Tuesday, January 21, 2014

Second Time as Farce

Can China command their economy to grow?

I've long held that China's massive economic growth isn't all that miraculous given that it rides the simple expedient of moving peasants into urban factories. The Soviet Union had pretty impressive growth, too, until they stagnated.

The most inefficient factory worker is going to produce far more GDP than the most efficient peasant farmer. As that simple input dries up, economic growth will slow. And as pay for those jobs increases, China is starting to lose their low-cost manufacturing jobs that gave those migrating peasants a factory to work in.

So that path to continued high growth rates is going away. Although China has the advantage over the Soviet Union of producing goods the world wants, so it isn't an exact comparison.

Apparently, China's leadership has noted the success of moving peasants into factories but forgotten that you need low-wage manufacturing jobs for those former peasants to do for that migration to make sense.

I'm late to this, but the last couple days I've been catching up on magazines piling up under a chair. My Internet was dead all day Saturday, and even today I kept taking a crack at whittling the pile down. I really need to do better about keeping up with the magazines I do get.

Anyway, a US Naval Institute Proceedings issue from September 2013 has an article that says:

In July, the Chinese government announced an initiative to move 250 million (not a misprint!) people from rural areas to cities over the next two decades. The relocation project has the ham-handed appearance associated with other grand social-engineering projects of China's past, such as the disastrous "Great Leap Forward."

I seems obvious that Chinese authorities have not made any effort to generate sufficient jobs for those they want to move. The country is already bedeviled by tens of millions of unemployed, constantly seeking temporary work.

Yes, China benefited from lots of people moving from rural areas to cities to take jobs in factories looking for workers and desperate to take anyone.

China can't replicate that leap in GDP by sending people from rural areas to cities and hoping they find jobs not now in existence.

Are the Chinese so deep into state capitalism that they have forgotten that Leninism relied on urban workers upset enough about their lot in life to be led into revolution?

Is China, whose Communist Party altered Marxism by relying on peasants to support their movement, just moving the most conservative people--the peasants, as Marx called them--out of their rural homes and making 250 million proto-revolutionaries waiting for a vanguard to lead them against the Chinese Communist Party?

Could that vanguard be from the increasingly nationalistic leaning military that stops thinking of itself as a defender of the Chinese Communist Party?

Mind you, I'm not saying our leadership is wiser. After noting how people who own homes and have college degrees are more productive citizens, our government made it easier to get both--neglecting that the stability may have been provided by the determination to get both rather than the papers showing a degree or mortgage. And that worked out swell.

Let's see how China's more massive program works.