In case it is not yet abundantly clear, the major states in the West are crumbling, while much of the East is thriving. It seems a straightforward enough proposition to simply identify the key differences and then apply the methods of the East back to the West, and those differences are so incredibly obvious. Yet still the West clings to outdated political and economic philosophies with such dogmatic fervor that it seems almost inevitable that they will collapse before changing their ways.
Let's look East -- led by the Four Asian Tigers (Hong Kong, Singapore, South Korea, Taiwan) starting in the 1960's, Asia has undergone tremendous transformation from dire poverty to economic wonder. China, Thailand, Vietnam, and even Indonesia have also experience remarkable achievements on this front. Note that I'm leaving out Japan, who despite successes in the post-WWII era has largely adopted the policies of the West and proved an early example of the failure of those policies. India also represents tremendous potential, but still has not yet fully adopted the policies of some of their more successful counterparts.
Even in the Middle East, places like Bahrain, Abu Dhabi, Dubai and Oman have caught on to the tactics employed by the Far East and have had similar success. So what is the difference? Simple -- all of these countries have implemented market-based reforms -- still a far cry from anything resembling a "free market" -- but as an overall direction or velocity their markets are becoming freer, or at least easier to access and to perform business activity. This attracts investment that in turn produces sustainable new capital production. As for the states themselves, most run at least a balanced budget or even a surplus, providing the means to
On the other hand, all of the major states in the West are going in the opposite direction -- more regulation, more beauracracy, more entitlement programs, and much, much more debt. Even if, for instance, there is still greater total economic freedom in the US than in China, it is a matter of velocity -- the US is becoming LESS free and LESS business-friendly, while China has steadily become MORE free and MORE business friendly.
The result will be that the East will come to dominate the world economically, and the West will continue to degenerate for a long time supposing that no major change in attitudes occur in either place. All of this seems so simple, and almost feels too obvious to write, and yet how can folks in the West remain so blind?
I'm not sure I can agree wholly with your assessment, at least not with the idea that China is becoming more free. Perhaps this assessment is true of other Asian states, but China is a consummately centrally controlled economy, and the communist party is trying to hold onto power over the middle-class (and successfully so) with all its might. A book that I think will make this point, based on the interviews that I've heard, is the following: http://www.amazon.com/gp/product/1591843014/ref=ord_cart_shr?ie=UTF8&m=ATVPDKIKX0DER
ReplyDeleteThe bigger problems, it seems to me, is that with our current political climate, western democracies are failing as democracies, i.e. in their ability to govern at all. This is the first and major problem in my mind, namely, that authoritarian states with little regard for personal freedoms (the very freedoms that make the western states worth living in) are winning a governance war. There will always be infighting in a Democracy: that's what helps to keep it transparent and alive. But our incapacities to function as democracies right is, in my opinion, the greater problem.
dfreric: I think your first point is spot-on, and requires that I clarify my argument. The second point is largely valid, but I'm going to make a counterargument there.
ReplyDeleteOn the first point, you are absolutely right that China is NOT becoming more free, and a distinction needs to be drawn between freedom and free markets on the one hand, and something like "business friendly" or "market reforms" on the other. The Eastern governments that have succeeded or are succeeding have embraced the latter -- business friendly climates through market-based reforms. This is not to be confused with freedom or free markets. However, there is some relationship between the two -- markets operate better when allowed to do their job, and the reforms implemented throughout much of the east are allowing for that more so than they have in the past, and perhaps more so than most Western governments at the present time. The important thing here is velocity -- the East is trending towards more functional markets, while the West is trending towards less functional markets as a result of policy. Again, there is no principled concept of free markets or individual freedom in the East, but I think in some ways I would consider the business-friendly market reforms a form of freedom in the market place.
On the second point, I would counter with this: economic law trumps politcal law, and when you get right down to it the success or failure of a state is tied to it's success or failure with its economy. While certain forms of government might tend to produce better economies than others, it is only a contingent relationship and not a necessary one. Democracies in the west are failing because their economies are failing, while authoritarian regimes (not sure how that's really different than the Western democracies, but I'll roll with it) in the East are succeeding because their economies are succeeding. What I would argue further is that ALL governments inherently are anti-free market at least in part, and have a tendancy over time to make markets less free. That we see something of a reversal in the East is born out of necessity largely, but in the end is likely unsustainable...what is sustainable? Read my next post!
Good! I think we've isolated where most of our quarrels are going to take place, and I frankly think it's a healthy place. I disagree that economics trumps politics. The free economic market is always a product of civil dialogue and the market of value creation, which presumes something like a Constitution and a Bill of Rights. I'll press the point in future posts of yours. It should make for some good debate. Good posts.
ReplyDeleteHa -- you've hit the nail on the head. My efforts today have been around setting up the structure for my master work in this arena, the Private Law Society. It's meant less as a critique of possible social or political arrangements and more as a positive exposition of how, specifically, society and the market could function in the total absence of the state. Looking forward to your feedback as that starts to take shape.
ReplyDeleteOn the topic of West vs East in recovering from global financial crisis of 2009, here is an interesting article from Stephen Roach, the chairman of Morgan Stanley Asia. I share his view by and large.
ReplyDeletehttp://www.todayonline.com/business/EDC100610-0000150/The-new-lesson-for-resilient-Asia
Interesting article -- the conclusions in particular were dead-on:
ReplyDelete"More than ever, the US needs to stop taking out its frustrations on others.
It should look in the mirror and deepen its understanding of the self-inflicted nature of its problems"
The one thing I don't see in the article is a description of *why* China is having so much success and why the US isn't -- that obviously wasn't the intent of the article, but I'd be curious to know the author's POV on that.
Also, regarding this statement:
"That does not diminish China's most daunting structural imperative - an increasingly urgent need to stimulate private consumption"
I have to vehemently oppose the idea that "stimulus" is needed -- I don't think such actions ever produce the intended outcome, or at best cannot do so without unintended consequences. That said, the simplest thing to do would simply be to float the Yuan against the dollar, which would immediately add purchasing power to the average Chinese individual, and without question that would result in increased demand for goods and services. Of course, that better work because as soon as that happens the US dollar will become nearly worthless, so China will lose a substantial amount of export volume.