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Centralised planning will beat democratised decision making if they indeed manage to respond in time to a changing environment. The advancements in tech and com

Centralised planning will beat democratised decision making if they indeed manage to respond in time to a changing environment. The advancements in tech and communication allows you today to be more effective than ever. Think about global corporations with offices around the world. They are effectively operating under a centralised model and they do it very well. What China learnt in the past 4 decades was how to manage the beast, not behead the messenger and have an effective planning anchored in true market signals. Another point worth mentioning is that the Four Tigers are working with a planning and investment horizon of 30-50 years. Since they don't have to justify every four years about what they've been up to, they can be more effective in chasing bigger investments that have a longer-term ROI such as research, education, strategic industrial branches. Now how do you compete with that?

netsharc 8y ago
> Since they don't have to justify every four years about what they've been up to I think saner governments manage that pretty well, they know research is good and beneficial so there's no questioning. Meanwhile in the USA, coal is or is not a health risk as policy dictates.
- trophycase 8y ago
  Oh please, China burns coal and pollutes their air, then publishes fake air quality index numbers and won't let their people talk about the air quality.
Tsubasachan 8y ago
This is Italy, anyone can beat them. Maybe now Italy can beg Beijing for money instead of Frankfurt.
- muxator 8y ago
  Don't you think your analysis is a bit too much simplistic? The ECB monetary politics was never meant to "save" any specific country (a whole system, maybe. You could argue abut this). On Beijing giving away money to Italy: it is a commercial deal we are talking about. The political implications of this deal are way more complex than a passing statement.
schuke 8y ago
Corporate-like government would work perhaps only if citizens can buy social security against failed government. Corporates go bust all the time so that only those with good cerntral planning are left.
philwelch 8y ago
The belt and road initiative is actually a response to the failure of Chinese central planning. So much of China's economy is specialized in construction at this point that they can't risk the mass unemployment that would result from popping the construction bubble, so instead they're doing everything they can--building high speed trains to nowhere, building infrastructure in other countries, building entire cities that nobody lives in--to keep the ball rolling.
- seppin 8y ago
  Also, infrastructure does not lead to economic growth. Quite the other way around, really.
  - adventured 8y ago
    It's a sliding scale of return. If your infrastructure is already decent, you will see a terrible return on your investment, as in the case of Japan's debacle of decades of infrastructure investment that produced negative real growth (due to the debt vs growth generated). If you're China in 1980 or 1990 (ie third world infrastructure), vast infrastructure spend will faciliate your decades-long growth explosion. Without that, you can't become China of 2019, you can't actually go from a $400b economy to a $14t economy. The ports, roads, rail, bridges, utilities, energy generation, et al. is a requirement and produces extraordinary returns in a context like that. It drastically boosts economic productivity and raises your maximum output potential by a lot. As another recently discussed (on HN) example, Romania has had one of the world's fastest growing economies in recent years. Economically it's attempting to push into a solid middle-tier economic nation, in the footsteps of countries like Poland, Chile or Slovakia. Romania simultaneously has a horribly lagging roads network that is in desperate need of expansion and improvement. It's very likely that properly building out their roads infrastructure would help facilitate their economic boom continuing; and that not doing so, would act as a serious point of friction on growth long-term. You can't get to $25k GDP per capita, with roads built for a $2k GDP per capita economy.
    - philwelch 8y ago
outwebbyyou 8y ago
You don’t need to compete with it. The chinese dictatorship model (like Soviet union before it) will collapse within time. One man decision making and the need to save face means it is incapable of making quick responses to changing environments. State owned model means there are tons of inefficient companies making inefficient investment decisions. Oppression means it will force others against it. Thus China currently has a 400% debt to gdp, private firms defaulting and failing while state firms hoards and makes inefficient investments, most of the free world economies aligning against China, more than 1/3 of rich people in China wants to/ are in the process of leaving, etc
realusername 8y ago
> Centralised planning will beat democratised decision making if they indeed manage to respond in time to a changing environment Only if you have competent leadership (which they seem to have right now). When you have a bad leadership and a dictatorship, there's no safeguard to prevent a total disaster to happen. The main advantage of a democracy isn't the power to the people but the separation of power, that's sometimes the last safeguard available to prevent a country to collapse.
dragonwriter 8y ago
> Centralised planning will beat democratised decision making Centralized / decentralized planning and democratic / autocratic decision making are orthogonal concerns.
thetechlead 8y ago
Some people still think China's economy is a centralized one. No it's not. It's a mix of state owned and private - the former really good at long-term planning for national strategic goals, maintaining economic stability and building infrastructures with no short term returns, AND vibrating private sectors that drive innovation and employment. How they keep the balance of the two is mythical to many. However the Chinese came to this mixed system not by design, but with some luck. It needs to be studied and whether it can be replicated elsewhere remains a question.
- chessturk 8y ago
  My understanding is that the Chinese economy is an "artificial" Free Market economy to bridge the gap between Maoism and here-to unforseen Communist Utopia. Hegelian/classical Marxist thinking requires a society to pass through a capitalist phase in order to industrialize to the point that the populace begins demanding socialist concessions. It was my understanding that the Post-Mao creation of free-market-like conditions in China was an admission by Communist leadership that the Hegelian model of history could not be short circuited (as Lenin and Mao attempted), and capitalist style economics was required to industrialize, but that the capitalist economics was a temporary solution. I could be mistaken though, and I'm curious why you thought they arrived there by luck.

netsharc 8y ago

> Since they don't have to justify every four years about what they've been up to I think saner governments manage that pretty well, they know research is good and beneficial so there's no questioning. Meanwhile in the USA, coal is or is not a health risk as policy dictates.

trophycase 8y ago
Oh please, China burns coal and pollutes their air, then publishes fake air quality index numbers and won't let their people talk about the air quality.

Tsubasachan 8y ago

This is Italy, anyone can beat them. Maybe now Italy can beg Beijing for money instead of Frankfurt.

muxator 8y ago
Don't you think your analysis is a bit too much simplistic? The ECB monetary politics was never meant to "save" any specific country (a whole system, maybe. You could argue abut this). On Beijing giving away money to Italy: it is a commercial deal we are talking about. The political implications of this deal are way more complex than a passing statement.

schuke 8y ago

Corporate-like government would work perhaps only if citizens can buy social security against failed government. Corporates go bust all the time so that only those with good cerntral planning are left.

philwelch 8y ago

The belt and road initiative is actually a response to the failure of Chinese central planning. So much of China's economy is specialized in construction at this point that they can't risk the mass unemployment that would result from popping the construction bubble, so instead they're doing everything they can--building high speed trains to nowhere, building infrastructure in other countries, building entire cities that nobody lives in--to keep the ball rolling.

seppin 8y ago
Also, infrastructure does not lead to economic growth. Quite the other way around, really.
- adventured 8y ago
  It's a sliding scale of return. If your infrastructure is already decent, you will see a terrible return on your investment, as in the case of Japan's debacle of decades of infrastructure investment that produced negative real growth (due to the debt vs growth generated). If you're China in 1980 or 1990 (ie third world infrastructure), vast infrastructure spend will faciliate your decades-long growth explosion. Without that, you can't become China of 2019, you can't actually go from a $400b economy to a $14t economy. The ports, roads, rail, bridges, utilities, energy generation, et al. is a requirement and produces extraordinary returns in a context like that. It drastically boosts economic productivity and raises your maximum output potential by a lot. As another recently discussed (on HN) example, Romania has had one of the world's fastest growing economies in recent years. Economically it's attempting to push into a solid middle-tier economic nation, in the footsteps of countries like Poland, Chile or Slovakia. Romania simultaneously has a horribly lagging roads network that is in desperate need of expansion and improvement. It's very likely that properly building out their roads infrastructure would help facilitate their economic boom continuing; and that not doing so, would act as a serious point of friction on growth long-term. You can't get to $25k GDP per capita, with roads built for a $2k GDP per capita economy.
  - philwelch 8y ago

outwebbyyou 8y ago

You don’t need to compete with it. The chinese dictatorship model (like Soviet union before it) will collapse within time. One man decision making and the need to save face means it is incapable of making quick responses to changing environments. State owned model means there are tons of inefficient companies making inefficient investment decisions. Oppression means it will force others against it. Thus China currently has a 400% debt to gdp, private firms defaulting and failing while state firms hoards and makes inefficient investments, most of the free world economies aligning against China, more than 1/3 of rich people in China wants to/ are in the process of leaving, etc

realusername 8y ago

> Centralised planning will beat democratised decision making if they indeed manage to respond in time to a changing environment Only if you have competent leadership (which they seem to have right now). When you have a bad leadership and a dictatorship, there's no safeguard to prevent a total disaster to happen. The main advantage of a democracy isn't the power to the people but the separation of power, that's sometimes the last safeguard available to prevent a country to collapse.

dragonwriter 8y ago

> Centralised planning will beat democratised decision making Centralized / decentralized planning and democratic / autocratic decision making are orthogonal concerns.

thetechlead 8y ago

Some people still think China's economy is a centralized one. No it's not. It's a mix of state owned and private - the former really good at long-term planning for national strategic goals, maintaining economic stability and building infrastructures with no short term returns, AND vibrating private sectors that drive innovation and employment. How they keep the balance of the two is mythical to many. However the Chinese came to this mixed system not by design, but with some luck. It needs to be studied and whether it can be replicated elsewhere remains a question.

chessturk 8y ago
My understanding is that the Chinese economy is an "artificial" Free Market economy to bridge the gap between Maoism and here-to unforseen Communist Utopia. Hegelian/classical Marxist thinking requires a society to pass through a capitalist phase in order to industrialize to the point that the populace begins demanding socialist concessions. It was my understanding that the Post-Mao creation of free-market-like conditions in China was an admission by Communist leadership that the Hegelian model of history could not be short circuited (as Lenin and Mao attempted), and capitalist style economics was required to industrialize, but that the capitalist economics was a temporary solution. I could be mistaken though, and I'm curious why you thought they arrived there by luck.