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Preview: Comments on: Let’s Go Pick Some Cherries

Comments on: Let’s Go Pick Some Cherries



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Last Build Date: Sat, 22 Aug 2009 15:19:02 +0000

 



By: Dweep

Wed, 07 Nov 2007 15:28:41 +0000

Reuben/Gaurav - Apologies for the late reply. Have been traveling. To return to your two points, I cannot agree more in theory that the state should stay away from sectors where its presence is merely distortionary and creates inefficiency. Our disagreement comes, however, when we must choose between distortion by the state or inherent distortions in a free market, or between inequality and inefficiency. You seem to prefer the latter option, while I seem to prefer the former. Does this address your point? Gaurav, elaborating further on the role of the state would require pondering too much on specific sectors. Suffice to say that even the creation of a dynamic private sector with light regulation and low levels of corruption requires action the concious adoption of positive policies by the state. And no, your example of Pakistan does not follow from mine on China - the latter illustrates simply that a state CAN play a positive role, contrary to the arguments of many (and has nothing to do with the type of government). Girish, I must support your note - free markets are great at some thing, but not at others. Accounting for non-economic barriers to mobility is one of the problems they, and economists, do not factor in. Presuming that theory will work in practice, or even presuming that we have the same needs/objectives as other countries, is to miss the point.



By: Girish Mallapragada

Fri, 26 Oct 2007 18:00:35 +0000

@Reuben Given that the government has indeed messed up areas such as primary education and health for many decades and that the consequences of such a socialistic approach are primarily felt in the rural areas, are you suggesting that a complete free market solution will now solve the problem? Would private enterprise have provided a suitable alternative to solving say India's education and primary health care problems during the sixties and the seventies? If someone insists it would have, they can do so because they don't have the burden of evidence weighing against them, as it never happened. I do understand that a minimal role of the government is prudent when it comes to spending the tax payer's money on "developmental" projects. However, it also seems to me that much of what has been learnt from the growth of western economies where the differences in population (to begin with) were not as great as in India, is being applied to the Indian context through the rubric of free-market economics. A more rational approach that takes into account the fact that the barriers for social and economic mobility in India are higher and stronger(due to the historical baggage), would probably be a slower, yet better approach to solving this problem. Your first two lines almost provide a justification for sacrificing political and social freedom for economic growth, and I apologize if I have read it the wrong way. Finally, I have issues when economists praise China for its seering growth, neglecting the costs that have come with the increases in bank balances and downplay India's when in my view we have managed to do it with a democratic backdrop.



By: Reuben

Fri, 26 Oct 2007 07:11:59 +0000

Dweep, I don't know if you're deliberately avoiding my point. Yes, the government has played a major role in China, but it's almost inevitable the government would platy that role given the political system there (there is no other option available). I go back to my point about industrialization in a fully democratic context where the governments/politicians will be subject to electoral pressures and will therefore ALWAYS choose the expedient over the right option. Short-termism is inevitable in such a situation and even politicians who know better have no option if they want to remain in power or be re-elected. How many times have you seen this situation play out in the last few years? Given the short-termism at work (and it's not going away anytime soon), I would suggest that the government should really withdraw from sectors where their presence is merely distortionary, creates inefficiencies and cause a massive waste of tax-payer money (NREG anyone?).



By: budu

Fri, 26 Oct 2007 01:55:15 +0000

One interesting document . http://stage6.divx.com/user/fmn/video/1743448/Why-Democracy---Please-Vote-For-Me .Why Democracy - Please Vote For Me . A documentary following the elections for class monitor in a 3rd grade class in Wuhan, China. Please Vote for Me gives a glimpse into China’s contemporary urban middle classes. It won the Sterling Feature Award at Silverdocs in 2007.



By: Gaurav Sabnis

Thu, 25 Oct 2007 14:33:22 +0000

Dweep... your point about how the role of the government can not be wishes away... has not been made sufficiently. What exactly is this role, beyond internal law and order, infrastructure and defense? Or is that all you speak of? Could you please be more specific than just saying there is a role? China is a communist country, and as such state is always going to play a role there. Using it as an example to make your point does not seem convincing. It is equivalent to pointing out the improvement in Pakistan's economy since Musharraf took over and saying that there is a role for the miltary to play in running a country and the role of the military can not be wished away.



By: thecupgr

Thu, 25 Oct 2007 03:19:12 +0000

Following video and paper (with real pictures) can show you the China's poorest Dingxi county at Gansu Province. Yes, this is THE poorest place in China you will be able to see if you travel out of the cities: people's homes, their living conditions, food, and environment. According to Chinese publications and history, Dingxi is the king of the poor regions in China. One of the India journalist delegation visited Gansu last year and one of them wrote about the comparison between Bihar and Gansu. In his paper, he stated that Gansu's per capita GDP is about 10 times of Bihar. But he might well overstate it. http://english.aljazeera.net/NR/exeres/1522979B-107E-46C8-A84E-7425F60C3EE9.htm http://www.youtube.com/watch?v=L-G5KiYAly4&mode=user&search=



By: thecupgr

Wed, 24 Oct 2007 01:19:53 +0000

Girish & Pragmatic, Thanks for the kind words. For social unrest, it can also be framed under a corporate development model (or theory) to explain. Major corporations, as we all know and might have experienced, have tight control and operational structures. They have good and bad managers. Periodically, corporations will do lay-offs, which nowadays is so common and can be done wothout any condition. So you hear often about worker rights lawsuits and even strikes for making a better contract deal. For looking China (also India) as a corporation, social unrest should be expected. Regardless how sound the government policies are, you have bad and corrupted officials. You have social issues at every level. Actually, it's abnormal if such unrest are not existed. The key here though is to see if governments (local and central, like corporations) have effective mechanisms to address these issues. In China's case, it seems that overall conditions on living standards, education, and poverty reduction have dramatically improved, partially because of the response to the pressure of equality and social stability. Using a corporate analogy to explain why China has developed fast in last thirty years makes a lot of things easy to understand. There are so many corporations out there, but only a limited number of them can deliver long-lasting growth. In Jim Collin's "From Good to Great" book, he compared ten great companies to ten comparison comapnies (with similar products mix) under similar operational conditions, ten great companies delivered an astonishing performance while their comparison companies stayed almost at the same place. You can even put a number on China's development compared to other developing nations. In growth rate alone in last thirty years, you can see the difference. For one thing, the corporate-style dictatorship has helped China for building its infrastructures. Most people in the west nowadays promote a full demacratic idealogy for economic growth, but the reality is that United States's infrastructures were built by government planning and oversight after WWII. For developing countries, the demacratic election process is often good on the paper, but has proving to be ineffective for building infrastructures. The bottomline is this: any model, if put politics and prejudice aside, has its own merit. An open mind approach is the best way to see through the differences.



By: Pragmatic

Tue, 23 Oct 2007 17:07:07 +0000

@thecupgr: A very interesting viewpoint indeed. However, you might like to look at the extracts from John Lee's paper at http://www.theaustralian.news.com.au/story/0,25197,22614110-28737,00.html Social unrest in China: Officially reported instances of social unrest (involving 15 or more people) have risen from 8700 in 1993 to 87,000 in 2005 (the latest available figures). This is about 240 instances each day. ...although indicators are that millions have been saved from poverty under World Bank standards of $US1 a day, this statistic must be tempered by the fact social and financial safety nets (such as health, education and welfare) have been greatly reduced during the reform period....Meanwhile, government spending in the same period has been reduced from 32 per cent to 15 per cent. Much progress was made from 1979 to the mid-1980s. Since then, of the approximately 900 million peasants, about 400 million have seen their incomes stagnate or decline during the past decade. ... the size of instances of unrest is growing and can be frightening. For example, in cases recently documented for 2003, a mob of 50,000 torched police cars in Chongqing to protest against the beating of a migrant worker; 100,000 stormed a government building and forced the postponement of a dam project in Sichuan due to inadequate compensation; 20,000 miners and their families rioted against lay-offs and the loss of their pensions. Other recent instances of unrest include 80,000 retired workers who protested in China's northeast over unpaid pensions in 2002; 30,000 rioting over exorbitant bridge tolls issued by local authorities in 2004; 7000 textile workers protesting after being forbidden to form their own union in the Shaanxi province in 2004. Of the 74,000 instances recorded in 2004, 17 involved 10,000 or more people, 46 involved 5000 or more people and 120 involved 1000 or more people. That order was restored only after martial law was implemented in many of these cases highlights the seriousness of the problem.



By: Girish Mallapragada

Tue, 23 Oct 2007 03:33:13 +0000

@thecupgr: Appreciate your viewpoint.



By: thecupgr

Mon, 22 Oct 2007 23:52:40 +0000

Girish, like your comments. Put politics and historical factors aside, such discussions are very helpful. For China's political system, like Dweep said, has its own merit, otherwise one can not make the economy grow for thirty years at ~10%. One way to look at this is to compare China as a major corporation. Every major company, if you have worked in one and should agree, is a defacto dictatorship although it has board to oversee the operations (but the board members are often appointed by CEO, just like China's one party system and parliament). If China is viewed as a corporation, which is largely true nowadays, the problems associated with China and its economic development can be easily understood. We already know that most dictatorships will fall sooner or later, but for every 100 failed companies, there is a GE or P&G that can manage its long term planning well and survive through difficult times. GEs or P&Gs can also implement comprehensive leadership programs to spot and train future company leaders (which like what China is doing nowdays). The corporation governing mechanisms, if managed properly, actually can have best people on top in orderly fashion and keep company running smoothly without disruptions. If you compare demacratic systems, elections can replace governments and development may become the second thought because you have to get the power first to do anything. But imaging a corporation make such changes and can one expect it still run the business smoothly? Chinese system has experienced fundamental changes in last thirty years. If anything, it's definitely no longer a traditional dictatorship. Rather it's gradully envolved into a non-traditional corporate-type dictatorship. The good part of this change is that it may develop into a new model that can combine two good things together: corporate governance and also demacratic pricinples (let's all hope). Business Week featured a China article recently and it showed five new faces in leadership and most of them have Ph.D. degrees in economics, so you can see that the system did select people who are the experts in economics. The selection system on these new faces can be compared to a corporation succession process(People at the top must know both economics and politics). Recall Jim Collins said in his book "From Good to Great" that most great companies pick their leaders from inside the organization. China, if you view as a corporation, certainly follows his advice. For last 30 years, China has indeed growed like GE or P&G. But at sometime in the future, a major internal adjustment will come, but one should not assume that such adjustments will come soon because current leadership changes seem to become routine and this will allow the government to focus more on poverty reduction and make longer term planning.