China Syndrome
Tyler Cowen on the Chinese stimulus efforts:
Is there a gentle way to glide down from 10 to 5 percent growth? I tend to doubt it. Are you prepared for a China with negative economic growth for a few years (or more)? I tend to doubt that too.
One nice thing about being a mature democracy is that faced with a serious economic problem under Republican watch, we get a Democratic Party landslide. If economic problems continue long enough, we’ll probably get a Republican counter-landslide in 2010. By contrast, in China economic difficulties seem likely to lead to a revolution or else to disturbingly violent suppression of dissent. My recollection of the revolutions literature from college is that these things tend to happen specifically when a period of prosperity reverses itself.
24 Responses to “China Syndrome”
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November 10th, 2008 at 3:04 am
Yikes, weren’t the Chinese, unburdened by Democracy or unionization or environmental regulations supposed to be eating our lunch with their uninterruptable economic growth?
Whatever happened to all that? Someone should ask Tom Friedman.
November 10th, 2008 at 3:21 am
That was naive, perhaps, and so are predictions of revolution.
Now, Iran on the other hand… those guys are probably fucked if oil prices go any lower and stay down there for any period of time.
November 10th, 2008 at 3:35 am
My thoughts on the coming revolution in China:
There will not be a revolution in China.
November 10th, 2008 at 4:53 am
But I thought that Barack Hussein was a Marxist…?
November 10th, 2008 at 6:16 am
If economic problems continue long enough, we’ll probably get a Republican counter-landslide in 2010.
Matt, I’m not sure you understand the gravity of our situation.
The economic situation will be terrible in 2010. It will be much, much worse than it is at present. It will remain terrible in 2012. There’s not very much that Obama can do to prevent this.
The key is to make sure that 2012 is 1936 rather than 1980.
November 10th, 2008 at 7:01 am
People I trust on economic matters think that if the federal government continues to act boldly enough, things will get worse in 2009 but should start turning around in 2010.
November 10th, 2008 at 7:12 am
Anyone who thinks she can predict the future of the economy, any economy, is welcome to try, but one should be expected ti believe them. No one understands the present, or can predict any market (unless it is monopolized. Remember every share is sold to someone who has a contrary opinion. The idea that China is going down is just a guess. They have a lot of cash (much of it ours)and are freeto set any exchange rate they wish. They have some excellent economists (like us) and some really stupid bankers (like us!) If there were a Nobel in banking there would be no winner this year. This is a superb opportunity (a “Minsky Momeny”) to test neo-Keyensianism against Sinomarxism. By chance we have a mad economist at the Fed (and three vacancies. Watch the Sec Treasury appt. If he is neo-Keynesian (even a very recent convert) listen to his Senate yestimony. If he is willing to throw trillions of imaginary dollars (all $US are imaginary) into the pit, and there is a even a little turnaround then there is hope. It will be a real test of savers and investors. If they can resist borrowing at 2 per cent and banks refuse to lend, then we shall have to nationalize the rest of the banks. It will be incredibly cheap. I might buy a small one myself. There is no reason but ideological, that the Chinese govt cannot sell off the remaining SOE’s to the public and fire up the stock market again. The govt can buy shares until the price goes up. We might try that ourselves. I know a really cheap auto mfr co.
November 10th, 2008 at 7:24 am
Right- the Chinese people are going to rise up and throw out the bums who raised China from an impoverished nation occupied by half a dozen foreign powers to one of the leading industrial economies on earth.
So much wrong here. So little time.
Suffice it to say that Matt’s idea that revolutions happen when economies have downturns probably came from reading the Classic Comics edition instead of the text that was assigned.
November 10th, 2008 at 7:57 am
From Americablog-
China announced a $586 billion stimulus package Sunday in its biggest move to stop the global financial crisis from hitting the world’s fourth-largest economy.
A statement on the government’s Web site said China’s Cabinet had approved a plan to invest the amount in infrastructure and social welfare by the end of 2010.
November 10th, 2008 at 8:10 am
Yes, they are, and within 15 years, too.
November 10th, 2008 at 10:04 am
Yes, they are, and within 15 years, too.
Agreed. If you look at the Middle Kingdom’s history, they’re the original “what have you done for me lately?” people.
November 10th, 2008 at 11:10 am
The way I remember it, China would fragment into little kingdoms when huge catastrophe struck, usually a flood followed by a famine, but sometimes a foreign invasion. Then over a few centuries it’d be laboriously and bloodily reunited, to fragment again when the next famine or invasion hit.
My amateur guess is that a revolution is unlikely unless things get so bad that the government is no longer able to maintain their flood-control works.
November 10th, 2008 at 12:09 pm
My amateur guess is that a revolution is unlikely unless things get so bad that the government is no longer able to maintain their flood-control works.
Their economic growth is the flood control works. If that stalls, or god forbid, shrinks, you’ll see millions go back to abject poverty in the countryside. Or they’ll revolt.
Yeah, they might be killed, but that assumes the army doesn’t fragment, too.
The peasants may not give a shit about the cities, but their people have been getting the short end of the stick for years now. If there’s a famine because all these excess people filter back to the provinces, you can bet that the army won’t just sit around and do nothing.
The PLA started as a peasant force, and remains so.
November 11th, 2008 at 7:52 am
“Right- the Chinese people are going to rise up and throw out the bums who raised China from an impoverished nation occupied by half a dozen foreign powers to one of the leading industrial economies on earth.
So much wrong here. So little time.”
You might want to look into a little thing called the Cultural Revolution.
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