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I sense a lot of mood affiliation in the title that I'm sure will earn the New York Times a lot of clicks. China is the biggest success story of free trade in t
by jvm 9y ago
I sense a lot of mood affiliation in the title that I'm sure will earn the New York Times a lot of clicks. China is the biggest success story of free trade in the history of the world, and the contrarian take presented here is absurd to the point of silly.
Liberalization is a matter of degree. You can't cherry pick a particular protectionist policy South Korea had and then say, "Oh look see they used import substitution and still had a good outcome." You have to also explain why that import substitution policy didn't ruin the Korean economy the way it did Argentina, or in an extreme example, Maoist China. And what you'll find is that they became much more liberal in other ways.
If you're going to claim that liberalism doesn't matter you need to show your work. You need to show that in aggregate, countries that liberalize their economies do less well than countries with less liberal economies. But when you look at the data, you will find just the opposite: Countries that move in a liberal direction, like China, South Korea, and Chile, tend to improve their outcomes, while those that do not, like Argentina or Zimbabwe, tend to stagnate. And almost every wealthy country in the world is either highly liberalized or sitting on an ocean of crude oil. The fact that even liberal countries have illiberal policies doesn't disprove the benefits of liberalization.
Most likely, Asia succeeded in spite of protectionism, not because of it.
- FelixP 9y agoI would also point out that the author conflate two tightly-coupled but distinct spheres - the political and the economic. China, Japan, South Korea, and Singapore have all been massively successful because they acted aggressively in the political realm to foster growth and development (with little to no regard for Democratic norms). Conversely, their economic systems were and are fairly liberal (China being both the least developed of these as well as the biggest laggard on this front). Chinese citizens may not be politically empowered, but it is far easier to set up a company, hire and fire, etc. in Shanghai than in New York.
- ahartmetz 9y agoJapan and South Korea fostered growth and development with little to no regard for democratic norms? I mean yeah, their democracies look a bit strange to Westerners, what with Japan being governed by mostly one party and South Korea being a fairly new democracy... But what specifically do you mean?
- emodendroket 9y agoAh, yes, unfortunately, everyone who does not share your perspective is highly emotional and illogical. If liberalization is all that matters, why isn't a libertarian dream-country like Georgia rich?
- adventured 9y agoBecause Georgia isn't a libertarian dream country. They suffer from relatively high corruption. Transparency.org lists them as comparable to Grenada, Costa Rica, and Rwanda. Georgia has been subject to being ripped apart by Russia. Its politics are directly, violently influenced by its giant neighbor. There are no other highly prosperous nations in the region to trade with. All nations in the region are either extremely low on the per capita wealth & per capita income scores, or a few are barely mid-lower tier. Turkey, Romania, Bulgaria, Moldova, Russia, Ukraine, Syria, Turkmenistan, Uzbekistan, Belarus, Armenia, Azerbaijan, Serbia, etc. These are quite poor nations per capita. It's like you expect a Singapore or Hong Kong to pop up out of nowhere amongst the desert, without a Japan + South Korea + China to trade with. Much less being eg Denmark in the midst of economic valhalla, or Canada riding on the world's richest economy. They get ranked very low on property rights protections, government integrity (ie corruption), and judicial: https://www.heritage.org/index/country/georgia https://www.heritage.org/index/country/georgia You can have low taxes, or flat taxes, as in Russia as well, but if your system is a totalitarian dictatorship and part command & control economy, the results are still going to overwhelmingly tend to be mediocre. Or in the case of Georgia, if you still suffer from weak property rights protections and high corruption, trust is going to be very low when it comes to investing. To say nothing of the risk that Russia will randomly destroy the nation, as it's known today, in any given year. That foreign capital investment is a prerequisite to massive economic development. Prosperous nations very rarely exist in such circumstances, save for a few extremely resource rich examples, such as Qatar, UAE, Brunei and Saudi. Those few isolated examples are all that have existed in modern history out of the present ~195 nations.
- emodendroket 9y agoWell, by the same standard, we could say that China was very poor when Mao took over and China had historically been subject to a lot of famines. Poking holes in your examples is just as easy.
- blindwatchmaker 9y agoChina succeeded because it was in the prime position to take advantage of western manufacturing looking to move production facilities elsewhere for wage arbitrage. Right place, right time to reap massive export surpluses - and they were smart enough to use the opportunity to have built up a domestic market/technical knowledge base when wages inevitably started to raise and manufacturers began to move elsewhere again. You're going to see a lot less 'liberalization', and probably some reversals, in China in the coming years.
- rvern 9y agoRather mostly China succeeded because it had a population larger than any other country. Production depends primarily on resources and human labor is one of the most valuable resources. It is no surprise that population count is strongly correlated with nominal GDP. This should be completely obvious. It also refutes the author’s argument. Why has a market economy directed by a Communist state become the world’s second-largest?! Would Friedman find it hard to explain why China, run by a Communist Party, has emerged as central to the global capitalist economy!? China has 19% of the world population but roughly 10% of the world GDP. It is 79th in GDP per capita at purchasing power parity. We should not evaluate a country’s economic policies by looking at its nominal GDP without also looking at its population—this is nothing Friedman would have difficulty explaining.
- jvm 9y ago> Rather mostly China succeeded because it had a population larger than any other country …is that also why India "succeeded"?
- rvern 9y agoYes, at least in the sense of succeeding the article talks about. India is the third country in the world by GDP at purchasing power parity, which is consistent with its population being second largest.
- jvm 9y agoI am very confused by this explanation. Why was it right place right time? Why not India? Why not Kenya? Why has Bangladesh followed the same strategy but been so much less successful, with wages much lower than in China?
- shorttime 9y agoWhat your thoughts on states like Somalia and Libya? They are, without a doubt, the freest market feasible. There's no government to control any economic policy. Why are they not succeeding?
- rvern 9y agoThey are not the freest market feasible.