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Showing posts with label Economic Policy. Show all posts
Showing posts with label Economic Policy. Show all posts

17 May 2010

The China Model for Economic Development


The China model

The Beijing consensus is to keep quiet

In the West people worry that developing countries want to copy “the China model”. Such talk makes people in China uncomfortable

May 6th 2010 | BEIJING | From The Economist print edition
CHINESE officials said the opening of the World Expo in Shanghai on April 30th would be simple and frugal. It wasn’t. The display of fireworks, laser beams, fountains and dancers rivalled the extravagance of Beijing’s Olympic ceremonies in 2008. The government’s urge to show off Chinese dynamism proved irresistible. For many, the razzmatazz lit up the China model for all the world to admire.
The multi-billion-dollar expo embodies this supposed model, which has won China many admirers in developing countries and beyond. A survey by the Pew Research Centre, an American polling organisation, found that 85% of Nigerians viewed China favourably last year (compared with 79% in 2008), as did 50% of Americans (up from 39% in 2008) and 26% of Japanese (up from 14%, see chart). China’s ability to organise the largest ever World Expo, including a massive upgrade to Shanghai’s infrastructure, with an apparent minimum of the bickering that plagues democracies, is part of what dazzles.
Scholars and officials in China itself, however, are divided over whether there is a China model (or “Beijing consensus” as it was dubbed in 2004 by Joshua Cooper Ramo, an American consultant, playing on the idea of a declining “Washington consensus”), and if so what the model is and whether it is wise to talk about it. The Communist Party is diffident about laying claim to any development model that other countries might copy. Official websites widely noted a report by a pro-Party newspaper in Hong Kong, Ta Kung Pao, calling the expo “a display platform for the China model”. But Chinese leaders avoid using the term and in public describe the expo in less China-centred language.
Not so China’s publishing industry, which in recent months has been cashing in on an upsurge of debate in China about the notion of a China model (one-party rule, an eclectic approach to free markets and a big role for state enterprise being among its commonly identified ingredients). In November a prominent Party-run publisher produced a 630-page tome titled “China Model: A New Development Model from the Sixty Years of the People’s Republic”. In January came the more modest “China Model: Experiences and Difficulties”. Another China-model book was launched in April and debated at an expo-related forum in Shanghai. Its enthusiastic authors include Zhao Qizheng, a former top Party propaganda official, and John Naisbitt, an American futurologist.
Western publishers have been no less enthused by China’s continued rapid growth. The most recent entry in the field is “The Beijing Consensus, How China’s Authoritarian Model Will Dominate the Twenty-First Century” by Stefan Halper, an American academic. Mr Halper, who has served as an official in various Republican administrations, argues that “just as globalisation is shrinking the world, China is shrinking the West” by quietly limiting the projection of its values.
But despite China’s status as “the world’s largest billboard advertisement for the new alternative” of going capitalist and staying autocratic, Party leaders are, as Mr Halper describes it, gripped by a fear of losing control and of China descending into chaos. It is this fear, he says, that is a driving force behind China’s worrying external behaviour. Party rule, the argument runs, depends on economic growth, which in turn depends on resources supplied by unsavoury countries. Politicians in Africa in fact rarely talk about following a “Beijing consensus”. But they love the flow of aid from China that comes without Western lectures about governance and human rights.
The same fear makes Chinese leaders reluctant to wax lyrical about a China model. They are acutely aware of American sensitivity to any talk suggesting the emergence of a rival power and ideology—and conflict with America could wreck China’s economic growth.
In 2003 Chinese officials began talking of the country’s “peaceful rise”, only to drop the term a few months later amid worries that even the word “rise” would upset the flighty Americans. Zhao Qizheng, the former propaganda official, writes that he prefers “China case” to “China model”. Li Junru, a senior Party theorist, said in December that talk of a China model was “very dangerous” because complacency might set in that would sap enthusiasm for further reforms.
Some Chinese lament that this is already happening. Political reform, which the late architect of China’s developmental model, Deng Xiaoping, once argued was essential for economic liberalisation, has barely progressed since he crushed the Tiananmen Square protests in 1989. Liu Yawei of the Carter Centre, an American human-rights group wrote last month that efforts by Chinese scholars to promote the idea of a China model have become “so intense and effective” that political reform has been “swept aside”.
Chinese leaders’ fear of chaos suggests they themselves are not convinced that they have found the right path. Talk of a model is made all the harder by the stability-threatening problems that breakneck growth engenders, from environmental destruction to rampant corruption and a growing gap between rich and poor. One of China’s more outspoken media organisations, Caixin, this week published an article by Joseph Nye, an American academic. In it Mr Nye writes of the risks posed by China’s uncertain political trajectory. “Generations change, power often creates hubris and appetites sometimes grow with eating,” he says.
One Western diplomat, using the term made famous by Mr Nye, describes the expo as a “competition between soft powers”. But if China’s soft power is in the ascendant and America’s declining—as many Chinese commentators write—the event, which is due to end on October 31st, hardly shows it. True, China succeeded in persuading a record number of countries to take part. But visitor turnout has been far lower than organisers had anticipated. And queues outside America’s dour pavilion have been among the longest.

18 February 2010

Public Option Support Surging In Senate

Public Health Care Option in the Senate?  Hmm...you know we've looked at this before, but it still astounds me that we fail to heed the lessons learned.  Robert E. Moffit, Ph.D., Director of Domestic Policy Studies at The Heritage Foundation, published a set of lessons learned regarding European government run healthcare back in 2001.  Some of his lessons learned are below.



Some Lessons: For Members of Congress and state legislators, there are some valuable lessons from the European experience:
  • If you insist on government management of the health care system, do not expect freedom from waste, inefficiency, or inequity in the delivery of care (look at France).
  • If you want to promise citizens a national or state program of universal insurance coverage, don't expect that you will be able to deliver universal access to high-quality health care. You won't and you can't (look at Britain).
  • If you want to fix prices for medical services, prescription drugs, or other medical devices, don't expect demand for these goods and services to be met or investment in research and development to continue apace. It won't (look anywhere).
  • If you insist, with a straight face, that in a government-run health care system, all of your fellow citizens will be treated equally--regardless of their class, station in life, or disease condition--you are not merely enthusiastic or well intentioned. You are lying.
If you haven't figured it out, health care policy is complex and difficult.  We'll fix one problem only to find we create an even bigger problem.  Why isn't anybody talking about limiting the size of mal-practice awards?  Why aren't we focusing on removing inefficiency in health care administration?  Why aren't we looking towards the more successful health care plans in the United States, such as with our military, veterans and members of Congress.

Man I wish we would spend more time talking about this instead of politicizing health care.


More Research from the Heritage Foundation:
Would Europe's health-care-for-all model work here?
Fiscal Policy Lessons from Europe


09 February 2010

Heritage Foundation Analysis of 2009 Federal Budget.

Greg Boone, an alert reader out in California posted this analysis of the Federal Budget from the Heritage Foundation.  It covers all aspects of Federal spending including revenues and entitlements, and gives an impact analysis of both the stimulus and the President's new spending proposals.  Although the Heritage Foundation tends to lean towards fiscal conservatism, the analysis seems balanced and spot on.  I'm interested in other's opinions.

01 February 2010

Can Government Spending Help Grow the Economy

I wonder, is President Obama's Budget really going to help the economy?  Friedman and Keynes are at odds on what effect government spending, specifically deficit spending, has on a nation's economy.  Keynes says you have got to increase consumption by increasing government spending.  This in effect puts more money back into the economy, especially when industries are not investing.  Friedman says that governments only get money one of two ways, by taxing or by borrowing.  In both cases he government crowds out investing by taking money that might have been legitimately invested in the economy and redistributing it to other economic sectors (i.e. borrowing money that would have been invested in buying factory equipment and providing it as a tax incentive to build roads).

I say there is a balance; government consumption can be used to help jump start an economy, but only if it leads to actual job creation.  President Obama's Budget seems to be trying to meet that mix, but the question is will it survive the pork barrel process of Congress.

Keynes vs Friedman: Why Governments Can't Spend Their Way Out of A Recession.

I always thought that John Maynard Keynes was right, that the when investment's contract during a recession or depression government needs to step in and increase consumption.  The following article, Why Government Spending Does Not Stimulate Economic Growth, talks about some of the fallicies of Keynesian Economics.  It had its time and place, but I think the moneterists lead by Milton Friedman have a more complete view on the role of government in managing economic fiscal policy.