And thus the brain drain from China will commence at full speed (more than present). Seems government regulators in China don't understand market forces either. Good to know.
Brain drain is a concern, but the world's most populous country will always be a target, especially as the new rich enjoy sending thier kids to get Western educations.
Something that should be apparently to is with the recent political events in the US is that when you control the media, you can control the narrative and to some extent the culture. Cons had far more control over this than any faction in America. Much of the early education is geared towards civil responsibility.
We also know that China isn't above flexing it's authoritarian muscle. Gifted students in math and science are often shanghaied (heh) into schools designed to feed thier own tech sector and PLA Unit 61398
Amazon seems pretty efficient. ;)
Once a company gets large enough, some of it’s inefficiencies can be caused by similar issues that centrally planned economies face, however the two are very different. Amazon still has to contend with market forces, and its resource allocation decisions have to be mostly aligned with that. In a centrally planned economy, resource allocation only has to align with the central plan.
Amazon also doesn’t have anything even close to the same supply chain complexity of an economy. I’d suggest you read ‘I, Pencil’, which convincingly asserts that not a single person knows how to make a pencil.
China’s tech boom largely comes from entrepreneurs innovating in a market that is in many ways under-regulated, which has been a very efficient environment for those entrepreneurs to operate in. If the communist party wants to take more control of that industry, it’s hard to see how it’s going to do that without impacting efficiency.
The difference between centrally planning your household finances, a company or a whole country is really just one of scale. Because the plan can allocate internal resources arbitrarily so long as the external forces are matched out, it's possible for this internal allocation to be wildly imbalanced. But if you're personally overspending on some item, you're going to feel that pretty quickly, while a corporation might sink a lot of money into a doomed project before it gets axed, and a country can spend decades before correcting. The larger an organization is, the longer it takes for a pressure felt at just one part of the organizational border to propagate far enough that it affects the overall plan.
This is actually less a problem of central planning than of an aversion to change the plan. In a market, there is little attachment to other participants, and if a better supplier for something pops up, nobody has any qualms about switching to them. But most companies would hesitate much more before cutting an internal department than they would if it were just a question of hiring a different contractor. Because changing the plan feels like admitting failure, inefficiency creeps in.
So central planning could actually work, but you would have to continually adapt the plan to changing circumstances. The end result might look a lot like a market economy, though.
This doesn’t scale up from a household scale to an economy-wide scale for numerous reasons, but probably the most significant ones are:
1. The non-existence or competition means that inefficient enterprises cannot fail.
2. The mind-boggling complexity of centrally planning the supply chain of an entire economy unavoidably introduce massive inefficiencies.
If a household wants more bread, they can just allocate more resources to buying bread. But if I want to plan for an economy to produce more bread, I need to individually allocate more resources to every single element of the bread supply chain. There’s no way a central planner could be expected to do that with the same efficiency as market forces could.
I've often wondered about the contradiction wherein it's argued that the economy thrives on competition and yet corporations larger than many nation states never apply the same model internally.
(I'm aware there are efforts in some companies at creating "internal markets" but never close to the scale of market forces that exist externally to the company)
Except withering and dying for a company is not a humanitarian crisis, but it is for a country. A company can also fire an underperforming team member, or ditch an entire department. Where as terminating underperforming citizens, or unneeded communities is generally frowned upon.
Free market or centralized economy, at the end of the day someone is making an executive decision about how resources are allocated. Whether you believe that executive person (or committee) should be acting in the best interests of the public or a group of shareholders is a matter of principle, not logistics.
In theory, a failing government is replaced by a different government. In practice, whether voters successfully identify problems and pick a better winner is an open question.
Unregulated free markets could prove to be at a disadvantage. We shouldn’t be engaged in free trade with China. Countries or robber barons of those countries shouldn’t be allowed to destroy their environment to have a cheaper price.
Although I would like to see a sample of a single lean and mean organization in USSR...
> [1] This is one of the advantages of not having the universities in your country controlled by the government. When governments decide how to allocate resources, political deal-making causes things to be spread out geographically. No central goverment would put its two best universities in the same town, unless it was the capital (which would cause other problems). But scholars seem to like to cluster together as much as people in any other field, and when given the freedom to they derive the same advantages from it.
Capitalism and planning isn't as far apart as it might appear.
What is a large multinational corporation except a centrally planned bureaucracy incentivized to maximize profits to shareholders? And where is the majority of wealth in the West (especially in the tech world), except in the hands of multinationals?