May 29, 2010 5 Comments
There was a really interesting NPR story this week comparing the economic growth in India as compared to China, and the “China envy” experienced in India. Here’s the rub:
In the middle of the last century, India and China were in the same place economically. Now China is three times richer. Its childhood malnutrition rate is far lower than India’s.
Yes, Indians are free, Thapar says — free to be poor.
Partha Sen, director of the Delhi School of Economics, says that “democracy in an everyday sense, in terms of getting things the poor need, has clearly not functioned. Somehow democracy has failed us.”
Democracy moves slowly. People debate things. Infrastructure — roads, water, power — remains underdeveloped.
The Chinese government doesn’t have endless parliamentary debates and legal battles. It doesn’t ask a lot of questions. It does things — builds roads, trains, power plants.
Here’s the really interesting kicker:
“We economists think that a benevolent dictator — a benevolent dictator with a heart in the right place — could actually do a lot of good,” Prasad says.
The problem, he says, is that the economic record of dictators and single-party states is not very good. China seems to be an exception.
In many ways, the government of China is abhorrent, but when it comes to policies that create economic growth and raise living standards, the government really does function as a benevolent dictator. And, if you are actually pursuing smart policies, being a dictator is way more efficient. Of course, most dictatorships don’t pursue the right policies, and here’s the genius of China’s leadership– maintaining dictatorial control, while putting the power of markets to work. Ezra Klein explains:
As I understand the Chinese model, it goes something like this: The failure of central planning was that the people with the power didn’t make very good decisions, at least not when compared with the market. On the other side, the difficulty of democracy is that it’s slow, and the cacophony of voices can lead to paralysis and social breakdown. China’s approach has been to marry market planning with state control. It brings in private companies and then uses the government’s power to build the infrastructure they ask for. It lets private banks purchase up to 20 percent of state banks so that it gets private-sector expertise without relinquishing the public sector’s control. It lets people buy shares of their financial institutions so it can get the oversight of the market, but it doesn’t ever hand the market the reins. It uses the market to help plan, but it uses the state to act on those plans far faster and more decisively than the market ever could.
I don’t think that’s an easy model to emulate, and we should not too lightly gloss over the human rights abuses that come with this type of government, but it is a really fascinating success story.