent, more balanced than biased analysis.
There are parts of the argument that are more dated, some arguments are
surprisingly still relevant:

> What Is the Chinese Economic Model?

1\. Steal Intellectual Property. IP represents the crown jewels of the global
economy; they are the peak achievement of Western civilization, and of all of
China's competitors. China steals IP daily, in every possible way: through
force, through simple copying, through reverse engineering, through industrial
and government espionage, through common theft. China also has a national
policy which prevents non-Chinese firms from selling in China unless companies
transfer their most valuable IP to China as the price of market access. The
clueless ones obey; just ask Boeing.

4\. Industrial Policy: Subsidize Key Industries. Japan also started this idea,
but China takes it much further. Originally, the government (or the Peopleâ€™s
Liberation Army) owned virtually all large enterprises, but even today, it
retains strong interests in most key export companies, which makes government
assistance less transparent. Many outsiders assume they are dealing with
â€œrealâ€ companies, when they are actually dealing indirectly with the
Chinese government. Examples of subsidization and export dumping would include
tires and, more recently, steel exports (sound like Japanese history?), now
being tariffed by the E.U. and the U.S.

7\. Price for Export, Suppress Domestic Consumption, and use domestic savings
to drive the above policies. While everyone is talking about how wealthy the
new Chinese coastal middle class has become, they forget that there are
another 800MM+ Chinese still waiting inland on the farm for anything good to
happen to them. Despite the latest boom, the Chinese people are still among
the top global savers. China seems to be allowing faster wage growth, and is
encouraging domestic consumption, more than Japan has.

[http://blog.stratnews.com/2010/01/what-is-
china/](http://blog.stratnews.com/2010/01/what-is-china/)

~~~
narrator
>Chinese banks are not banks; they are cash distribution pipelines, generally
controlled or heavily influenced by the government. Selective industries are
fed loans, based on the flavor of the week, on terms dictated from above. When
the pipelines are empty (as they are now), the government just inserts more
money into the other end.

This is the single most different aspect of the Chinese system. Banks operate
as partially privatized central planning. The government prints its own money
and hands it out to the banks whenever they lend badly to favored government
entities. Corruption in banking is dealt with severely to prevent the bad
behavior that the moral hazard would entail. There is such deep denial of the
corrupt nature of private money creation in banks in the west that most
analysts overlook this as a key advantage of the Chinese system. How many
years have we had predictions that the Chinese economy was going to bust any
day now?

~~~
tomp
I find you comment interesting and agreeable, but I'm not sure what to make of
this sentence:

> There is such deep denial of the corrupt nature of private money creation in
> banks in the west that most analysts overlook this as a key advantage of the
> Chinese system.

Can you maybe explain it? Are banks more corrupted in the West or in China? Is
<something, I'm not sure what> an advantage or a disadvantage of the Chinese
system as compared to the west?

~~~
marcosdumay
Banks loan much more money than there is available, creating systemic risk and
in extreme cases making the government unable to directly control inflation.
The upside is that loans get much cheaper, making it possible to invest on
enterprises that wouldn't exist otherwise.

Looks like banks in China can only do that with their government
authorization.

~~~
seanmcdirmid
Banks in china use every loophole available to lend more than the gov wants
them to; the government is more reactive than proactive in reigning the banks
in.

Of course, the government is incredibly multilayered and not cohesive, so
usually this simply means local government vs. central government.

------
Jack000
My hope is that as a new generation grows up with the internet, censorship
will become increasingly intolerable. They banned the big bang theory and
everyone just pirates it now.

I believe that government is a reflection of culture, and as China's culture
becomes more globalized its government may become more open.

~~~
higherpurpose
Completely agree. The real problem with China's censorship right now is not
really the government. Yes, it's a government that's highly skilled and
efficient at censoring stuff, but this would only take them so far if it
wasn't the Chinese _culture_ that allowed them to do it.

In other words, the vast majority of Chinese are still _fine_ with this type
of censorship, because they truly believe the government is protecting them
and creating a better life for them. Surely an American can understand this,
too (post-9/11 National Security brainwashing).

Until most Chinese start believing their government is evil, and that there is
a much better, more free way to live, not much will change.

~~~
__P
> Until most Chinese start believing their government is evil, and that there
> is a much better, more free way to live, not much will change.

Is their government evil? It seems to me that their government has been hugely
successful in bringing about economic growth and spreading that wealth
effectively. There is corruption within the government and the equivalent of a
dynasty going on at the leadership level, but evil seems an incorrect
assessment.

Also is there an example of a much better more free way to live (that
continues to work at China's scale)?

~~~
GregBuchholz
>Is their government evil?

I suppose people can argue about how things are different now compared to the
past, but I once worked with a man who was the sole survivor in his village.
The rest of his family and village were starved to death. The cleanup crew
found that he was still barely alive and nursed him back to health. He
eventually smuggles himself to the U.S. It is one thing to hear about abstract
atrocities in far-away lands, that happened a long time ago, but it is quite
another thing to look someone in the face who has suffered from them.

[http://en.wikipedia.org/wiki/Great_Chinese_Famine](http://en.wikipedia.org/wiki/Great_Chinese_Famine)

[http://www.theguardian.com/world/2013/jan/01/china-great-
fam...](http://www.theguardian.com/world/2013/jan/01/china-great-famine-book-
tombstone)

~~~
notahacker
Calling the current Chinese government "evil" for what happened during the
late 1950s is arguably _less_ reasonable than blaming the Obama administration
for the Jim Crow laws and McCarthyism that existed during the same period,
especially given the relatively sweeping systemic changes that have happened
in China since then. There are no shortage of living victims of various US
administrations' foreign policy errors either. The present Chinese government
might have many flaws, including a reluctance to acknowledge past misdeeds
even happened, but starving the population to death through intervention in
agriculture is not one of them.

------
foxhill
so, we have a political system whose goal is to maximise it's economic output
- or at least this is one goal. but what about its people? aren't the
government supposed to work for the people? at what point in history has there
been a culture who have intentionally surrendered their freedoms on this
level?

you might argue something along the lines of "well what does it matter? look
at china", to which my response would be, so _what_? economics, businesses,
money, etc. are all just abstract complicated notions run and managed by
paper-clip maximisers. there are _people_ who are _suffering_ , and.. how can
that be ignored?

~~~
bayesianhorse
Actually, for much of the 20th century most Chinese were suffering a lot more
from poverty than from individual rights. Even if they were able to overthrow
their feudal masters, and later the government functionaries, there still
wasn't enough wealth to alleviate their suffering (for example food shortages,
violence, dangerous and damaging working conditions, no health care...).

Today in China this suffering is reduced more and more, despite a growing
population. That in itself is a good thing. However, the Chinese don't have
the amount of freedom we are enjoying. But how do you compare non-freedom
versus material suffering?

I believe that eventually China will have to establish these freedoms to keep
improving their economy. And we are already seeing signs of the limitations:
Innovation in China is hard to come by, and corruption on any level is
uncontrollable with citizens afraid to speak up.

~~~
logicchains
>However, the Chinese don't have the amount of freedom we are enjoying. But
how do you compare non-freedom versus material suffering?

I think this is a false dilemma. Taiwan, Singapore and Hong Kong all managed
to develop into wealthy nations (PPP GDPs per capita of around 35k, 60k and
40k respectively compared to 12k in the mainland), in spite of having far
greater degrees of freedom than Mainland China.

>most Chinese were suffering a lot more from poverty than from individual
rights

The poverty was to a degree due to the lack of individual rights. In Maoist
China, you literally didn't even have the right to the grain you farmed in
your field; you had to give it to the Party and then wait in line for whatever
they decided you deserved. There was no opportunity to save up and improve
your lot; starting a business, privately buying and selling things, was
literally grounds for execution.

~~~
vidarh
Taiwan was a one-party dictatorship until the mid 90's. Singapore is generally
not considered a functioning democracy, given that the country's politics is
totally controlled by the People's Action Party and there are severe
restrictions on things like rights of assembly.

Hong Kong also had very limited democratic control until the 80's (being a
British Crown Dependency until then) and was in an extremely special situation
by acting as a place that received a massive inflow of people and capital
fleeing from the PRC when CPC took control, and that was able to capitalise
massively on trade with the rapidly growing Shenzhen.

It is in any case moot, as the point is not that it isn't _possible_ , but
that _if_ faced with the choice - whether or not the choice is a false dilemma
or a total fabrication - it is not at all clear, nor even likely, that people
will pick freedom over material wealth.

It is not an excuse for dictatorship, but an _explanation_ for peoples
willingness to put up for them in certain situations.

> The poverty was to a degree due to the lack of individual rights. In Maoist
> China, you literally didn't even have the right to the grain you farmed in
> your field; you had to give it to the Party and then wait in line for
> whatever they decided you deserved. There was no opportunity to save up and
> improve your lot; starting a business, privately buying and selling things,
> was literally grounds for execution.

The poverty didn't start when Mao gained control. This was a _response_ to
widespread poverty previously.

One can certainly make the argument that they could have developed faster with
a different system.

But that is not the point that was being made. The point being made was that
when your population is poor - to the point of starvation - their priority is
material improvements, not freedom of speech - and this largely explains why a
dictatorial government that manages to feed their population and produce
growth gets so little opposition. It's not that there might not be better
alternatives, but that if most people feel they're doing better than last
year, they will not rebel.

It's worth noting that the effect of steady improvement on people's overall
happiness is quantifiable, and there are theories that claim that major
societal upheaval in _general_ can be tied back not to high degrees of poverty
or oppression, but to "backsliding". That is, people will for the most part
put up with bad situations, but not put up with things getting steadily worse
for long periods. Conversely, societies are at their most stable not when they
are wealthiest, but when they see slow, steady growth.

(Jonathan Haidt's "The Happiness Hypothesis" covers this in more detail and
with some references to related research)

~~~
logicchains
I was speaking of individual rights, not necessarily democracy. One can have a
non-democratic political system where individual rights are respected, for
instance a republic ("government by laws, not by men"). Citizens in Hong Kong,
Taiwan and Singapore in general had far more individual rights, especially
economic rights, than those in China.

------
known
In democracy it's your vote that counts; In "feudalism" it's your count that
votes.

------
precisioncoder
Y'know the thing about topbars or sidebars that scroll with the user to stay
on the page? They obstruct vision, thus they get blocked. Then later when the
user returns to the page at another time they're confused that the site
doesn't seem to have navigation. Or maybe it's just me, still for someone like
me I've very very happy that there are plenty of features to simply right
click an annoying design feature and remove it so I can read in peace.

------
antocv
China and USA are the same kind of democracy.

~~~
TazeTSchnitzel
The US is more accurately a corporatocracy, not a democracy

~~~
seanmcdirmid
Ok, I give: which corporation runs the USA? I mean, which one has absolute
power to do what they want and not get punished for it? Enron?

~~~
prof_hobart
That's not what a corporatocracy is, any more than a democracy means one
person has absolute power to do what they want and not get punished for it.

The idea of corporatocracy is that a country is run by, and for the good of,
corporations as a whole rather than individual citizens. People who believe
this view will point to things like the huge lobbying power of corporate
interests, the level of influence of the corporate media, the fact that an
awful lot of lawmakers have very close links with companies in industries that
they are drafting regulations about, or the the bailout of banks etc.

You may or may not agree with whether this is really happening in the US or
elsewhere, or the level to which it undermines democracy, but it helps to talk
about what the word actually means rather than a straw-man argument.

------
littleyangqh
fuck ccp!!!

------
mimighost
Why there are so many articles about China suddenly jump out of nowhere and
most of them seem only remotely, if ever, related to tech?

~~~
seanmcdirmid
Uhm...it's Friday afternoon in China, that might have something to do with it.

------
bayesianhorse
Democracy is an emergent property of a complex political system.

~~~
visakanv
What do you mean by that? When I read "X is an emergent property of a complex
Y", I can't help but interpret it as "something that sounds smart but doesn't
actually explain anything".

~~~
bayesianhorse
How do you define democracy? By the institutions? By elections?

Turns out, lots of antidemocratic systems have elections, I would even argue a
modern dictatorship should have as many elections and referendums as humanly
possible.

One democratic and one antidemocratic nation might have very similar
constitutions, and institutions.

Is it then about human rights and freedoms? Human rights are impossible to
implement perfectly. There are always compromises. For example, if you want
people not to hurt, kill and steal from each other, you better tax them to
finance some kind of justice system. But taxation is a violation of the right
to property, and policing restricts all sorts of freedoms. What we call
"democratic countries" just have a "better" compromise than antidemocratic
ones.

Democracy being an emergent property solves all sorts of conundrums. Freedoms,
and the protection thereof are essential to enable free and fair elections.
These free elections are necessary to maintain control of the state aparatus
which is necessary to guarantee these freedoms.

An emergent property is hard to construct. We've seen how difficult it can be
to establish a democratic system from the outside (Afghanistan), and how easy
(Germany).

The necessary parts of a working democracy (and what are these, anyway?) seem
to depend on the other parts to work.

But the general attitude is "Let's just have open elections, and everything is
peachy!" And in a more subtle manner, in Europe people start to view "number
of referendums" as the only measure to compare "democracticness".

~~~
atmosx
> But taxation is a violation of the right to property, and policing restricts
> all sorts of freedoms.

That's true only if you are 'liberal' (to the extreme). Taxation is what gets
you public health, schools, streets in places where you go once a year. It's
what keeps remote villages connected to the mainland.

In a sense, it's what society is _all about_. Otherwise we would be still
living in the jungle like monkeys.

So since your view is _open to interpretation_ , better be cautious using
_strong_ terms like if you're talking about maths IMHO e.g. "[...]taxation is
a violation of the right to property [..]"

~~~
aianus
> That's true only if you are 'liberal' (to the extreme)

No, it's quite literally true. Taxation is armed men taking your money by
force. We've just agreed that it's worth it to violate property rights to some
degree for the greater good.

~~~
michaelt
Property rights don't exist in a vacuum - they're made by us humans in our
heads, just like intellectual property.

Get rid of the government and you could take my house just by showing up with
a bigger gun than me.

Only thing I could do is get together with my friends and neighbours to form
an armed gang for mutual property rights enforcement, AKA a government.

