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Why China got rich and India didn't

davidoks.blog

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Re: Why China got rich and India didn't

#41

Post by ninjagoo »

This article seems to completely miss the significant compounding effect of real growth over 13 years.

China liberalized their economy in the 70s: 1976 Mao dies -> Cultural revolution ends -> 1978 Deng Xiaoping launches 'Reform & Opening Up'.

India liberalized their economy in the 90s: 1991 Rao and Singh come to power -> eliminate tariffs, dismantle the License Raj.

The difference is at least that of compounded growth over time. At 7% real growth, in 13 years an economy gains about 2.4x. In PPP terms, China's economy is about 2.4x India's [1].

Additional factors to consider are that China liberalized more aggressively through state directed experimentation, and India liberalized more gradually, and within a democratic legal system. Also, on the Chinese side there were periods of slowdown (1989, others), and on the Indian side the economy would have been about 20% larger but for the right-wing/fascist policies of the BJP government [2][3]. But policy failures on both sides are probably a wash, bringing us to today's gap.

[1] https://www.imf.org/external/datamapper/NGDP_RPCH@WEO/OEMDC/...

[2] https://www.hks.harvard.edu/sites/default/files/centers/cid/...

[3] https://www.nationalheraldindia.com/india/ill-conceived-demo...

Re: Why China got rich and India didn't

#42

Post by esjeon »

0xpiguy wrote: post #34

The article didn’t mention what I think is the single most important reason: the ability to align local governments with the central government. You can design the best policies in the world, but it’s local governments that actually implement them. The Great Chinese Famine was a prime example of this. Mao became the scapegoat, but he wasn’t as detached from reality or as blindly idealistic as many people make him out…

> the ability to align local governments

I think seeing it as an “align”-ment problem puts too much blame on the local side. Also, autonomy has nothing to do with the problem of misalignment.

In authoritarian systems like China, mis-alignment with authority can carry serious political and social risks, so people are easily pushed toward dishonesty. What happened under the Mao’s rule is simply this; local officials were too afraid of criticizing the very father of the revolution, which could be interpreted as attacking the legitimacy of the revolution itself. It was a side effect of over-concentration, and gaining more control over local would have not made any differences.

Deng was successful only because he was exactly aware of this problem. In his speeches on the government reform (the Open-Door policy), he explicitly pointed out over-concentration as a major issue. He not only eased the concentration of power, but also redesigned the incentive structure, so that officials can adopt objective measures and even try their own experiments.

Re: Why China got rich and India didn't

#43

Post by nobodyandproud »

hollerith wrote: post #12
api wrote: post #11

It’s been kind of obvious to me that China did it by copying what America was doing from the post Civil War era until we abandoned the formula in the 1970s. China calls it “iron and salt” I think. The state makes very large investments in infrastructure and helps build huge globally competitive conglomerates in strategic and bedrock industries. The state builds the “iron.” Then it allows the free market to do the “sa…

I doubt investment in railroads or aviation in the US was anything close to majority-government. I'd be shocked if the government's share of cumulative investment in petroleum production since 1859 (the start of commercial production when Edwin Drake's well near Titusville, Pennsylvania, struck oil) was above 2%.

For railroads, just wrong.

Can’t speak for the rest, but we still subsidize airlines and the infrastructure to make it possible.

As we should.

All of the little industrialists and VCs here on HN wouldn’t have a prayer of striking it rich without the median income workers paying (hard-carrying) your little dreams.

Re: Why China got rich and India didn't

#44

Post by jmclnx »

I have to say I think the author makes a good point.

It will be interesting to see how the current US War on education changes the country in 20 years. Will a similar but opposite article be written about the US in a few decades ?

Re: Why China got rich and India didn't

#45

Post by mc32 »

0xpiguy wrote: post #34

The article didn’t mention what I think is the single most important reason: the ability to align local governments with the central government. You can design the best policies in the world, but it’s local governments that actually implement them. The Great Chinese Famine was a prime example of this. Mao became the scapegoat, but he wasn’t as detached from reality or as blindly idealistic as many people make him out…

Lee Kwan Yew identified this shortcoming along with the issue of many factions in India. Due to its huge diversity there is little pan-national alignment -everyone wants their own thing and prioritizes accordingly.

Here's me Lee: https://www.youtube.com/watch?v=QaTNpw0-wAk

Re: Why China got rich and India didn't

#46

Post by samantp »

China invested in converting people to a skilled workforce planned top down. Smart workhorses, be it workers, doctors engineers, scientists, sportspersons. Freedom from traditional norms were replaced by bondage to standardisation/regimentation to communist party leadership’s planned rule sets to scale quickly. And which is fine.

India in 1947 invested in freedom of thought, democracy, and gradual donning away with archaic customs (only) wherever needed, with overall gentleness. Or should I say, this has been nothing new with India, happening since eternity. Without mega turbulence, maybe with intermediate evolution-revolutions as needed like the freedom movement till 1947. Business as usual.

This is clearly an unclosed chapter at this point. Many alternative futures could work out. Say, with machines doing more and more work including that of building machines, that part hopefully will get commoditised, along with the core science and infra behind that. And innovative controlled employment of those advances for societal benefits will become the need. Grassroot level, day-to-day creativity and innovation will be the mantra. Who could tell? All analysis is in hindsight anyways.

Even the current fear around India moving towards some authoritarian regimented society is nonsense. Society will not let it happen. They have tasted the blood of freedom. Often at the cost of discipline, progress, economy, basic survival.

They do seem to cling hard their religion, gods, spirituality though!

Re: Why China got rich and India didn't

#47

Post by rawgabbit »

0xpiguy wrote: post #34

The article didn’t mention what I think is the single most important reason: the ability to align local governments with the central government. You can design the best policies in the world, but it’s local governments that actually implement them. The Great Chinese Famine was a prime example of this. Mao became the scapegoat, but he wasn’t as detached from reality or as blindly idealistic as many people make him out…

"Local officials lied about food production and greatly exaggerated output figures to gain promotions."

Were any of these officials who played fast and loose with truth ever punished and stripped of their ill-gotten promotions? The only person "punished" because of the Great Leap Forward, from my memory, was Peng De Huai who stood up to Mao and was eventually killed during the Cultural Revolution.

From https://en.wikipedia.org/wiki/Peng_Dehuai#Persecution_during...

"After Peng still refused to "confess," his jailers began routinely beating him and broke several ribs,[106] injured his back, and damaged his internal organs,[107] especially his lungs. Peng's violent "interrogations" lasted over ten hours a day, but his interrogators were replaced every two hours to keep them from developing any sympathy for Peng, a practice pioneered by the Stalinist secret police in the 1930s. Peng was "interrogated" that way over 130 times.[106]"

Re: Why China got rich and India didn't

#49

Post by hollerith »

nobodyandproud wrote: post #43
hollerith wrote: post #12

Earlier quoted context omitted.

I doubt investment in railroads or aviation in the US was anything close to majority-government. I'd be shocked if the government's share of cumulative investment in petroleum production since 1859 (the start of commercial production when Edwin Drake's well near Titusville, Pennsylvania, struck oil) was above 2%.

For railroads, just wrong. Can’t speak for the rest, but we still subsidize airlines and the infrastructure to make it possible. As we should. All of the little industrialists and VCs here on HN wouldn’t have a prayer of striking it rich without the median income workers paying (hard-carrying) your little dreams.

If I'm wrong, Wikipedia is wrong, too:

>Financing of railroads provided the basis for a dramatic expansion of the private (non-governmental) financial system. Construction of railroads was far more expensive than factories: in 1860, the combined total of railroad stocks and bonds was $1.8 billion; in 1897, it reached $10.6 billion (compared to a total national debt of $1.2 billion). Funding came from financiers in the Northeastern United States and from Europe, especially Britain. About 10 per cent of the funding came from the government, particularly in the form of land grants that were realized upon completion of a certain amount of trackage. The emerging American financial system was based on railroad bonds . . .

https://en.wikipedia.org/wiki/Rail_transport

Although neither my quote nor the surrounding text explicitly states that it refers to the US rail system, the sentence that starts, "About 10 per cent of the funding came from the government" has a footnote that is a reference to this book:

>Edward C. Kirkland. Industry Comes of Age: Business, Labor and Public Policy, 1860–1897. The Economic History of the United States, Vol. VI.

Re: Why China got rich and India didn't

#50

Post by esjeon »

I think the caste system is what’s hampering social and economic progress in India (or at least partially).

It’s a sort of game theory stuff here. A structured class hierarchy makes it inherently more difficult for individuals to challenge the authority in power, even under the democratic government. The system imposes an additional risk of social backlash/punishment/retaliation for anyone who attempts to disrupt the established order, thus people have more reasons to stay back. This kind of risk is largely absent in more egalitarian/classless societies.

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