And I think this is a good thing that people have no idea what to do. If you don’t have any idea what to do, you think and think and think and then you end up figuring something out. The “New Right” and the “New Left” argue with each other and eventually something sensible comes out.

It’s when you know exactly what to do that you end up with huge messes. Mao knew exactly what to do, and wasn’t about to listen to anyone with a different opinion.

Glen: Seriously, post-Olympic decisionmaking will be very, very interesting.

Chinese decision making is always very, very interesting. One thing to point out is that the arguments that people are having now aren’t any more bitter than the one’s that people have had in China for the last thirty years. So watch out for the “Chinese leaders disagree with each other so the Party is going to collapse” meme that happens in the Western media. The institutions are far stronger and the real disagreements are far, far *less* bitter and fundamental then they have been over the last thirty years. Person A wants to spend 20% GDP on investment. Person B wants to spend 50%, so after they argue for a month, then end up spending 35%. (That’s one of the nice things about arguing about money rather than ideology, arguments about money can be resolved by splitting the difference.)

Huizer: That should involve greater separation of party and state (very difficult to do and very risky not to do)

Separation of party and state was tried in the 1980’s. It worked very, very badly, and really I don’t see any reason to try it now. One thing that is interesting is to try to get someone that supports it to explain exactly why they think it is a good idea.

The system as it now exists has the actual orders going down the state hierarchy, but with the party being something of a “human resources” department in charge of figuring out who gets what state position. I don’t see any reason to have any quick, radical changes in the system, since it seems to work.

I do support strengthening the state and legal system so that if there are ever any bitter fights or power struggles within the party, that the whole thing doesn’t collapse (i.e. what happened in Russia), but I can’t think of any reasons to split the party and state. (And that includes human rights reasons, since I don’t think a split party/state will be more friendly to dissidents, and if it means less control over local officials, it may be even worse for political dissidents.)

Huizer: administrative (not entirely separate but high priority) reform of the rural sector

I’m really starting to really hate the word “reform” since it has become a feel-good word that really is starting to lose any meaning. In 1980, the term “reform” actually had some meaning in China since it meant the group of people that didn’t believe in revolutionary Maoism or Stalinist economic policies. Since no one in the Chinese government is a Maoist or a Stalinist today, it means that everyone is a “reformer” and when everyone is a reformer then the term doesn’t have any meaning any more.

Let’s step back a bit. What *exactly* do you think ought to be changed in rural China? I think that if you ask a dozen people what exactly “rural administrative reform” means, you will get a dozen answers, and arguing over specific policies is the conversation that needs to happen.

Rien

sure the seperation of party and state makes for good government but sometimes that has merely been the effect of factionalism . In some more remote areas of china that has led to a situation that updates the old saying that the “mountains are high and the emperor is far away”, just think of those cases of modern day slavery in brickwork “factories”.

Glen

not sure if you’re still reading this thread but just a thought; could the growing wealth gap and the resentment that stirs transform rhetoric to policy?

Really? Not the ones I have read. You must get most of your economic knowledge from real klutzes.

Well put.

Brad,

Of course, whatever the outcomes of changes in the institutional framework may be, they will be very Chinese. My reference to Europe (see also Glen’s piece with attention for unmet demands of groups that will never “get rich”) was in reference to an often used (by by economists too) and (too) simplistic dichotomy; Europe (of course the continent) vs the anglo-saxon model. Now there is a fair bit of variety in both categories but it involves clusters like common law vs civil code/statute law (plus different role of the state in law creation and juridical function ans structure) two party systems/ plurality vs proportional representation/typically coalition government high degree of individual risk mnagement (health care, unemployment) vs high degree of state risk assumption (but: several Anglosaxon countries, UK, Australia, Canada, NZ have health systems that are more government-driven than continentals like Holland.

Anyway, it is anyone’s guess but political reform (not necessarily democratization) is necessary to arrive at a functioning public adminsitration system. for the whole of the country. That should involve greater separation of party and state (very difficult to do and very risky not to do) and administrative (not entirely separate but high priority) reform of the rural sector. I did not mention some form of political pluralism outside the party (there is a fair bit of real politics (not only career-making) going on at the moment but it is hardly official and the more there is that seeps out, the harder it would be for the leadership to do a public conversion to pluralism and its attributes (fredom of political organization, press, metings etc (some of these things re still imperfect in a modern place like Singapore) But again h point is not the high profile “democrcy” thing, but a better alignment between public administration and the emerging market economy.

One thing I find extremely interesting/important in that context is a matter Twofish has often touched upon here.
The ‘consensus’ on what to do in Beijing…. or the liberty of the CPC leaders to do as they please.. it really isn’t there as much as most Western observers think. It never was probably, but seemingly less than ever.

Maybe you can argue that it is there at the top levels in terms of foreign policy, power projection and long terms strategic goals (it seems so), but in terms of China’s internal developmental strategies and economic policy…and thus the “who benefits” question, nah!

I do rather a lot of interviews with Chinese economics/political science scholars in or on the periphery of the advisory groups to Government, and the answers to questions about China’s post-Olympic policy changes ranges from New Left to New Right chartered courses, but most frequently “right now we really have no idea either”.

More and more, when asking top International bankers, when the microphone is off and answers are less or not political at all, I get the same sense. People are guessing, and when people don’t know – then you get more fear. When you don’t know – suddenly the “finance internal drive and growth policies by decreasing the dollar propping” scenario seems more plausible to many. Nevermind the difficulty or potential backlash from this.

Everyone sees that Hu Jintao currently feels it necessary to give in to factions in the party/SouthEast and inland exporters needing stimulus, but for China the impact here is minor in the greater scheme of things so far.

Everyone can also envision that the growing frustrations (more and more outright anger) among both urban (migrant) and rural poor plus the elderly being largely deprived of security must be addressed in some way. That leads to majority assumptions that there’ll be a marked increase in Chinese fixed asset invesment that targets especially such concerns as well as further education, further improvements for farmers/rural communities. The disagreement goes to whether this increase will be big enough to signal an actual policy change. These constituents obviously are weak in everything but numbers.

At the same time you have Hu’s pledge to political reforms after the Olympics. What will that mean – if anything? The slightest changes here can cause major behind the scenes fighting.
You have new high profile voices coming out of Beijing in seemingly open support for Shenzhen’s (seemingly) quite dramatic accountability and multi-choice election plans which clearly corresponds well with previously articulated goals from Hu and Wen Jiabao. And of course you have local governments and many in the top brass who will fight this development tooth and nail to keep their priviledges.

Seriously, post-Olympic decisionmaking will be very, very interesting.

Compared to what? Compared to the magical, fairy dust economic systems that people come up with. No. Compared to any real system that has ever existed, it does quite well.

DC: “Investment Banks have failed throughout US history without the United States economy collapsing, why is it that now that Hank Paulson will bailout every Wall Street bank that gets into trouble”.

Jim Rogers needs to read about the panics of 1797, 1819, 1825, 1837, 1847, 1857, 1866, 1873, 1884, 1890, 1893, 1896, 1901, 1907, and 1910. Since 1914, when there has been a central bank, there has only been one massive disaster and that was in 1929.

Answer the question honestly, as presently regulated, has Wall Street done a good job of properly allocating capital throughout the US Economy? There are literally tens of thousands of abandoned McMansions littered across the states of Florida, California, Nevada, and Arizona. If you choose to answer disingenuously, why should there even be any economic consideration for a federal taxpayer bailout of Wall Street’s wrecked balance sheets. There has been little if any consideration for the “moral hazards” and the economic implications to the US government’s own balance sheet from repeated taxpayer bailouts of private Wall Street firms. Even S&P was forced to admit that the Federal Debt would have to be downgraded to perhaps below China’s AA-rating if Fannie Mae’s debt was assumed by the US Treasury. As noted investor Jim Rogers has commented, “Investment Banks have failed throughout US history without the United States economy collapsing, why is it that now that Hank Paulson will bailout every Wall Street bank that gets into trouble”.