How China Won and Russia Lost

"The largest number of overseas Chinese, most of whom were refugees from China, resided in Hong Kong and Taiwan, and China’s first lesson in global exchange was from nearby Hong Kong. Before communist rule, the inhabitants of the capital of Guangdong (adjacent to Hong Kong), were considered city slickers, while Hong Kong was full of country bumpkins. As Hong Kong surged, several million Guangdongese escaped to Hong Kong, where they participated in its economic miracle. Friends and families lined up in long queues in Guangzhou to receive hand-me-downs from their Hong Kong friends and relatives. Young urban women wanted to marry only men with overseas family relations.15 When the Chinese government first set up Special Economic Zones in Shenzhen (near Hong Kong), Zhuhai (near Macau), Shantou (the hometown of Hong Kong refugees), and Xiemen (near Taiwan), the Chinese borrowed their new rules and regulations directly from Hong Kong. Guangdong entrepreneurs copied the Hong Kong model of 'Front Shop, Back Factory,' while others set up joint factories together with Hong Kong small business owners."

I watched this process occurring in the 1980s, with the later participation of business persons from Taiwan (noted later in the submitted article). Having a culturally similar alternative model (Hong Kong and Taiwan with different political rules and different economic structures) was crucial in helping China make a smoother transition to sound rather than irrational economic policies than Russia has been able to achieve thus far.

I upvoted this article because I think there are some neat lessons in it about 'cooperative entrepreneurship' for lack of a better term. I am surprised, for instance, that more groups of American startups do not self organize into the kinds of 'business cooperatives' that you see a lot in China.

Having mentioned that, I understand that this guy is cherry picking facts to fit his particular world view, or narrative. Liberal and Conservative academics are known to do this in their work. Especially the ones who work at think tanks dedicated to espousing a given world view.

I think it is important, however, that we are able to read through a lot of these works picking out useful lessons. Seeing an example of farmers (entrepreneurs) working together, and what that model eventually morphed into industrially in places like Ningbo is useful. I have always wished for an in depth analysis of these formal and informal Chinese business structures. There is probably something we can learn from that.

There is an interesting analogy to India too, which had a sclerotic, state-dominated economic system for 40+ years. India had far less of a dispora than China, but far more than Russia. And India's economic reforms have been half-hearted, and results have been in between China and Russia.

Oh yes, China succeeded economicaly because it is such a free nation.

And while we should commend China for the impressive freedom of its citizens and the resulting economic wealth, we should forget the humble messenger. Isn't it great that we have such stalwart libertarian scholars like the hoover institution that helpfully point out and commend nations that are truly free. With institutions like these in the US, I bet every dictator in the world is shaking in his boots.