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Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

carnegieendowment.org

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Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#81

Post by dang »

tsuabing2 wrote: post #14
eksemplar wrote: post #4

I don’t get this article. China exceeded their economic growth target for 2018 in April when their economy hit 6.8% growth. Their wages are steadily increasing. Their internal market is the healthiest of any g20 economy. Investments both internally and internationally are up and their population has little dept. On top of that they haven’t touched retirement age, so they have a lot of leverage there.

> China exceeded their economic growth target for 2018 in April when their economy hit 6.8% growth Wrong. Fake GDP. It's estimated that 1/3 of their GDP is wasteful government spending. Many of their provinces also have confessed to 20-30% fake GDP, thus another 1/3 of their gdp is fake. https://www.bloomberg.com/news/articles/2018-01-19/this-is-h... https://www.investors.com/politics/editorials/new-study-shin... so…

Please don't use HN primarily for nationalistic or ideological battle. We ban accounts that do that, as the guidelines say: https://news.ycombinator.com/newsguidelines.html

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#82

Post by seanmcdirmid »

Nokinside wrote: post #10

Unlike liberal democracies, Beijing has more room to act in crisis. China has extractive institutions that will ultimately be a growth limiting factor, but I don't see it limiting their crisis responses. * There will be no political gridlock between left and right that can be solved only with half measures. Decisions are done in small groups of 30 people at most, with several hundred people having some influence. * T…

Unlike liberal democracies, Beijing has also mostly absolved its people of moral hazard, creating a situation where they have to act and fix things up because they have basically taken complete responsibility for the health of the economy. In a liberal democracy, one can just vote the turkeys out when something economically bad happens (whether or not it’s their fault), but that is obviously not an option in China.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#83

Post by seanmcdirmid »

sseth wrote: post #79
ksec wrote: post #63

Earlier quoted context omitted.

>However, there is also the fact that their ability to keep the lid on things means they may also suppress feedback mechanisms which in a democracy may prevent wrong things from going on too long That is where surveillance and big data comes in. And I am not too sure if they are scrambling at their one child policy, there are simply far too many people in china.

In 2016, they put an end to the one child policy. In 2017, they are offering women free removal of IUDs. Under the one child policy, women were forcibly fitted with IUDs after the first child, and were forced to undergo sterilization after two. This has led to a ridiculous situation highlighted in the New York Times, where a woman forcibly fitted with IUDs in 2012, is now being offered free removal of the same IUD. T…

The same thing happened in Korea and Singapore, however, it isn’t like China was alone in being wrong in how population control can backfire.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#84

Post by seanmcdirmid »

tsuabing2 wrote: post #25
Nokinside wrote: post #17

Earlier quoted context omitted.

The political elite is relatively small number of people. When the political power is not widely distributed, you can take care of the elites without hurting the economy. If the top 100,000 power players and their families are shielded from the fallout, how much will that cost? Few $100 billions or so?

That’s naive and uninformed. Many Chinese political elites not on the side of Xin jing ping have been jailed and killed in recent years under the guise of corruption. Many corporate elites have been quarantined, jailed or killed, such as head of HNA and Wanda. The only elite safe is xinjingping. Because he is the dictator

This is also naive and uniformed. Xi Jinping hardly has absolute power, there are a few very powerful red families pulling strings in the background, a lot of power brokers that are way in the background. Xi has power, is probably the most powerful man in China, but even he isn’t safe.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#85

Post by polotics »

andygoo wrote: post #8

Studying economics for some time, I think economists often ask wrong questions. So let's say trade war occurs, and china will lose some of its exports. The main question is not whether savings would decrease or investment rise, the main question is how all the spare capacity left will be utilised. Yeah, if it won't be utilised then there will be unemployment, well pointed by the author. If domestic consumer will cons…

How can you be so naive as to state that a dictatorship is a "strong" government? Having one man and his clique at the helm is extreme weakness. Any strength the government may have at any time is wholly incidental, not structural or systemic like what a well-functioning democracy of the people for the people produces. In many way the current state of governance in China is worse than what an established hereditary monarchy would provide. Any way this all will be tested soon enough.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#86

Post by dougmwne »

Nokinside wrote: post #10

Unlike liberal democracies, Beijing has more room to act in crisis. China has extractive institutions that will ultimately be a growth limiting factor, but I don't see it limiting their crisis responses. * There will be no political gridlock between left and right that can be solved only with half measures. Decisions are done in small groups of 30 people at most, with several hundred people having some influence. * T…

Everything you said might be right, I don't know. I think though that your facts are just as political as the facts the western countries use to justify market-based deregulation.

I've spent some time near Washington politics. It gave me the opionion that our system is purposefully designed to create gridlock in order to tie up political energies. Political energies that would have otherwise been used to create rapid change. I think the entire point is to create a relatively stable climate for business investment.

So that's the exact opposite philosophy as how you described the Chinese system. Central planning and proactive decisions made by a few vs. market driven and reactive desisions made by many.

I'm not even sure if it's possible to determine which system is better or what the exact best middle ground would be. It may have complexity beyond our scientific tools' ability to study.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#87

Post by mistermann »

crwalker wrote: post #77
Nokinside wrote: post #35

Earlier quoted context omitted.

Just study the War Economy in different countries during the WWII. Government can simplify and direct the economy if it has total control over it. For lighter control look at the post war economies in Europe, Japan and Korea. Tight control of the economy worked just fine to stabilize the system.

If WWII policies seem to be evidence that "tight control of the economy worked just fine to stabilize the system," consider that centralized economic decisions (German war finance, treaty of Versailles, war reparations, Weimar Republic hyperinflation) paved the way for WWII. Early 20th century Europe is an odd example to choose to demonstrate a stable, well-controlled system.

Unless I'm mistaken, I think the point of contention here is whether centralized economic decisions can work sometimes (his point?) versus can never ever work (your point?). And by "work", I do not mean "work absolutely perfectly".

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#88

Post by simonh »

seanmcdirmid wrote: post #83
sseth wrote: post #79

Earlier quoted context omitted.

In 2016, they put an end to the one child policy. In 2017, they are offering women free removal of IUDs. Under the one child policy, women were forcibly fitted with IUDs after the first child, and were forced to undergo sterilization after two. This has led to a ridiculous situation highlighted in the New York Times, where a woman forcibly fitted with IUDs in 2012, is now being offered free removal of the same IUD. T…

The same thing happened in Korea and Singapore, however, it isn’t like China was alone in being wrong in how population control can backfire.

Sure, but the point is that while totalitarianism provides enormous scope for rapid action, those actions are not informed by a full and frank public debate and there’s no mechanism for society as a whole to force a change of direction via an election. That means the ruling power, which has huge political capital tied up in their policies cannot be removed, and so tend to cling in to those policies until long, long after it’s become blatantly obvious they are doing serious harm.

Democracies do have less scope for action due to checks and balances, but on the other hand if they pursue a mistaken policy, every 5 years the voters get the chance to force a change. The fact this is so means the current rulers have a strong incentive to course correct themselves as well either executively, or through an internal coup in the party in the case of parliamentary democracies. They are enormously more flexible.

The Chinese governments back handed handling of their stock market is a good example. They exercised powers far beyond those available to democratic leaders, but they were wrong headed and they persisted with them long after it was obvious they were harmful. And the same people that made these grave errors are still in charge and faced no consequences. This is a better system?

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#89

Post by solotronics »

dougmwne wrote: post #86
Nokinside wrote: post #10

Unlike liberal democracies, Beijing has more room to act in crisis. China has extractive institutions that will ultimately be a growth limiting factor, but I don't see it limiting their crisis responses. * There will be no political gridlock between left and right that can be solved only with half measures. Decisions are done in small groups of 30 people at most, with several hundred people having some influence. * T…

Everything you said might be right, I don't know. I think though that your facts are just as political as the facts the western countries use to justify market-based deregulation. I've spent some time near Washington politics. It gave me the opionion that our system is purposefully designed to create gridlock in order to tie up political energies. Political energies that would have otherwise been used to create rapid…

I think there is a natural system of balance found in a true free market. When thinking about longer term ideas such as climate change it is ultimately up to the average desire of the population of comsumers as a whole. Even though this has shortcomings I think it is a more "fair" system because it is just a reflection of the psyche and desire of the people and not a controlling party or politburo.

When thinking about things like unsustainable growth rate and ghost cities in China I think that is the negative side of the top down model of central control. The ability to change policy quickly might be a benefit but I don't think we will know the true result in terms of benefit to civilization or country until we can look back and compare systems in the future.

Re: Beijing’s Three Options: Unemployment, Debt, or Wealth Transfers

#90

Post by seanmcdirmid »

simonh wrote: post #88
seanmcdirmid wrote: post #83

Earlier quoted context omitted.

The same thing happened in Korea and Singapore, however, it isn’t like China was alone in being wrong in how population control can backfire.

Sure, but the point is that while totalitarianism provides enormous scope for rapid action, those actions are not informed by a full and frank public debate and there’s no mechanism for society as a whole to force a change of direction via an election. That means the ruling power, which has huge political capital tied up in their policies cannot be removed, and so tend to cling in to those policies until long, long a…

I don’t disagree with your conclusion, I just think population control is a bad example as that was more of a regional trend and not a symptom of totalitarianism. Also, after Mao’s excesses (also a regional thing) in the opposite direction, the one child policy was probably necessary, the only problem being that they let it continue too long.
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