Who would be the most able American to deliver the end of the world in December 2012?

[KrazyHorse]

As I understand the story, that's mainly because others are kept from competing by stifling bureaucracy. Favored companies can get permits, unfavored ones can't.

There are also a number of alternative possibilities why companies can't survive without government help. None of them mean that China is richer due to interventionism. For instance, a government might use taxes to subsidize certain companies' operations. These companies might drive up the cost of labor, pricing the non-subsidized companies out of the market. Yet without the taxation and subsidization, the society would be better off because the companies which thrived would be the most efficient at turning inputs into outputs rather than the ones the government picked (never mind the distortionary effect of the taxes).

[DaShi]

They are also heavily subsidized. I'm making no statements about whether the system is fair or even right in the longterm. But it has benefited China immensely.

Generally, businesses in China are heavily regulated. It is just fortunate for most of them that the government is very pro-business.

[KrazyHorse]

It hasn't benefited China. You may be engaging in a the fallacy of composition, if I understand your argument. Subsidization helps any given company thrive. Economywide though, subsidization does not magically mean that more companies thrive, simply that different ones do.

[DaShi]

Subsidies do benefit domestic companies over foreign ones.

[Hauldren Collider]

Not really. They benefit companies that export over companies that import, and whatever industries are subsidized over whatever industries aren't.

[DaShi]

As I understand the story, that's mainly because others are kept from competing by stifling bureaucracy. Favored companies can get permits, unfavored ones can't.

There are also a number of alternative possibilities why companies can't survive without government help. None of them mean that China is richer due to interventionism. For instance, a government might use taxes to subsidize certain companies' operations. These companies might drive up the cost of labor, pricing the non-subsidized companies out of the market. Yet without the taxation and subsidization, the society would be better off because the companies which thrived would be the most efficient at turning inputs into outputs rather than the ones the government picked (never mind the distortionary effect of the taxes).

That is a good point, Chinese companies are horribly inefficient due to both a lack of true competition and an education system that favors rote learning over innovation. On one hand, the lack of competition has allowed China to create megacorporations in a relatively short time, on the other, these corporations probably couldn't compete well internationally or domestically against foreign companies without a lot of government support. It is the latter that China fears the most.

[DaShi]

Not really. They benefit companies that export over companies that import, and whatever industries are subsidized over whatever industries aren't.

No, I just covered this in my previous post.

[Hauldren Collider]

Sounds like they could hit a Japan-style crash and burn, only worse.

Also, rote learning is great for a country playing catch-up but it rapidly loses effectiveness as you approach the education level of advanced countries.

[DaShi]

Sounds like they could hit a Japan-style crash and burn, only worse.

Haven't heard that every year for the past 20 years.

[Jon Miller]

China has seen a larger boost to economic development than India. This is even with the advantage India has of being more English friendly.

China has more state support of business than India.

These seem linked?

JM

[SlowwHand]

Considering that China runs a lot, if not all, of the businesses, is that really a big surprise?

[Hauldren Collider]

China has seen a larger boost to economic development than India. This is even with the advantage India has of being more English friendly.

China has more state support of business than India.

These seem linked?

JM

....no?

Come on, JM. You're supposed to be a scientist.

[KrazyHorse]

Subsidies do benefit domestic companies over foreign ones.

Now you're falling into the mercantilist fallacy.

[KrazyHorse]

China has seen a larger boost to economic development than India. This is even with the advantage India has of being more English friendly.

China has more state support of business than India.

These seem linked?

JM

The US is massively richer than either and has far less state control of the economy. Seem linked to you?

[Jon Miller]

We started far earlier. Which has a huge benefit, when you look at nations as diverse as Sweden and the US.

I don't consider the US and China comparable in this fashion. Additionally, our economic development has been a lot lower than China is recent years.

JM

[KrazyHorse]

Seriously, ascribing Chinese success over the last 30 years to state interventionism is hilarious.

The Chinese remained poor until Deng started allowing people to build things for themselves. Now they are less poor, but still massively poorer than more market-oriented economies. China and India have both grown as a result of opening labor, goods and services markets to freer entry, more private ownership and less interventionism.

[KrazyHorse]

We started far earlier. Which has a huge benefit, when you look at nations as diverse as Sweden and the US.

JM

The US started earlier because it had better rules earlier. Rules like freedom to contract, freedom to invest, freedom to change jobs, freedom from fear of random confiscatory government actions. If the Chinese had loosened state controls 10 years earlier than they did then they would be 10 years further along now.

[Jon Miller]

I am attempting to ascribe it to the combination of a pro-business state, which means it is freer in ways that promote business, but not in ways that don't in addition to the opening of markets up (in a controlled fashion).

For the most part.

JM

[KrazyHorse]

There is absolutely no rational version of the India-China miracle that doesn't come down to the fact that the people of both countries were having their potential held back by government intervention in the economy and now less so.

[Jon Miller]

The US started earlier because it had better rules earlier. Rules like freedom to contract, freedom to invest, freedom to change jobs, freedom from fear of random confiscatory government actions. If the Chinese had loosened state controls 10 years earlier than they did then they would be 10 years further along now.

I would agree with that, but China didn't control itself prior to the middle of last century.

It was being exploited by europe (UK). There is a reason why the first world countries are so far ahead.

JM

[Jon Miller]

We can compare China and India though. In many points, India had the advantage. The question is 'why is China doing better?".

JM

[Jon Miller]

We can compare China and India though. In many points, India had the advantage. The question is 'why is China doing better?".

JM

[KrazyHorse]

I am attempting to ascribe it to the combination of a pro-business state, which means it is freer in ways that promote business, but not in ways that don't in addition to the opening of markets up (in a controlled fashion).

For the most part.

JM

So allowing people to speak their mind destroys growth?

Come on now....

The only possible story you can tell here is that the stronger and less democratic Chinese government has opened more markets more quickly than the weaker and more democratic government of India has. In this case, you are relying on the unelected government simply making better choices than the elected government.

EDIT: "government", not state.

[KrazyHorse]

I would agree with that, but China didn't control itself prior to the middle of last century.

It was being exploited by europe (UK). There is a reason why the first world countries are so far ahead.

JM

And why the hell did Europe get so far ahead? Do you think it was magic?

The more you let people "truck, barter and exchange" with each other, the more amazing **** happens.

[KrazyHorse]

We can compare China and India though. In many points, India had the advantage. The question is 'why is China doing better?".

JM

As far as I can tell, in large part because Indian bureaucracy is actually worse than Chinese bureaucracy.

[Jon Miller]

If people want things like less pollution in their rivers and an easier time breathing and to be paid more and to have insurance and so on.

You know, the things that people in (all?) first world countries want (to a greater or lesser extant).

JM

[KrazyHorse]

People in India don't get paid more, virtually none have insurance AFAIK, and I'd be surprised if India was significantly less polluted than China is.

Pollution control and social insurance are both valid activities of the state (they are examples of two classic market failures; identify them!)

However, poor countries can and do demand less of each of those, because they face tighter budgets overall (they have less to spend). As China gets richer it will want cleaner air and water, and more social insurance.

[MattBowron]

If we're going to base our calenders off the birth-year of Jesus Christ, then technically with Christ really being born around 4BC or 6BC, that means that today's year is really 2015 or 2017. 2012 has come and gone baby. Just another Y2K thing.

[Jon Miller]

Most theological classes use BCE and CE instead of AD and BC.

JMM

[DaShi]

I'm certainly not arguing that the Chinese system is better than another, but to deny the involvement of the government in their economic success is being deliberately blind.

Had China not so heavily restricted foreign companies and boosted up domestic ones, the country would be filled with foreign companies grabbing up all the resources, exploiting the workforces, and making shoddy products. Now we just have the Chinese doing that there themselves. The point is that the CCP knew what a fully open Chinese market would result in (the term Chinese firedrill comes to mind). They only need to look at their own activities in Africa to know the effect of foreign companies on locals. Yes, China had a lot of potential to work from that was held back by Maoist idealism. But through the decisions of a planned economy, they molded it into a modern global marketplace that strongly favors themselves (if at least in the short term, but really once you have all the money and guns, who cares what happens to the rest of the world).