Comment by econ11 | Hacker News Reader

Comment by econ11 | Hacker News Reader

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"The communism that took resources from the urban coast and built roads, schools, and other infrastructure in rural areas was more likely a bigger contributor to the massive improvement in (purely economic) standard-of-living for most Chinese."

That is just shockingly untrue, intellectually dishonest, and utterly asinine. I have no clue why your post was up-voted so highly. China reformed its communistic system and embraced capitalism toward the late 70s. GDP growth has grown staggeringly since, and is the fastest growing large economy caused by its move toward a freer market system. Communism hardly caused a dent for its GDP growth between the 50s to the late 70s [1], but instead, caused widespread famine, the greatest destruction to real estate in human history, and deaths in the millions due to massive starvation. [2]

The graph below basically discredits communism contributing anything to the "massive improvement in (purely economic) standard-of-living for most Chinese". [3]

[1] http://en.wikipedia.org/wiki/Economy_of_the_Peoples_Republic...

[2] http://en.wikipedia.org/wiki/Great_Leap_Forward#Consequences

[3] http://en.wikipedia.org/wiki/File:Prc1952-2005gdp.gif

I never meant to say communism was responsible for the country's economic growth. Clearly, liberalisation caused that, as your graphs imply. However, the growth was concentrated on the coast, and the existence of a central command economy was the direct mechanism for infrastructure development in rural areas that were not directly benefiting from liberalisation. I don't claim communism is a good approach to economic growth, I meant it as a counterexample to the claim Hong Kong brought liberalism to the countryside and poverty went away. Hong Kong brought the wealth, Beijing redistributed it (violently).

I expect I was upvoted for commentary on the charter city idea, not because I proposed communism as an alternative. Thank you for bringing up an important point though.

Edit: please include the full sentence from my post, I think the part that you removed obscures my meaning.

RE: "...a bigger contributor to the massive improvement in (purely economic) standard-of-living for most Chinese"

Hong Kong's prosperity influenced China to transform into a freer economic system. The roads, schools, and other infrastructure built from China's centrally-planned economy would've been much more affordably built with a higher and growing GDP; instead, doing those projects shifted much-needed resources during its Great Famine and many other periods of starvation into unnecessary and ultimately lethal projects that caused the deaths of a lot of people.

Once again, I don't dispute that; we're in full agreement. My key point is that the effects of liberalism that lead to growth in Hong Kong did not lead directly to growth in rural China; as nice as that would be, there were other forces at play that caused that. Another way of putting this is to say that the effect of the communist government was to constrain growth around Hong Kong, and infrastructure development occurred in rural areas despite that.

The motivation behind "charter cities" is exactly that such a direct effect from liberalization would occur, whereas that doesn't necessarily follow and certainly not well-illustrated by the article's example. It is just one point in a broader criticism of the whole concept: such cities may provide an example, but they don't solve the (IMHO, harder) problem of affecting change in the non-charter city areas, which will still face broader structural obstacles. The existence of a Hong Kong is not a sufficient condition for broad societal change, though it is certainly a helpful one, if not exactly necessary.

I'm happy to continue this discussion via email, no need to take up more of this thread.

The Chinese coastal cities got rich in part by emulating Hong Kong, providing much of the capital required to further develop the interior (much of which remains quite poor, however). There was a news story recently which illustrated how Shanghai had changed over the last 20 years with two photos taken from the same vantage point in 1990 and 2010. Even as recently as 1990, Shanghai just looks like a low-rise town, nothing special. The 2010 photo looks like a spaceport. This was in large part the result of Deng Xiaoping saying that the government was OK with people getting rich and would no longer treat it as an economic crime.

  China reformed its communistic system and embraced
  capitalism toward the late 70s.

As someone claiming to be countering something 'shockingly untrue, intellectually dishonest and utterly asinine': take a look in a mirror please. China has never 'embraced capitalism toward the late 70s'. That's a PR ploy. On the one hand, the trivial 'free internal markets' have always been there, as much as they have always existed in Cuba. A complete lack of internal markets has never been implemented anywhere, except for perhaps North-Korea.

On the other hand, for a vast majority of purposes, there are still no free internal markets in China. You can't just start a company manufacturing bicycles and expect to sell them: the government still tightly controls who is allowed to do what and when. Whether you call it a communism, an oligarchy or even a dictatorship doesn't matter: that's not embracing capitalism. At most they've acknowledged how capitalism effectively rules the international markets and gone effectively along with the flow. Internally, there's a far cry from free markets.

Ascribing China's growth to 'embracing capitalist principles' is just wishful thinking from people that think capitalism is the source of all good things. If anything is responsible, it's the fact that a well-informed leadership with a strong vision can pull a country from the dust, like no president of a democratic country would ever have the mandate to do. That is what has happened in China, capitalism be damned. Touting 'capitalism' has just made them look good enough in the eyes of the West to make it that much easier to pull it off.

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