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Comment by throwawawua4234 | Hacker News Reader

Is there any knowledge on why East Asian Tiger economies do so well with state backing ?

The major takeaway from the 'Princes of Yen' by Richard Werner is about how Japan soared from a destroyed country to an economic powerhouse, before being brought down by the bankers at the BOJ, ostensibly to change the system from a 'state backed economy' to a US-styled one. Ditto with the Asian tigers in Thailand, S Korea etc.

Such managed-economies have failed miserably in many other places - notably in India. China seems to be following the path of its neighbors, however.

On a meta-level, I don't see what the big deal is TBH - whatever floats ones boat eh ? The argument about 'unfairness' is a bit of a joke, since it is well known that there are very deep (albeit hidden) connections/interests b/w state and corporations in Western nations.

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> I don’t see what the big deal is TBH

The main issue is that Italy is part of the EU, and also one of its major economies. The argument about unfairness is absolutely not a joke. In fact, it’s the main point. Doing business in China as a foreign-owned company in many sectors of the economy is, simply put, a huge challenge, when not outright impossible. This is mainly due to opaque or protectionist regulations. State-backed competitors also make the market harder to penetrate since they will always win price wars. Then add lack of concern for intellectual property.

Chinese companies don’t have these problems in Europe. Not even close. They enjoy all the advantages of a (basically) free market, whereas the opposite is not true. This is where the “unfairness” is.

The EU has been trying to find some leverage against China to balance the scale for some time now, albeit our efforts have been mild. That’s because the EU doesn’t have a common foreign affairs strategy and individual member states are always more concerned with their internal politics to actually go figure out one.

So China can just come here, pick a country that can be easily enticed by the promise of bilateral cooperation and handsome investments, and all of a sudden the EU now has a member who will start voting against anti-China policies.

Without a unified will, the EU member countries don’t have the contractual power to demand and obtain anything from China. We will be an easy game for them.

It's not that I understand the argument, my point was that many of the mechanisms that provided enormous advantages to Western nations is often rarely spoken about. For instance, US can often infuse large amounts of cash through the central bank because it's position as the global reserve renders it very unsusceptible to inflation. There is also the inexorable power of WTO/IMF and these "international" agencies that are often steered entirely for the benefit of the US and its allies.

I understand this may not apply to EU nations to the same extent, but then there are all sorts of historical inequities in their favor (esp. Britain) that one wonders if this new found "righteousness" is a bit ahistorical.

Consider India - it's basically run by erstwhile cronies of the British empire, who basically transferred all of its generational wealth to the city in little under 200 years. This while it was made into a cocaine tanker to destroy China. It was made to fight European wars, while being footed with the bill, and now the British groan about the pittance they pay India in foreign aid. Never mind that this aid, is mostly geared towards the Anglo-Saxon eugenics schemes of all sorts.

India currently owes about half a trillion to the IMF, after being run by a IMF crony, and his Italian mistress for 10 years. It's easy to guess what the IMF will ask for (far more loudly) when it inevitably goes belly up.

More state backing is great when starting out on the path because it’s relatively straightforward; provide education, infrastructure and stability and your country will take care of itself. You can even goose the figures a bit by boosting a select few companies to be your champions.

The problem is that as you get richer and move up the value chain, you start requiring industry that is more creative, or entirely new creative industries. When creativity is required state backing is horrible at picking winners. And then those industrial champions are now sucking up a lot of the capital within a country.

Eventually the champions become slow and sluggish. But they’re too big to fail; as an extreme example, Samsung’s revenues are 17% of South Korean GDP, to say nothing of their suppliers.

Samsung is a world leader in display tech, memory tech and probably many other things. Slow and sluggish, you say? :)

Before that we had Sony, Sharp, and Toshiba at the top of the world. You can lose your competitive advantage very quickly, and then all of a sudden you'll either get launched into a lost decade or two (Japan) or beg the IMF for money and have to sell off the crown jewels (Korea, 1998).

> Japan soared from a destroyed country to an economic powerhouse, before being brought down by the bankers at the BOJ, ostensibly to change the system from a 'state backed economy' to a US-styled one. Ditto with the Asian tigers in Thailand, S Korea etc.

You're talking about some of the most successful economies in the world, vs a China that grew a lot in a short time and now faces real problems (debt, slowdown, political crackdowns, etc.)

I'd still rather be a citizen of SK or Japan than China.

China has been doing central planning for more than two thousands of years. Japan and Korea copied the system.

I would say it's because it's properly planned capitalism. They however face growth issues because of lack of freedom. On the other side they have power to build massive projects that benefit the entire region or country.

You need an enlightened leader for this to work.

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