China's Superior Economic Model: Andy Stern WSJ

[Yamaka]

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Hello All:

Here's a shot across the bow - India and America must read what Andy Stern is saying about China's Strategy.

I will give my two-cents on this very soon.

Andy Stern: China's Superior Economic Model - WSJ.com

 

[sangom]

Hello All:

Here's a shot across the bow - India and America must read what Andy Stern is saying about China's Strategy.

I will give my two-cents on this very soon.

Andy Stern: China's Superior Economic Model - WSJ.com

Since Indians in US are still having very high optimism about US' ability to turn around and rise like a phoenix, is it not appropriate to wait & watch, as you usually advice?

My feeling is that unless there is a "bloody revolution" the US cannot and will not be able to sustain itself. But because the US is so much addicted to luxury and enjoyment this may not happen at the appropriate time; it will be too late to be helpful. If China also starts exporting armaments on large scales, then US is done for ever.

 

[subbudu1]

Since Indians in US are still having very high optimism about US' ability to turn around and rise like a phoenix, is it not appropriate to wait & watch, as you usually advice?

My feeling is that unless there is a "bloody revolution" the US cannot and will not be able to sustain itself. But because the US is so much addicted to luxury and enjoyment this may not happen at the appropriate time; it will be too late to be helpful. If China also starts exporting armaments on large scales, then US is done for ever.

Sangom we have been discussing this in some other threads. I feel all Americans are optimistic about USA. It is no different from an old man that he will live for ever. Whatever puja he does, he has to die sooner or later. While discussion on God can always be a matter of contention, God does not seem to interfere in the rules of the game . Theists may have to take consolation only in that the rule itself could be considered God. In any case, I feel over-spending is the culprit. Living beyond one's means and accumulating beyond one's need.

Capitalism did promote efficiency because the individual who owned the company is after increasing productivity. However how to prevent that from becoming an exploitation. One might say Government regulation. But how far can it go. Suppose my doctor tells me not to eat sweet, and I eat it. My wife stops me and threatens me not to eat it. I will consider it oppressive if I am addicted to it. This is the problem in that as Individuals we cannot prevent ourselves from being self-centered. If Government provides job irrespective of your work, then you will not work at all. This is the extreme opposite.

China is a mystery and I am yet to study its economic and social setup. But they seem to be working harder and harder inspite of being communists. What is making them do it? However the more serious question is are they unwittingly getting themselves exploited?

 

[kunjuppu]

sangom,

each time, i look at china's progress as is evidenced by the increasingly high tech goods, and fear that they are going to rule the world economically, there comes another news out of china, that is contradictory.

i understand that like india, china has a huge soft underbelly of abject povertied peasantry. china just recently upgraded its poverty definition to earning just $1.25 per day which works out to 75 rupees a day. that is not fiction, but a reality, which takes hard to digest.

furthermore, the have nots in china, do not have the luxury of 'throwing out the rascals' every 5 years. it is the same corrupted communist party officials, these people have to beg, to be spared if their land is to be confiscated for a factory, if their son or daughter needs a permit to move to a city for a job (yes movement within china is restricted) or if one wants to borrow money for seeds.

i have good friends from ukraine, who lived under soviet communism. the one thing they all agreed, was it was a rule by thugs. what these folks said was the rule of the law, and woe to you, if you crossed them on the wrong side. any sign of decent intellectual revolutionary disappeared once stalin came to power, and it was plain thuggery from then on.

i imagine, china is not unsimilar to that, judging from the type of corruption that we hear, and the pronouncements from beijing, re anti corruption measures and high profile executions. china is the only country in the world, where one can be shot for economic crimes, and i believe china leads the world in the number of executions per year.

outside of the dazzling big cities lie the industrial zones build by the blood (literallY) and sweat of near-slave labour. i do not think no other nationality of a decent number, like indians or americans or brazilians, will be willing to work under those conditions. yet to these indentured labour, it is freedom from a thankless low reward yoke to the land.

when i was in beijing a few years ago, i was extolling how impressed i was about the city to a chinese businessman. quickly and furtively he turned, looked all over, and whispered. 'just go 50 kms away, and you will see china which is more than 500 years behind - poverty, sanitary, education and above all hopelessness'.

it is ironic, that china sits on top of trillions of usa dolla, and like the proverbial midas, unable to spend it in its own country. for various reasons, that i cannot fully comprehend.

it is ironic, that china flouts every copyright and intellectual law, has state sponsored economic spying of technology and above all sucks western industry into 'offers that they cannot refuse' ie make them so dependent on china's orders (for airplanes, raw materials, lumber etc), that they cannot live or without china.

i do not know if china would have done better with any other form of government but the dictatorial one that it now has. it is managed by technocrats, - cold, calculating and with long term vision. also, china is blessed with longevity of its leaders, ie, a leader is not under scrutiny every day to perform, and has a long time span to prepare and execute plans. something that is not possible in a democratic framework.

there is no one to wipe out the tears of millions of folks whose lands have been forcibly taken away to build the flashy high rises of beijing or shanghai. or all the factories in south east china. the quid pro quo: no one starves anymore. bok choy, once the staple is now discarded and used as animal feed.

dear sangom, you see how complex, i think, china is. to balance a first world urban thought, with a third word peasant majority. it would be interesting to see how they solve their issues and bring the whole of china on par. it is good that china has such huge issues - if for nothing else, than they do not have the mindset or energy, to involve themselves in foreign wars.

which the usa appear to be doing constantly....

re the usa: i simply dont know enough to figure out, how they are going to get out of their immense debt, except by printing more and more dollar notes, and diluting the value of their currency so that foreign reserves of china, india, japan, singapore will be worth only a fraction of what they originally paid to acquire them. maybe good time, for india to buy more gold?

 

[suraju06]

Dear Kunjuppu,

i understand that like india, china has a huge soft underbelly of abject povertied peasantry. china just recently upgraded its poverty definition to earning just $1.25 per day which [FONT=inherit !important][FONT=inherit !important]works[/FONT][/FONT] out to 75 rupees a day. that is not fiction, but a reality, which takes hard to digest.

outside of the dazzling big cities lie the industrial zones build by the blood (literallY) and sweat of near-slave labour. i do not think no other nationality of a decent number, like indians or americans or brazilians, will be willing to work under those conditions. yet to these indentured labour, it is freedom from a thankless low reward yoke to the land.

The Communist Party's most important principle is "One generation has to sacrifice a lot for the following generations to live happily". That is perhaps what is happening in China. Only the generation that suffers is suffering a little longer!!

it is ironic, that china sits on top of trillions of usa dolla, and like the proverbial midas, unable to spend it in its own country. for various reasons, that i cannot fully comprehend.

Other than the leverage it has gained in dealing with US, the cash/treasury notes have no value for China. Until there is a severe drought in China and China decides to import grains from US this mount of cash will lie in the coffers in US earning poor returns. In the case of other countries because of Arms import such reserves gets depleted quickly but in the case of China there is no chance for that to happen.

it is ironic, that china flouts every copyright and intellectual law, has state sponsored economic spying of technology and above all sucks western industry into 'offers that they cannot refuse' ie make them so dependent on china's orders (for airplanes, raw materials, lumber etc), that they cannot live or without china.

It is sweet revenge for China. They were once fed with opium and the entire population was made opium dependent by the Western Powers. Now they returning in kind. Only it is not opium this time.

re the usa: i simply dont know enough to figure out, how they are going to get out of their immense debt, except by printing more and more dollar notes, and diluting the value of their currency so that foreign reserves of china, india, japan, [FONT=inherit !important][FONT=inherit !important]singapore[/FONT][/FONT] will be worth only a fraction of what they originally paid to acquire them. maybe good time, for india to buy more gold?

About this later.

Cheers.​

 

[subbudu1]

sangom,

each time, i look at china's progress as is evidenced by the increasingly high tech goods, and fear that they are going to rule the world economically, there comes another news out of china, that is contradictory.

I would like to make a point here. China or India is not anywhere near creating that advanced social system which is found in the west.
Does that make them paper tigers?
Singapore is nothing in comparison to India's economic might. For the sake of an argument, if there were a war between India and Singapore, then India would win it hands down. But Singapore provides its citizens a comfortable place to live and the average citizen is in much better situation.

We should not confuse these aspects. Today USA is Indeed a big country by size, and the comforts an average american can enjoy will not be enjoyed by the average Chineese or the Indian.

Todays situation is a tragedy. China will not be a super-power because of its overall progress and ability to bring its citizens out of poverty. China will be a super-power because the American model allowed China to upstage america in terms of economic might(concentrated among some), america is trapped in a viscious cycle of debt, and the economic power is no longer in its full control.

This may seem pessimistic but are we seeing a world of no-real super-power, and continuous economic turbulence, until we learn to manage our earth's resources in equal share and in a way it is not exhausted. The real fear is whether all the social systems in the west can continue a few decades into the future?

 

[sangom]

Dear Kunjuppu,

I tend to agree with most of your remarks regarding China. But the 75 rupee limit for poverty is not very measly, because even in rural KK district there are poor families earning between 100 and 200 rupees per day, and comprising 7 to 10 mouths to be fed.

China is a very exploited country and slavery, cruelty are part of the mongol races. The prisoners of WWI were so cruelly tortured by the Chinese during WWI that reportedly the Nazis made use of it subsequently.

The vastness of China gives it a sort of mysterious, inscrutable quality and there are small communities there living in centuries old life style. Thus the China we talk of and the actual China are two different entities so to say. The only saving grace is that China does not call its social system as caste-based but imho much of the nastiness of our caste system is what powers the Chinese existence. Nor can we know whether an exploited, illiterate Chinese farm worker can become the President of the country one day, so that we may be able to say that there are equal opportunities for everyone.

 

[Yamaka]

Sangom we have been discussing this in some other threads. I feel all Americans are optimistic about USA. It is no different from an old man that he will live for ever. Whatever puja he does, he has to die sooner or later. While discussion on God can always be a matter of contention, God does not seem to interfere in the rules of the game . Theists may have to take consolation only in that the rule itself could be considered God. In any case, I feel over-spending is the culprit. Living beyond one's means and accumulating beyond one's need.

Capitalism did promote efficiency because the individual who owned the company is after increasing productivity. However how to prevent that from becoming an exploitation. One might say Government regulation. But how far can it go. Suppose my doctor tells me not to eat sweet, and I eat it. My wife stops me and threatens me not to eat it. I will consider it oppressive if I am addicted to it. This is the problem in that as Individuals we cannot prevent ourselves from being self-centered. If Government provides job irrespective of your work, then you will not work at all. This is the extreme opposite.

China is a mystery and I am yet to study its economic and social setup. But they seem to be working harder and harder inspite of being communists. What is making them do it? However the more serious question is are they unwittingly getting themselves exploited?

Dear Subbudu Sir and others:

1. As many of you know Andy Stern is the Union Boss - a known Socialist who is a good friend of Obama (dear N ) and no wonder he is attracted towards Red China!

2. I also agree with Andy that US should have a long term strategy of Job Creation and Technology Development. Right now, our Congress is gridlocked - nothing gets done. The rules of the Senate must be changed so that Bills can be passed by simple up or down votes.

3. I don't worry much about China's growth at all. If the artificially manipulated yuvan is corrected by about 25% (appreciation against U$ as BHO mentioned) China's export will slowly dwindle and they have to increase their domestic consumption. Let's see how that goes. But India must learn a lesson or two on how China quickly implements her Five Year Plans.

An economically stronger China is not in the best interest of India, as I mentioned in another Thread. Economic attraction was the PRIME reason that ancient India was plundered by occupiers and colonialists...for nearly 12 long centuries.

4. America's deficit and debt are quite manageable, as long as we focus on the Growth Strategy. As a perpetual entity, a debt NEED not be paid out fully as long as the World Bond Market (read Bond Vigilantes) is willing to re-finance it very cheaply (now the 10 yr T is about 2% and 30 yr T is about 3% when the inflation is less than 3%).

Many of you don't appreciate this point. But the Bond Vigilantes understand this better than anybody.

5. The notion that China is going to take over US on per capita GDP by 2025 is simply a pipe dream: Today, nominally speaking 1.4 billion people of 800 million workers make about U$6 trillion worth of GDP - while about 300 million people of 145 million American workers make about U$15 trillion GDP.

Please do your math.. and remember, when the economy grows faster it accumulates so much of bad by-products which will have a negative feed-back against future growth... Nothing can go on a torrid pace of 8-10% a year for ever.

America's robust Immigration Policies to attract the world talents and its population growth of about 1% is a boon, while China's one-child policy is a curse. America gets the first bite on all Apples of Talents in the world, while China can't even dream of it.. Americans love luxury and fabulous life, for which they work their tail off; but most of China and India know how to suffer in misery and cry about it... whose fault is it?

Plus, China's State manipulated Capitalism just can't stand long term...Liu Xiabos of Chinese will come in millions and rock the boat sooner than later.

Let China implement Charter 08 (Life and Liberty) as Liu Xiabo (the Nobel Peace winner) demands for the citizens..

To conclude, India needs to pay attention more on governance and growth from bottom up.. India's Parliament must work long and hard hours debating issues, not paralyzed by dirty politics.

Andy's Socialistic call is well taken: US must create MORE JOBS...by whatever new policies.

But Andy is dead wrong in this: Resources are allocated more efficiently by the profit-seeking Private sector, not by Uncle Sam, who can supervise the economy better, if at all.

More later....



ps. I am delighted that Wall Street Journal - the Daily Diary of Capitalists Fart, as my son Anand calls it - even published this Andy Stern's article!

 

[Yamaka]

Dear Kunjuppu,

I tend to agree with most of your remarks regarding China. But the 75 rupee limit for poverty is not very measly, because even in rural KK district there are poor families earning between 100 and 200 rupees per day, and comprising 7 to 10 mouths to be fed.

China is a very exploited country and slavery, cruelty are part of the mongol races. The prisoners of WWI were so cruelly tortured by the Chinese during WWI that reportedly the Nazis made use of it subsequently.

The vastness of China gives it a sort of mysterious, inscrutable quality and there are small communities there living in centuries old life style. Thus the China we talk of and the actual China are two different entities so to say. The only saving grace is that China does not call its social system as caste-based but imho much of the nastiness of our caste system is what powers the Chinese existence. Nor can we know whether an exploited, illiterate Chinese farm worker can become the President of the country one day, so that we may be able to say that there are equal opportunities for everyone.

Dear Sangom:

1. The definition of poverty is mind boggling to me. Recently, I listened to Montek Singh Ahuwalia who said those Indians making less than Rs. 160 per day per person will be considered poor. Although the media was talking about Rs. 32 for urban and Rs. 24 for rural dwellers.

In my mind, I will consider an income of less than U$2 (Rs. 100) to be a poor income per person per day. On this basis, there are 460 million poor in China and about a billion poor people in India! A humongous number, IMO. What say you?

2. China is an enigmatic place, perhaps like India. Since I was born and raised in rural India, I know first hand what's happening there.. but most part of China is a Closed Society to me.

Many people say that their economic numbers are all "wishful thinking" - no way to independently confirm it.

For example, US takes nearly 26 days to figure out the GDP figures for the previous 3 months (quarter), while Chinese claim that they can do it in about 13 days! If you ask the methodology and the techniques used, you get a "Smile" saying "We write what our Superiors want us to write - who knows the real numbers; we don't have the technology to do it the way US does it?"

3. From my Chinese friends here I understand this:

There are about 80 million CCP members who are very influential in China - the most corrupt people, most of whom live fabulously well. What's the participation of rural China in this is not clear.

It seems these members divided into hierarchy of panels, meet in closed doors and vehemently argue on policy matters. Then they vote. Once the panels pass the Resolutions, the Govt implements it ASAP.

This is the Magic of China's Strength: One Party Rule, which India and US do not have it.

We both have gridlocked politics. Both are multi-Party Democracies. India's Parliament is paralyzed and US Congress is dead in water.

In this sense, China is winning with its One Party Autocracy....

Very sad...

What cost is Democracy, anyway?

Cheers.

 

[zebra16]

Dear Subbudu Sir and others:




4. America's deficit and debt are quite manageable, as long as we focus on the Growth Strategy. As a perpetual entity, a debt NEED not be paid out fully as long as the World Bond Market (read Bond Vigilantes) is willing to re-finance it very cheaply (now the 10 yr T is about 2% and 30 yr T is about 3% when the inflation is less than 3%).

Many of you don't appreciate this point. But the Bond Vigilantes understand this better than anybody.

I do not know whether you have read Sri Sangom's other posts. He has worked in Reserve Bank of India (Indian equivalent of Fed Reserve). My guess is that he would also have worked in departments of RBI pertaining to government borrowing, monetary policy etc. So I would not be making the assumption you make and state "may be you don't appreciate this......".

The following is the definition of a Bond vigilante as provided by wikipedia: "A bond vigilante is a bond market investor who protests monetary or fiscal policies they consider inflationary by selling bonds, thus increasing yields.[SUP][1][/SUP]In the bond market, prices move inversely to yields. When investors perceive that inflation risk or credit risk is rising they demand higher yields to compensate for the added risk.[SUP][2][/SUP] As a result, bond prices fall and yields rise, which increases the net cost of borrowing. The term references the ability of the bond market to serve as a restraint on the government's ability to over-spend and over-borrow."

Basically they (vigilantes) are like market-maker for bond market who "bid" and "offer" for government bonds depending upon the supply and demand position. They hardly forecast the government debt market years in advance.

By the way, when Italy borrowed at the height of the euro-crisis (about 10 days back), the yield crossed 7% for the first time ever. Although Italy was in "PIIGS" category since 2008, I would be interested to know whether any Bond vigilante had forecast that its cost of borrowing would cross 7%, and if yes, kindly let me know the web url where this was published.

 

[Yamaka]

I do not know whether you have read Sri Sangom's other posts. He has worked in Reserve Bank of India (Indian equivalent of Fed Reserve). My guess is that he would also have worked in departments of RBI pertaining to government borrowing, monetary policy etc. So I would not be making the assumption you make and state "may be you don't appreciate this......".

The following is the definition of a Bond vigilante as provided by wikipedia: "A bond vigilante is a bond market investor who protests monetary or fiscal policies they consider inflationary by selling bonds, thus increasing yields.[SUP][1][/SUP]In the bond market, prices move inversely to yields. When investors perceive that inflation risk or credit risk is rising they demand higher yields to compensate for the added risk.[SUP][2][/SUP] As a result, bond prices fall and yields rise, which increases the net cost of borrowing. The term references the ability of the bond market to serve as a restraint on the government's ability to over-spend and over-borrow."

Basically they (vigilantes) are like market-maker for bond market who "bid" and "offer" for government bonds depending upon the supply and demand position. They hardly forecast the government debt market years in advance.

By the way, when Italy borrowed at the height of the euro-crisis (about 10 days back), the yield crossed 7% for the first time ever. Although Italy was in "PIIGS" category since 2008, I would be interested to know whether any Bond vigilante had forecast that its cost of borrowing would cross 7%, and if yes, kindly let me know the web url where this was published.

Dear Zebra:

1. I am not sure about what Sangom Sir believes: I got the impression that he likes old Mercantilist Theory of Trade more than Modern Economics of Wealth and Trade, and International Finance. I may be wrong here.

2. Your definition of Bond Vigilanets is correct most part. Yes, bond yields and price move in opposite direction.

Bonds are long tern IOUs of 10 year to 50 year duration. The Bond Market always calculates the potential impact of "Inflation or Deflation" on their money LONG TERM; accordingly they bid for the bonds in the open market.

Right now, they bid for US T 10 yr at a price that yields about 2 -2.3% and for 30 yr T at a price that yields about 3%. This in my view is dead cheap money.

What happened yesterday is: US Fed decided to borrow money very cheap AND transfer the funds to the Euro Countries for the same cheap rate... this is the Magic that the most powerful US FED can do (legally authorized to do) to protect the world financial markets in terms of the so-called Liquidity. And, world stock market loved the action with a near 4% jump world wide!

3. You may get the data in WSJ Market Data section everyday.

My view is Euro will collapse eventually because of no FISCAL union in Europe.

Budgets are prepared separately; fiscal policies are quite different and country specific. Therefore a Fiscal Union is impossible.

Then how can we have a single Euro Bond to finance all the Debts of EMU countries?

Impossible. Bond Vigilantes know this... they will ask more yields from all the weaker countries in Europe. That's what's happening in Italy, Greece, Portugese etc.

Cheers.



ps. As you may know well, the bonds can be bought and sold every working day in NY and other major financial centers. If you keep the bond to maturity you WILL get the Principle back with interest specified before hand (unless the company or country declares bankruptcy);but if you sell bond before maturity you may lose or gain money depending on the market condition (this will be the so-called Capital Loss or Gain, respectively). I have a MBA which I picked up on the side! LOL to say I know a bit of Business Financing!

 

[Yamaka]

China's Hard Landing - a WSJ Opinion Article

Review & Outlook: China's Hard Landing - WSJ.com

I have written about housing bubble in China and India before in this Forum....

Please write about your views on this and of what's happening in India regarding Growth, Development, promises and perils.

Cheers.

 

[Yamaka]

China Fears of Fire at Home

China fears global crisis may ignite fire at home - The Times of India


Euro crisis could plunge the world into another Deep Recession: Both India and China will be affected MORE than any other country.

Unique to India, there is slowing growth, high inflation and rupee is losing value (maybe, the FIIs are leaving India because of all the "Corruption" scams, Corporates kept in jail for 8 months without bail and the paralysis in the Parliament etc etc) all suggesting of brewing Financial Tsunami near the shores, even if the Euro crisis is averted this week!

Take good cover, if you are in Real Estate, which will meltdown like ice in Chennai Summer!

Cheers.

 

[Naina_Marbus]

Here is something for all of us to chew on and argue about.

NPR news (USA), under "All Things Considered", on January 20, 2012 , was discussing China's reported economic growth at 9% a year for more than 30 years. The reporters were conversing with David Kestenbaum and Jacob Goldstein, part of NPR's Planet Money Team, which got back from a visit to the rural village of Xiogang in China. They were wondering about how this boom got its first start. Here is an extract:

In 1978, at the height of communism in China, everyone in the rural village of Xiogang worked on the village's collective farm; there was no personal property, no one could own anything. The government took away what the collective farms grew, and distributed to each family. There was no incentive for anyone to work hard. In that village, there was never enough food, and the farmers often had to go to other villages to beg. Their children were going hungry. They were desperate. So, in the winter of 1978, after another terrible harvest, the farmers came up with an idea that rather than work as a collective, each family would get to farm its own plot of land. If a family grew a lot of food, that family could keep some of the harvest. The idea was so dangerous that the farmers could get executed if the party officials got wind of it.

Nevertheless, they decided to try the experiment. They wrote it down as a formal contract, so everyone would be bound by it. The farmers divided up the land among the families. Each family agreed to turn over some of what they grew to the collective. And, crucially, the farmers agreed that families that grew enough food would get to keep some for themselves. The contract also recognized the risks the farmers were taking. If any of the farmers were sent to prison or executed, it said, the others in the group would take care of their children until age 18.

Before the contract, the farmers would drag themselves out into the field only when the village sirens started blowing, marking the start of the work day. After drawing up the contract, the families went out before dawn. They all secretly competed, and everyone wanted to produce more than the next person.

It was the same land, the same tools and the same people. Yet just by changing the economic rules, everything changed. At the end of the season, they had an enormous harvest: more than in the previous five years combined.

But, that huge harvest also betrayed them. Local party officials figured out that the farmers had divided up the land, and word of what had happened in the village made its way up the Communist Party chain of command. But fortunately for them, at this moment in history, there were powerful people in the Communist Party who wanted to change China's economy. Deng Xiaoping, the Chinese leader who would go on to create China's modern economy, was just coming to power. So instead of executing the village farmers, the Chinese leaders ultimately decided to hold them up as a model.

Within a few years, farms all over China adopted the principles in that secret document. People could own what they grew. The government launched other economic reforms, and China's economy started to grow like crazy. Since 1978, something like 500 million people have risen out of poverty in China.

But here is a twist . When the farmer, who invented the new model , started a couple of new businesses over the years, the local communist party took them away once they became profitable. And the new factories springing up around that original village these days are largely empty, and haven't created many job. CAN ANYONE EXPLAIN WHY?


NPR: All Things Considered

Moral of the story:

1) People have to get desperate. Look how Bank of America withdrew their debit card fee recently, or Verizon withdrew their proposed on-line payment fees.

2) Politicians and Government are the biggest hurdle for progress.

3) As per the red-lettered words in the post, you have to have luck on your side.

 

[kunjuppu]

naina,

re your post #14

if this post is not considered deragatory to india, i would like to point out,

in 1991 when india's foreign exchange reserves for enough only for 2 days, the government of narasimha rao, got desperate, decided to give up policy and principle of 35 years (it was at the avadi congress party meet of 1956 that congress party officially went 'socialist') - adopted capitalism and freemarket.

rajiv gandhi, to his credit, tried this, early 1980, but was scuttled by the self serving bureaucrats. and by his own party. congress' socialism protected plenty of big businesses - starting from the birlas. some of them survived the liberalization and some failed.

maybe we should consider desperation, as the mother, of inventivenss.

good post.

 

[prasad1]

Here is something for all of us to chew on and argue about.

NPR news (USA), under "All Things Considered", on January 20, 2012 , was discussing China's reported economic growth at 9% a year for more than 30 years. The reporters were conversing with David Kestenbaum and Jacob Goldstein, part of NPR's Planet Money Team, which got back from a visit to the rural village of Xiogang in China. They were wondering about how this boom got its first start. Here is an extract:

In 1978, at the height of communism in China, everyone in the rural village of Xiogang worked on the village's collective farm; there was no personal property, no one could own anything. The government took away what the collective farms grew, and distributed to each family. There was no incentive for anyone to work hard. In that village, there was never enough food, and the farmers often had to go to other villages to beg. Their children were going hungry. They were desperate. So, in the winter of 1978, after another terrible harvest, the farmers came up with an idea that rather than work as a collective, each family would get to farm its own plot of land. If a family grew a lot of food, that family could keep some of the harvest. The idea was so dangerous that the farmers could get executed if the party officials got wind of it.

Nevertheless, they decided to try the experiment. They wrote it down as a formal contract, so everyone would be bound by it. The farmers divided up the land among the families. Each family agreed to turn over some of what they grew to the collective. And, crucially, the farmers agreed that families that grew enough food would get to keep some for themselves. The contract also recognized the risks the farmers were taking. If any of the farmers were sent to prison or executed, it said, the others in the group would take care of their children until age 18.

Before the contract, the farmers would drag themselves out into the field only when the village sirens started blowing, marking the start of the work day. After drawing up the contract, the families went out before dawn. They all secretly competed, and everyone wanted to produce more than the next person.

It was the same land, the same tools and the same people. Yet just by changing the economic rules, everything changed. At the end of the season, they had an enormous harvest: more than in the previous five years combined.

But, that huge harvest also betrayed them. Local party officials figured out that the farmers had divided up the land, and word of what had happened in the village made its way up the Communist Party chain of command. But fortunately for them, at this moment in history, there were powerful people in the Communist Party who wanted to change China's economy. Deng Xiaoping, the Chinese leader who would go on to create China's modern economy, was just coming to power. So instead of executing the village farmers, the Chinese leaders ultimately decided to hold them up as a model.

Within a few years, farms all over China adopted the principles in that secret document. People could own what they grew. The government launched other economic reforms, and China's economy started to grow like crazy. Since 1978, something like 500 million people have risen out of poverty in China.

But here is a twist . When the farmer, who invented the new model , started a couple of new businesses over the years, the local communist party took them away once they became profitable. And the new factories springing up around that original village these days are largely empty, and haven't created many job. CAN ANYONE EXPLAIN WHY?


NPR: All Things Considered

Moral of the story:

1) People have to get desperate. Look how Bank of America withdrew their debit card fee recently, or Verizon withdrew their proposed on-line payment fees.

2) Politicians and Government are the biggest hurdle for progress.

3) As per the red-lettered words in the post, you have to have luck on your side.

Naina excellent post. Any body listing to NPR has to be good. LOL

 

[Naina_Marbus]

@Kunjuppu

It is the kind of desperation Sri Krishna was referring to when he said:

Paritranaya sadhoonam vinasaya cha dushkritaam.
Dharma sansthapanarthaya sambhavami yuge yuge.
(Gita 4:8)

 

[kunjuppu]

naina,

a brief googling reveals such



paritranaya sadhunam
vinasaya ca duskrtam
dharma-samsthapanarthaya
sambhavami yuge yuge

In order to deliver the pious and to annihilate the miscreants, as well as to reestablish the principles of religion, I advent Myself millennium after millennium.



you must excuse me, mandoo as i am, as to what this stanza of gita has to do with china or pn rao! please explain.

or maybe this translation is wrong?
Bhagavad Gita As It Is, 4: Transcendental Knowledge, Text 8.

 

[Naina_Marbus]

naina,

a brief googling reveals such



paritranaya sadhunam
vinasaya ca duskrtam
dharma-samsthapanarthaya
sambhavami yuge yuge

In order to deliver the pious and to annihilate the miscreants, as well as to reestablish the principles of religion, I advent Myself millennium after millennium.



you must excuse me, mandoo as i am, as to what this stanza of gita has to do with china or pn rao! please explain.

or maybe this translation is wrong?
Bhagavad Gita As It Is, 4: Transcendental Knowledge, Text 8.

Dear Kunjuppu sir:

1) My approach to interpreting the verses in the Gita has generally been thus: what was the
author trying to convey? In contemporary parlance, what was he thinking? (Note that I used
the past tense for the author - today's thinking is different from yesterday's).

2) Different people interpret the Gita differently, since words can mean different things to
different people, depending on the time, place, cultural context and knowledge-base. I prefer
to interpret the word 'sadhu' as not just referring to the 'pious', but to all common folks
who want to carry on with their day-to-day dharma, and seek to lead a peaceful life while
suffering from political exploitation.

3)'paritranaya' means "to protect". Protect from what/whom? From desparate
conditions arising from socio-political situations (adharma), created by evil-doers whose
annihilation is implied by 'vinasaya cha dushkrtam'.

From this perspective, I felt that the inventive idea that occurred (in desperation) to the
chinese farmer was a case of 'periodic divine manifestation'. It doesn't have to be once in
a millennium, doesn't have to be once in a yugam (yuge yuge).

As a reality check, in fact, don't you think that for many of us, when governed by unpopular
party leaders elected to a term of 4-5 years, and with our waiting for the next election to
throw the sob's out, even the 5 years seem like a yugam?

IMHO, nor does one have to have an explicitly identifiable avatar, like Rama or Krishna.
In today's environment and thinking, you wouldn't recognise an avatar, even if Lord Vishnu
did come down! The only ingredient that would enable us to recognise the 'sambhavami' is
that spark of inventiveness that leads to social progress.

As you say: desperation is the mother of inventiveness. PNRao's act of desperation
....would qualify under this definition.

 

[Jaykay767]

wow I am astonished at the responses to this post.

1. what is this fixation about USA losing out to China. why do we care ?. The americans are very smart, they will ensure their dominance for the next 200+ yrs. Remember how the japanese were the new economic superpower in the 80s & u all know where they are !! when the Japs purchased Columbia Pictures in 80s, the entire USA went bersek & wrote sob stories abt how they are the third rung economic power !!

2. China has only 100+ mil poor. they have smartly combined socialism & capitalism to deliver their people out of poverty. remember they are over 1+ billion people in China. SO WHAT IF THEY PIRATE COPYRIGHT STUFF FROM THE WEST ???. SO WHAT IF THEY STEAL FROM THE WEST? SO WHAT WHAT ??. THEY ARE DOING THIS TO ENSURE THE POOR INNOCENT PEOPLE GET FOOD, WATER, SHELTER & PROSPERITY !!.

3. India has over 800+ mil poor. our most honest Saint Sardar PM Manmohan says it is a national shame that 42% of childern are malnourshed. what the hell was he doing for the last 7 years !!

yeah, China is communist, so no freedom etc.., everyone knows this. so what ????, they are giving all their people food water shelter & free healthcare & our 800 mil people are dying without anything !!. so what should poor people do with the freedom, shove it up...


INSTEAD OF PULLING DOWN CHINA, LETS TRY TO PULL UP INDIA -

 

[kunjuppu]

jaykay,

I am with you re china and india.

Whenever I have mentioned of china’s material achievements, I was always presented with negatives about china, and not how we can catch up to china.

I have found the chinese leadership have a vision, and this vision is handed down from one generation of leadership to the next, and adopted, almost intact. This level of patriotism, and thinking of ‘my country uber alles’ is something that is missing in us. I attribute it to poor leadership and nothing else.

Even in tamil nadu, we have the same rubbish, tweedledum undoing what tweedledee did during his reign, and vice versa.

But we know that an authoratarian rule is not for india. If there is one thing all parties are united, it is the preservation of power. They will not tolerate a one party rule or take over by the army. Which is good, for atleast now, inspite of all its warts, democracy allows constant outlet of blowing out steam of frustration and anger. A pent up of the same, can cause unimaginable damage, and our community would be the first to be vulnerable under such circumstances.

I hear a lot of jingo stuff, like we will win in the long run and china will find its grave in its faults and shortcuts. I think these are just pessimism wrapped in optimism, while the reality, maybe that china, being a quick learner, and a even quicker turnarounder, can clean up its act, before we even blink.

We leave a china centred universe to our children. At this point, it is tough to tell, what this means.

 

[Jaykay767]

Hi Kunjuppu,

Agree, I am not suggesting a communist model for India. However the current form of governance is not working & we have a majority of people under poverty consistently for the last 65+ yrs.

Hence we need to change our model of governance if our poor should have any chance to get out of this mess.

My suggestion is - "remove govt from everything except for Military, foreign affairs, Internal security/police & revenue/tax" & privatize everything else. Poverty will disappear in a very short time - 5 to 10 yrs !!

Cheers,
JK