Matt Yglesias’s China Syndrome

by Corey Robin on September 24, 2012

Commenting on the recent labor unrest in China, Matt Yglesias makes a comparison with the past and present of the United States.

Conditions in contemporary China have much more in common, structurally speaking, with conditions during the heyday of western labor activism than does anything about the Chicago teachers strike or the apparent American Airlines sickout. The rapid pace of Chinese industrialization means the average wage in a Chinese factories has managed to lag behind the average productivity of a Chinese factory worker (roughly speaking because it’s dragged down by the absymal wages and productivity of Chinese agriculture) which creates a dynamic ripe for windfall profits but also for labor activism. The repressive nature of the Chinese state is an unpromising ground for union organizing, but by the same token Chinese labor organizations have much less to lose (in terms of union-managed pension funds, union-owned buildings, etc.) if they break the law with “wildcat” strikes and the like.

Why are workers rioting in China? Because, says Matt, of the large gap between labor productivity and labor compensation there, which is similar to how things once were in the US and Western Europe but is unlike anything in the contemporary US.

Oh really? Since 1973, labor productivity in the US has risen 80.4 percent. Yet median wages have increased only 4 percent, and median compensation as a whole—which includes benefits—has only increased 10.7 percent.

This is hardly a state secret; mainstream economists talk about it all the time. Which is why I was so puzzled by Matt’s claim.

So I asked him about the discrepancy. He  responded: “I should explain the difference more clearly. US is a median issue, China is a mean issue.” I’m not clear what point he’s trying to make here, but it seems to work against him: if the mean worker wage in China is being depressed by very low wages in agriculture, that means factory work pays better than agriculture, so workers should be flocking to the factories. An increase in the labor supply is not usually conducive to labor activism.

Back to the US.  So where did all that productivity growth between 1973 and 2011 go? Writes Paul Krugman:

One third of the difference is due to a technical issue involving price indexes. The rest, however, reflects a shift of income from labor to capital and, within that, a shift of labor income to the top and away from the middle.

2/3 of the productivity, in other words, went to the “windfall profits” that Matt speaks of above. Not so unlike China after all.

And what about labor activism? Matt is right, of course, about the repressive Chinese state. But as I’ve long argued, a good deal of worker activism in the United States also gets repressed. One in 17 of every eligible voter in a union election gets illegally fired or suspended for his or her support for a union. While it’s true that the American state is not the equivalent of the Chinese state, it’s also true that a great deal of repression in the US has always been outsourced to the private sector—even in “the heyday of western labor activism.”

Over the summer, when Chris Bertram, Alex Gourevitch, and I were advancing our thesis about workplace tyranny, Matt repeatedly professed bafflement as to why we were even talking about this issue. Well, this is one reason: repression and coercion in the workplace actually prevent the union organizing that helps ensure that that growth in worker productivity translates into higher pay and benefits for workers.

Matt gets it. In China.

This is cross-posted at coreyrobin.com.

{ 37 comments }

1

Uncle Kvetch 09.24.12 at 3:33 pm

I’m not clear what point he’s trying to make here

“Compared to a worker on a Foxconn assembly line, a Chicago public school teacher has it made. They should suck it up and quit whining.”

Seems pretty clear to me.

2

andthenyoufall 09.24.12 at 3:36 pm

I think Yglesias’ point is (fairly) sound. In theory, under the classical economic paradigm, if there is a wedge between worker productivity in the agricultural and the industrial sectors, you expect workers to pour out of one sector into the other until their productivity aligns. In practice, this doesn’t happen. For example, in China labor mobility is extremely restricted (mostly in order to prevent urban areas from becoming centers of misery and political unrest).

3

Wonks Anonymous 09.24.12 at 3:40 pm

4

J. Otto Pohl 09.24.12 at 3:57 pm

My how things change. Just a few short decades ago the American left was profusely praising the PRC under Mao and its labor policies. Now American leftists are calling it a “repressive state” and other insults. If China had not broken with the USSR in the 1960s and had not introduced capitalist reforms in the 1980s I am guessing that no American leftists would be criticizing it today. But, in reality it is hard to see how Chinese workers are any worse off today than they were in the 1960s and 1970s when Maoism was really popular among the New Left in the US and Europe.

5

The Raven 09.24.12 at 4:11 pm

Pohl, don’t be a troll.

As to the subject at hand, I think the starting conditions matter. Chinese labor is starting from a beginning-of-industrialization situation; the USA is already an industrial economy.

6

MPAVictoria 09.24.12 at 5:02 pm

“My how things change. Just a few short decades ago the American left was profusely praising the PRC under Mao and its labor policies. “

Wow. That is a very trolly first sentence my friend.

7

L2P 09.24.12 at 5:21 pm

“I think Yglesias’ point is (fairly) sound. In theory, under the classical economic paradigm, if there is a wedge between worker productivity in the agricultural and the industrial sectors, you expect workers to pour out of one sector into the other until their productivity aligns. In practice, this doesn’t happen. For example, in China labor mobility is extremely restricted (mostly in order to prevent urban areas from becoming centers of misery and political unrest).”

Unless he means to say that factory worker wages are being held down BECAUSE agricultural workers are flooding in and keeping wages low, factory wages aren’t “dragged down by the absymal wages and productivity of Chinese agriculture.” A factory worker doesn’t make $2/hour because a farm worker makes $1/hour. A factory worker makes $2/hour because a farmer worker is willing to TAKE the factory job for $2/hour. Traditionally, that’s exactly how strikes were broken. A thousand Poles were brought to Milwalkie or wherever if workers asked for too much money.

But that isn’t happening in China on a large scale because there isn’t large scale labor mobility (purportedly). If the factor worker can’t compete for that job b/c of state interference, the factory worker will make more; the competition doesn’t exist that otherwise would keep wages down. So either there is large-scale mobility, and agricultural workers actually are competing for factory jobs, or it’s something else that’s keeping factory wages down. Or possibly agricultural workers compete psychically for the jobs but never actually get them.

Regardless something’s missing in Matty’s analysis (not a surprise there.)

8

Tim Worstall 09.24.12 at 5:36 pm

“So either there is large-scale mobility, and agricultural workers actually are competing for factory jobs, or it’s something else that’s keeping factory wages down. “

Given that Chinese manufacturing wages have gone up by a factor of four since the year 2000, quite possibly the largest rise in recorded history anywhere, I’m not sure why anyone thinks wages have been kept down.

There are endless stories of the first areas to industrialise facing labour shortages. That’s why factories are moving west, Foxconn is installing robots and so on.

Since the post mentions Krugman, his essay “Ricardo’s Diffcult Idea” explains much of it. Or Marx of course. It’s the reserve army of the unemployed that keep wages down. Once that army is being employed then wages rise. As is happening in China.

9

Sebastian H 09.24.12 at 7:18 pm

“So I asked him about the discrepancy. He  responded: “I should explain the difference more clearly. US is a median issue, China is a mean issue.” I’m not clear what point he’s trying to make here, but it seems to work against him”

Isn’t he saying that it is a median issue in the US because the average worker (median) hasnt gotten 80.4% more productive? A few workers toward the top of the productivity scale plus a few workers working in recently more mechanized areas are MUCH more productive, skewing the US mean without reflecting dramatically more production by the median worker. I don’t know enough about actual labor situations to know if that is factually the case, but it is plausible from a statistics point of view. It would be similar to law schools touting the average salaries of lawyers at around $90K when it turns out that the median lawyer makes closer to $55K. The average lawyer makes barely a white collar salary despite the fact that due to skewing by the very few, the average salaries of lawyers (total money divided by total number of lawyers) looks very nice.

10

Corey Robin 09.24.12 at 7:32 pm

Sebastian H: I think you’re mixing up your means and your medians. Means are more likely than medians to be skewed one way or the other by a few outsized numbers.

11

kharris 09.24.12 at 7:39 pm

If one were to compare the Yglesias of the past 2 years with the one five years ago, I think one would find a sharp deterioration in the quality of his economic commentary. He either isn’t being very careful these days, or has lost some of the brain cells that were responsible for economic thinking. I’d guess the former, given that he is as likely as the next guy to suffer from pundit syndrome. He needed a contrast to make his essay catchy, and, I’d guess, as soon as he got a catchy contrast in his head, he didn’t give it another thought. Anyone who has spent any time at all thinking about the US labor market knows that compensation has lagged productivity for a good many years, but Yglesias missed it?

12

Alex 09.24.12 at 8:00 pm

Worstall: imagine what it would be like if they didn’t torch CCP offices.

13

bourbaki 09.24.12 at 8:06 pm

@Corey Robin

No Sebastian has it right. He is proposing (though not endorsing) the view that perhaps most American workers are no more productive now then in the 70′s (i.e. median productivity is stagnant), but that a select handful (the mythical job creators?) are much much more productive — dramatically raising the mean productivity.

I don’t think this would stand up to much scrutiny — though it would be interesting to know (if possible) what were the sources of the increase in productivity.

14

Sebastian H 09.24.12 at 8:07 pm

Corey, I often mix them up, but I don’t think I’m doing so this time.

(Note, for the purposes of this analysis I’m assuming that “productivity growth” is a (mean) average. It appears to be that way in the linked article which is further linked to this paper Productivity growth is defined as “Labour productivity is calculated by dividing real expenditure-based GDP, obtained from BEA NIPA tables, by the number of
hours worked for all workers, including the self-employed, from unpublished BLS data.”)

Take 10 workers in 1970 in the XSA. All of them produce 10 units of production. That makes for a model GDP of 100 and a mean productivity (the ‘average’ productivity of workers in the XSA) of 10. Since they also have all the same productivity, the median productivity (the productivity of the average ‘most typical’ worker) is also 10.

Now lets fast forward to 2010 in the XSA. 8 workers still produce 10 units of production. 1 worker has been trained on a really cool machine. He, with the help of the machine produces 50 units of production. 1 worker has come up with a really cool method of providing important services over the internet to lots of people. He also produces 50 units of production. The GDP is now 180. Average (mean) per worker labor productivity is up 80%. Hooray. However MEDIAN worker productivity is up 0%, because the most typical worker is still only making 10 units of production.

Now please, for the love of God, understand that I’m not arguing that is actually what has happened in the economy. I’m just showing how the mean/median thing can be very important in these statistics. The quoted paper is super careful about the mean/median distinction for wages and compensation, but breezes right past it on the productivity question. I suspect that isn’t anything nefarious on their part, but rather the fact that such data would be really tough to get. But it is nevertheless important because it isn’t at all inconceivable that technology/machines might end up skewing things heavily (and which might bear strongly on the questions in nearby threads about predistribution vs redistribution).

Similarly on the lawyer question, I suspect there would be fewer law school applicants if they realized that the average lawyer (median) is barely going to make a white collar salary even though the average law salary (mean) looks perfectly respectable.

15

bourbaki 09.24.12 at 8:12 pm

Two plausible sources are:
1) Information and communications technology (I think this goes without saying).
2) Labor market changes (i.e. more contractors, more temps, more exploitation of exempt employees — in other words more work for less pay).

16

Corey Robin 09.24.12 at 8:22 pm

Sebastian H and Bourbaki: My bad. For some reason I thought the productivity numbers in the links were medians as well (I guess I transferred the median on wages to productivity, even though as you say, that’d be tricky to come by.) My apologies.

17

Seth 09.24.12 at 10:45 pm

Niall Ferguson, for all his faults, hit upon a useful moniker for the U.S. China relationship with the name “Chimerica”. Here’s what it should mean (not necessarily related in any way to Ferguson’s original idea):

1. China imports the U.S. economic system.
2. The U.S. imports the Chinese political system.

If Chinese workers don’t force labor and political reform in China, we can expect the U.S. political system to become steadily less responsive to the needs of working people. And that’s saying something, given the level of disregard for the needs of the non-elite (99.9%) already prevailing here.

18

John Quiggin 09.24.12 at 11:21 pm

An important point about the US is that, relative to other developed countries both the pre-1970 and the post-1970 periods are anomalous.

US Workers did exceptionally well in the postwar settlement, to the point where unskilled factory workers earned middle-class wages. (Arguably, this predistribution muted support for redistribution).

Then since 1970 workers in the US have done much worse than anywhere else – in most places the labor share has declined only modestly if at all.

19

Charrua 09.24.12 at 11:33 pm

There’s the question of levels and trends, too. Even if American workers productivity has risen faster than their wages lately, it’s still possible than the productivity of Chinese industrial workers is still much, much, much higher than their wages.
And of course, rising wages mean that the bargaining position of the working class is improving (even if they rise more slowly than productivity) which makes activism more likely while stagnant or decreasing wages mean the reverse.
Also, the industrial sector is a especially fertile ground for labor activism while the service sector is not.

20

chris 09.24.12 at 11:45 pm

US Workers did exceptionally well in the postwar settlement, to the point where unskilled factory workers earned middle-class wages.

This is the only known successful recipe for creating the strong and vibrant middle class politicians are always talking about. Ever. In the history of any nation. The fact that politicians that talk about promoting the middle class rarely make a serious effort to recreate the actual golden age of the middle class seems pretty telling, to me.

Of course, any given politician is constrained by all the others he/she has to work with, but still, it seems like they could at least start by acknowledging that Reagan crushed the US middle class on purpose and no real progress can be made without first undoing his agenda. Or would that itself constitute jumping out the Overton window?

21

PeterC 09.25.12 at 2:41 am

The sad (or happy) thing in China is that the authorities seem to have the weapons and will-power to quell worker unrest. The GFC necessitated China to switch to domestic demand with a consequent higher standards of living path than would have otherwise been. Higher living standards can become addictive. Chinese workers can do the sums, so expect Chinese wages to continue to rise. The era of cheap Chinese goods will not last as long as it might have due to things the GFC set in motion. Our loss, the Chinese workers gain.

22

derrida derider 09.25.12 at 4:01 am

Related to what John Q said @18, the choice of 1973 as your starting point is very much a cherrypick. Wages were unsustainably and temporarily ABOVE measured productivity in 1973. If you don’t pick a cyclical high as your start the basic point about increasing returns to capital and high-wage labour remains but it is far less dramatic.

We get annoyed when sundry right-wing pundits do this sort of thing – we shouldn’t do it either.

23

Mao Cheng Ji 09.25.12 at 7:04 am

What does it mean, exactly, when you say that wages are above or below productivity? It seems to me that the only way to measure these things is by the level of exploitation; roughly speaking: ratio of profits to wages.

24

Mario 09.25.12 at 1:17 pm

derrida derider @22:

1973 is actually not “very much a cherrypick”–1973 was the first of the series of oil shocks in the 1970s. There’s a huge academic literature that argues that in 1973 the Fordist era of production changed into the modular post-Fordism that characterizes the industrial and labor worlds today. (The usual phrase is “on or about 1973.”) The choice here is pretty clearly reflective of those debates.

Point being, you can argue that 1973 isn’t the right choice for Corey’s point, but it’s not out of nowhere.

25

Glen Tomkins 09.25.12 at 2:00 pm

A prophet is without honor in his own country.

“Matt gets it. In China.”

For a certain kind of dilletantish, overly abstracted person, the fact that they were raised Christian gives them a better feel for a religion in which they were never catechized, than they have for Christianity. A religion like Bhuddism seems to offer a line to deep and universal truths, while Christianity, for them, can never be more than its kitsch and dogmatism and other accretions of its status as an institution in Christian countries. Of course, people raised Bhuddist have as their closest and most enduring contact with that religion, all the amazingly similar kitsch and dogmatism that Bhuddism has accreted in countries where it is an institution, so they tend to wonder at all the fuss these enthusiastic anglo types are making over that religion.

Yglesias was raised in a society in which unions in particular, and demand economy considerations in general, had become truisms. Nixon himself, at the Moscow trade show in 1959, was famously the champion of demand and consumption against the Soviet Union’s monomaniacal fixation on production. Even the champions of the party that served the capitalists most assiduously used to be doctrinaire demand-siders.

What contrarian dilettantes like Yglesias have trouble with is seeing that truisms are usually true. He imagines that we couldn’t possibly need unions because the need for them was once received wisdom, and received wisdom can’t be true because it was handed down loaded with all sorts of kitsch and accretions.

A country is without honor to its own prophet.

26

Bruce Wilder 09.25.12 at 9:55 pm

I really hate the whole thought paradigm, of a $1/hour agricultural worker dragging down the $2/hour manufacturing wage, as well as the whole vision of people pouring out of one sector and into another, driven by differences in pay. It is really not a very good analysis, and presumes a degree of substitution of labor for capital, which seldom obtains.

The actual capital that gets invested in applying technological possibilities and making high productivity possible is remarkably lumpy. There’s seldom an alternative high-labor-intensity method of making anything; the usual pattern, is complete domination by dedicated capital embedding an advanced technology. People are mostly employed in miscellaneous control functions, and not for an homogenous flow of labor services, which can vary neatly at the margin. There’s only one seat on a farm tractor, as Pareto observed long ago. There’s no farm tractor design, which is a labor intensive alternative.

A key foundation for the U.S. middle class of the 1950s and 1960s was one of the most successful industrial policies ever adopted — the second version of the agricultural adjustment act, put in place in 1935, which stabilized agricultural finance, in ways that enabled rapid investment of capital, setting off steady improvements in productivity in agriculture, coincident with the migration of labor off the farm. Economists, by and large, think AAA was a giant failure, when it was, in fact, a resounding, astonishing success. Classical analysis wants sectors to either attract resources or shed resources, but, in real life, the best result may require that a sector both attract resources and shed resources simultaneously, as U.S. agriculture did, from 1935 on, creating a foundation for rising middle class incomes, out of the widespread agricultural poverty of the 1920s, which had been a significant contributer to the Great Depression.

China, as is well-known, deliberately manipulated its currency and internal price structures, to make investment in high-tech manufacturing, low-risk and profitable. I don’t say that to criticize what they have done as somehow “unfair” — they wanted to build up a manufacturing sector, as a means to drive up production and incomes, and this is what they had to do. Economists often seem to think that such policy manipulation should be unnecessary, but such economists are idiots. The economic production processes that dominate international trade and deliver high incomes are precisely the ones with increasing returns, network externalities and so on. Without policy intervention, the “free” market, left to its own libertarian calculation, would leave China forever undeveloped and on the short-end of highly disadvantageous terms of trade, vis a vis the already developed countries. Every developing country, after the English pioneer, has had to engage in protectionist or industrial policies, to succeed.

Part of China’s policy scheme for manipulating the price matrix in ways that made rapid investment in manufacturing was using the domestic agricultural, service and state-owned sectors to make it possible for manufacturing workers to earn a pretty good living, on a wage, which was very low in international currency exchange terms, in part by keeping that domestic price structure low, and, also, by encouraging the Chinese to save fantastic shares of their incomes. Chinese consumer spending is way less than half of GDP even now, which is unsustainable. Years of sterilizing massive currency exchange rate interventions has exacerbated the institutional shortcomings of their banking system, in a country which is lousy with money savings.

Chinese agriculture was made to retain a large farm population. Agricultural productivity can be depressed by congestion effects — too many hands actually depress the productivity of a fixed amount of land and other agricultural resources. It’s a problem.

But, the bigger problem is that the whole price matrix will have to rise and Chinese consumers will have to spend some serious money, absorbing the country’s output. The factory worker will have to be paid more, and, also, his barber and his lawyer. It is only a matter of time, before the Chinese figure out that they don’t need to be subsidizing Wal-Mart, or Sony or Philips or Apple, and the margins they once conceded to make manufacturing investment a no-brainer, can be reversed in a shift in the terms of trade in their favor.

The shifting of gears, though, is likely to be political and economic chaos for several years. I would be very surprised, if there isn’t considerable political upheaval, if only because China desperately needs to institute a social welfare state and a more modern consumer banking system, to enable people to stop saving such massive amounts of money (and cushion the blow, as much of that accumulated savings evaporates in adjustments of the price matrix and reform of banking).

27

Alex 09.25.12 at 10:06 pm

26 is good.

28

ezra abrams 09.25.12 at 11:41 pm

is there any reason to think that M Yglesisas actually knows anything about china, other then what he reads in the paper ?
I think most of us have college degrees, and can imagine a senior english paper – write a knowledable essay about something you know nothing about

29

Cranky Observer 09.25.12 at 11:45 pm

= = = is there any reason to think that M Yglesisas actually knows anything about china, other then what he reads in the paper ? = = =

He toured there for about two weeks (3-4 years ago?) at the invitation of the government of the PRC.

Cranky

30

Cranky Observer 09.25.12 at 11:48 pm

James Fallows, OTOH, has lived and taught in the PRC for quite a while (various periods over the last 10 years), often in areas outside the direct all-seeing eye of Bejing. His reports are always prefaced, couched with exceptions and cautions, careful to distinguish between what is reported to the international press and international economics statistics agencies vs what appears to happen in actual daily life, and always end by saying “but China is a lot bigger, and things there are a lot more varied and complex than is possible to report – for good and bad”.

Cranky

31

Roger Gathman 09.26.12 at 9:05 am

BW at 26 is pitch perfect. Bravo!

32

Barry 09.26.12 at 12:59 pm

Glen Tomkins: “Yglesias was raised in a society in which unions in particular, and demand economy considerations in general, had become truisms. Nixon himself, at the Moscow trade show in 1959, was famously the champion of demand and consumption against the Soviet Union’s monomaniacal fixation on production. Even the champions of the party that served the capitalists most assiduously used to be doctrinaire demand-siders.”

Actually, Matt graduated from Harvard several years ago; he’s probably just under 30.
That would mean that he was born in the early 80′s, and his awareness of things like this would have started in the 90′s, well after the crushing of most private sector unions, and the establishment of the political theme that we are a post-union country.

33

Glen Tomkins 09.26.12 at 2:37 pm

Barry’

Well, what sort of mix of opinions and, much more mportantly, the tacit assumptions that underlie stated opinions, were around when he went to Harvard? If he had received his education on the factory floor, sure, by the turn of this century unions would have been mostly gone. But at Harvard in particular, universities in general, what used to be the consensus, something that can be agglomerated (highly imperfectly, no doubt) under the rubric of Social Democracy, is still around. It never was the only game in town, and while clearly no longer dominant, is still probably more prevalent than any alternative. It would be perceived as Old Think by someone ambitious to be a public intellectual, because I would imagine that the age breakdown of who still thinks SD at Harvard, vs who has gone New Think, skews old vs young.

The bottom line is, if your schtick is mindless contrarianism, you can’t possibly reach back to tired Old Think even if it best explains the world. When it comes to unionization in the US, we’ve been there, done that, it didn’t work, as proven by the decline of unions (and please, don’t bother me with conspiracy theories about the US PTB doing unions in despite their beneficial effect of preserving demand in the economy — no conspiracy theories allowed, it’s all been market forces!), time to move on to my shiny new contrarian explanation of our long-term economic woes. But unionization in China hasn’t been tried, so it suffers not under the cloud of indentification as Old Think. Unionization in China is the shiny new contrarian idea that would succeed brilliantly if only the Chinese PTB had the good sense to listen to Yglesias.

34

MQ 09.26.12 at 3:05 pm

@9, @13, @14 — if they are intended to explain U.S. wage trends, these comments about median vs. mean all seem to be rooted in a mistake. It is a basic tenet of labor economics that unless there are barriers to labor mobility, wages follow the MEAN productivity of all workers in the labor pool and not the productivity of any particular worker in question. So it doesn’t matter if only one out of ten workers (the one who works on the cool machine) is more productive, the wage for everyone should still be pulled up. This is true unless there are barriers to competition or unless the ‘more productive’ worker truly has a unique skill that is impossible to imitate. (Not true if his producivity can be ascribed to the machine he works on).

The classic example of this is barbers. A barber/hairstylist is probably no more productive than he was in the middle ages. (The electric shear adds some productivity but scissors date back thousands of years). But he makes more money since he competes in a labor pool where he could choose to be an auto worker, computer worker, what have you.

35

Anderson 09.26.12 at 3:14 pm

Let’s set up an Intrade market on how long till Yglesias is blogging at National Review or one of its clones.

36

MQ 09.26.12 at 3:14 pm

I will add to the chorus saying 26 is a terrific comment.

The factors Bruce is pointing to about the lumpiness of capital complicates the straight neoclassical point I was getting at in 34 but does not completely eliminate it, you still have to think about how job market search works.

37

William Timberman 09.26.12 at 4:49 pm

BW’s 26 is as superb as other commenters have already noted. It puts me in mind of the contrast between Soviet industrial development — central planning and all that — and the Chinese market-led model, and the differences in the way those different models of development interacted with the Leninist weirdness of the political organizations driving them. Looked at in the abstract, the Chinese model looks more savvy, but as Bruce and others have made abundantly clear, the problem with it is that the markets leading their development are over here, not over there, which at this point makes the Chinese hostages to fortune in some largely unforeseen and increasingly unpleasant ways.

What the Chinese had that the Soviets didn’t have was a huge overseas market to export to, and access to technological assistance from Japan, Europe and the U.S. on a grand scale. The ironies involved are stunning. Big-time payback for the territorial concessions of the late Nineteenth and early Twentieth Centuries on the one hand, and the stunning aikido-like reversal pulled on foreign corporate planners who’d nearly wet themselves in the Nineties over the expectation that acquiescing in technology transfer was going to buy them access to an export market large enough to solve all their problems forever.

On the face of it, the Chinese regime of today seems to be smarter than the Soviet regime of the Twenties and Thirties was. Certainly they’ve been luckier in coming along when they did. Still, I think the jury is still out on whether or not they’ll be able to manage the contradictions in their development model that Bruce has so ably described. Achieving a balanced economy in this age of globalization isn’t likely to be any easier for them than it’s proving to be for the other major players. In fact, given the apparent rigidity of their management structures and the size of their population, it may prove to be a good deal more difficult.

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