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Why would growth be bounded depending on the cause of that growth? Genuine question, not trying to be snarky. 50 years might be an unrealistic timeframe for Ch

by spangry 10y ago

Why would growth be bounded depending on the cause of that growth? Genuine question, not trying to be snarky. 50 years might be an unrealistic timeframe for China, but then again who knows? Putting aside my personal view that they're going to either stagnate or go backwards within the next decade, it doesn't seem impossible. Although they're obviously much much smaller, Singapore is an example of a country that went from abject poverty to one of the richest in the world in less than a generation. Again, very different country compared to China, but they were also pretty much at rock-bottom even a decade after WWII ended. They were bombed, invaded and occupied by the Japanese in WWII, which meant they were heavily air-raided/bombed by the Allies in the later stages of the war. They had no natural resources, scarce water supplies and were kicked out of the Malaysian Federation in the early 60s. Even Lee Kwan Yew, at the time, appeared to think the latter was a death sentence: https://www.youtube.com/watch?v=41ND3U_9HgQ https://www.youtube.com/watch?v=41ND3U_9HgQ . I dunno. I guess all I'm saying is miracles can happen (although I personally think it unlikely in China's case).

Bartweiss 10y ago
> Why would growth be bounded depending on the cause of that growth? Totally fair question. I didn't mean specific causes are bounded (it doesn't matter if your conductors are yttrium or graphene), but I wasn't terribly clear. What I mean is that relative-growth gains are bounded in a way that absolute-growth gains aren't. Relative growth (i.e. cutting better trade deals, capturing more share and profit on what exists) is constrained by existing wealth + wealth growth. So the pie you can steal from other countries, plus the fairly stable ~2% annual increase in the size of the pie. You can do a bit better than that by increasing internal efficiencies, and in fairness Singapore has done well with this - their health efficiency per healthcare dollar is sky-high, and it's not because they're pioneering radical new medicine. But even so, these effects are generally limited by international conditions and the size of your existing inefficiencies. (Again, to be fair, sky-high in China.) Absolute growth I'm considering unbounded, or bounded at ludicrous heights. It's about increasing the growth rate of the pie (and capturing some/all of that growth). So industrialization, nitrate fertilizers, and similarly ground-breaking tech all let the pie grow faster and produced incredible pie-growth wealth. (Not computerization, an oddity for which I have theories but no one seems to have answers.) All of which is to say that the larger your nation, in both absolute terms and percentage of globe terms, the harder it is to get rich on relative gains. Discreet banking was worth some relatively fixed percentage of money movement. That created huge wealth in Switzerland (and the Seychelles), but can't be scaled by employing 10x as many bankers. Bridging East and West with free markets, low-corruption governance, and a stable core city was worth some large amount of money for Singapore, but that can't be scaled by developing 10 such cities. These are tricks where you interpose yourself in the middle of an extreme profit flow, and if your group is small enough then collecting your cut at the margin makes everyone rich. I confess that I'm overstating, though. My personal suspicion is that gross inefficiencies are a defining trait of most economic activity, and China is surely worse than many. So in that sense, it might be possible to pour money into efficiencies like health, education, and (sustainable) infrastructure and reap massive gains. It might be that 2% global annual growth can be locally beaten by just being less stupid, but Singapore and Switzerland were simply too small alter the global stats with their local improvements. So I could be vastly wrong - maybe handing iron rule of China to another Yew could produce 4% or 8% growth every year, even without any special breakthrough. As for will happen, I think we agree there. Too much fragility, not enough political will.
- spangry 10y ago
  Thanks for the well thought out reply. I think what you say is sensible in the context of relative growth. I suppose the two factors that might allow relative growth of one country's economy to be net positive growth globally would be (a) gains specialisation and trade and (b) advancement in technology (in a sense, one of the aspects of 'efficiency' you discussed above). It seems easy enough to argue one way or the other about how much scope these factors create for 'net positive relative growth', but I would definitely agree it's bounded at some level. It's a good point about Yew having the advantage of a near-autocracy. Although it might sometimes appear that way to us westerners, this is not entirely the case in China. I have noticed though that there is a (not entirely unjustified) stain of thought that authoritarian government is better able to implement unpopular, but growth positive, government economic policy. It's just my vague concern with nothing to really back it up, but I can't help but feel were slowly sliding towards illiberal 'democracy' in much of the first-world anglosphere. Hopefully I'm mistaken, as I quite like genuine liberal democracy. The computerisation point is a very interesting one. Putting aside the possibility it's a measurement issue, one other theory I've seen posits that computerisation more often leads to cannibalisation of industries, rather than creation. Albeit these argument generally acknowledge that minor (but still positive) gain are made from higher industrial efficiency. My own pet theory is that computerisation has turned many markets into 'winner-takes-all' markets, meaning gains from efficiency have been translated into (highly concentrated) private wealth much more than they have led to broader increases in economic growth. I think there are two factors at play here: (1) the positive network externalities often associated with computerised markets and (2) the 'always increasing' economies of scale that purely (or mostly) computerised services enjoy, due to the non-rivalrous nature of their consumption. I'd be very interested to hear your theories if you're willing to share :)

by spangry 10y ago

Bartweiss 10y ago

> Why would growth be bounded depending on the cause of that growth? Totally fair question. I didn't mean specific causes are bounded (it doesn't matter if your conductors are yttrium or graphene), but I wasn't terribly clear. What I mean is that relative-growth gains are bounded in a way that absolute-growth gains aren't. Relative growth (i.e. cutting better trade deals, capturing more share and profit on what exists) is constrained by existing wealth + wealth growth. So the pie you can steal from other countries, plus the fairly stable ~2% annual increase in the size of the pie. You can do a bit better than that by increasing internal efficiencies, and in fairness Singapore has done well with this - their health efficiency per healthcare dollar is sky-high, and it's not because they're pioneering radical new medicine. But even so, these effects are generally limited by international conditions and the size of your existing inefficiencies. (Again, to be fair, sky-high in China.) Absolute growth I'm considering unbounded, or bounded at ludicrous heights. It's about increasing the growth rate of the pie (and capturing some/all of that growth). So industrialization, nitrate fertilizers, and similarly ground-breaking tech all let the pie grow faster and produced incredible pie-growth wealth. (Not computerization, an oddity for which I have theories but no one seems to have answers.) All of which is to say that the larger your nation, in both absolute terms and percentage of globe terms, the harder it is to get rich on relative gains. Discreet banking was worth some relatively fixed percentage of money movement. That created huge wealth in Switzerland (and the Seychelles), but can't be scaled by employing 10x as many bankers. Bridging East and West with free markets, low-corruption governance, and a stable core city was worth some large amount of money for Singapore, but that can't be scaled by developing 10 such cities. These are tricks where you interpose yourself in the middle of an extreme profit flow, and if your group is small enough then collecting your cut at the margin makes everyone rich. I confess that I'm overstating, though. My personal suspicion is that gross inefficiencies are a defining trait of most economic activity, and China is surely worse than many. So in that sense, it might be possible to pour money into efficiencies like health, education, and (sustainable) infrastructure and reap massive gains. It might be that 2% global annual growth can be locally beaten by just being less stupid, but Singapore and Switzerland were simply too small alter the global stats with their local improvements. So I could be vastly wrong - maybe handing iron rule of China to another Yew could produce 4% or 8% growth every year, even without any special breakthrough. As for will happen, I think we agree there. Too much fragility, not enough political will.

spangry 10y ago
Thanks for the well thought out reply. I think what you say is sensible in the context of relative growth. I suppose the two factors that might allow relative growth of one country's economy to be net positive growth globally would be (a) gains specialisation and trade and (b) advancement in technology (in a sense, one of the aspects of 'efficiency' you discussed above). It seems easy enough to argue one way or the other about how much scope these factors create for 'net positive relative growth', but I would definitely agree it's bounded at some level. It's a good point about Yew having the advantage of a near-autocracy. Although it might sometimes appear that way to us westerners, this is not entirely the case in China. I have noticed though that there is a (not entirely unjustified) stain of thought that authoritarian government is better able to implement unpopular, but growth positive, government economic policy. It's just my vague concern with nothing to really back it up, but I can't help but feel were slowly sliding towards illiberal 'democracy' in much of the first-world anglosphere. Hopefully I'm mistaken, as I quite like genuine liberal democracy. The computerisation point is a very interesting one. Putting aside the possibility it's a measurement issue, one other theory I've seen posits that computerisation more often leads to cannibalisation of industries, rather than creation. Albeit these argument generally acknowledge that minor (but still positive) gain are made from higher industrial efficiency. My own pet theory is that computerisation has turned many markets into 'winner-takes-all' markets, meaning gains from efficiency have been translated into (highly concentrated) private wealth much more than they have led to broader increases in economic growth. I think there are two factors at play here: (1) the positive network externalities often associated with computerised markets and (2) the 'always increasing' economies of scale that purely (or mostly) computerised services enjoy, due to the non-rivalrous nature of their consumption. I'd be very interested to hear your theories if you're willing to share :)