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The Agenda
NRO's domestic-policy blog, by Reihan Salam.
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TEXT RESIZE
Andy Stern’s Peculiar Idea
Andy Stern believes that the Chinese economic model is superior to what he calls the “conservative-preferred, free-market fundamentalist, shareholder-only model.” Having spent the day in Chongqing, Stern sees the sprawling city as indicative of China’s success. Those of you who are familiar with the political economy of Chongqing, and the devastation of its rural economy and its environment, might find this somewhat peculiar. The fact that China’s rural interior actually saw decreases in literacy levels and life expectancy for long stretches of the boom years might also be of interest. He points to rapid annual wage growth and the creation of specialized industrial zones as other promising signs, while others see rapid inflation as a consequence of its currency peg and a future source of economic vulnerability. He also seems to believe that China’s current growth rates are sustainable as the country transitions to a more service-oriented economy, which is an interesting view, and he seems to have missed the extensive evidence that growth slowdowns tend to occur sooner in countries with undervalued real exchange rates. Then, of course, there is the fact that China’s post-1979 catch-up growth followed several decades during which large numbers of Chinese died of starvation and the remnants of its pre-war industrial economy languished.
Stern writes:
America needs to embrace a plan for growth and innovation, with a streamlined government as a partner with the private sector. Economic revolutions require institutions to change and maybe make history, because if they stick to the status quo they soon become history. Our great country, which sparked and wants to lead this global revolution, needs a forward looking, long-term economic plan.
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.
Another way to grow the American economy is to embrace Brink Lindsey’s “Frontier Economics” approach. Recognizing that advanced economies are different from other economies — it is easy to replicate the institutions and practices pioneered in the leading economies; it is harder to create new practices and products that take off — we need to facilitate experimentation to achieve growth, and even then we won’t match growth that flows from conditional convergence.
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I get the impression you're not familiar with the history of Walmart, which was founded and which flourished before China's opening. Labor-intensive manufacturing has flourished in other emerging economies that do a better job of securing the human rights of their citizens.
I am actually very familiar with the history of Wal-Mart, enough to know that their emergence as a national and international player was directly tied to the opening of China, which allowed them to surge ahead of Sears and other older chains that were later to the China party. Before the early-90s, Wal-Mart was still largely a Southern chain, unheard of by many folks on the coasts. While I agree that Wal-Mart has since diversified its manufacturing base as Chinese workers are demanding more than pennies a day and barrack-style living, the Wal-Mart we know today was built on the backs of workers who were by just about any Western measure treated terribly. China and Wal-Mart had a symbiotic relationship for year, and the fact that this does not upset more anti-communists mystifies me.
The trule interesting thing to me is, no matter how many of Obama's associates OPENLY express their admiration for Mao, their ideological ties with the Viet Cong, their desire to see our country transformed into another Communist China, and their utter disgust with capitalism, any mention of this is greeted by the chattering class as little more than warmed over 'birtherism', akin to 'flat earth' idiocy.
"Then let's severely curb those township and village enterprises because they represent a potential political threat and invite large foreign multinationals to work our population to the bone at artificially suppressed wage rates, threatening those who complain with serious reprisals up to and including death."
This is why I am always mystified by conservatives' love of Wal-Mart. Its entire business model is predicated on the communist Chinese government's centralized control of the economy. Always low prices means always low wages, and the best way to achieve that is for an authoritarian government to make it so. And as a liberal, I'll side with Lindsey's utopian vision over Stern's utopian vision any day of the week.
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