In India, the Emperor had little direct control over much of his Empire. There were intermediate Governors who dealt with Rajahas and Chieftans who retained considerable power. In China, the Emperor ruled directly through a vast bureaucracy and the hukou system of family registration which restricted the movement of people. True, there were notable families with considerable influence in their own Districts. But there was nothing like the Indian system where most people lived in small principalities or under feudal landlords whose power was seldom checked by the representatives of the Imperial government.
As Disraeli said, India had not been conquered by Britain. The British had attained paramountcy by administering the customary laws of the Indians. They interfered very little in local matters and did not seek to impose their own religion or language. But the same could be said of earlier Empires. Even if there was a period of centralization and direct control it seldom lasted for more than a couple of generations.
Japan began to rise when its own bureaucratic Samurai class saw that the West must be emulated in a very thorough fashion. Confucian and Buddhist ideas must give way to Western ways of doing things. After Japan defeated China, the Chinese mandarin class saw that China must follow the example of Japan. But, after the Bolshevik revolution, there was another neighbor whom they could emulate. The question was whether the Communist Command economy could deliver superior results to the Market economy. By the end of the Seventies, the answer was clear. South Korea, which emulated Japan, not North Korea, which emulated the Soviet Union, was the proper model to emulation. Like Taiwan, South Korea had gone in for export led growth. North Korea emphasized self-sufficiency. A key factor was a rise in the female participation rate. Get rural girls into giant factory dormitories producing goods for the export market. Incentivize local government to make it easier to set up such factories. Maintain the 'hukou' internal passport system so that immigrants from poorer regions get less in the way of entitlements. Thus, the indigenous people gain the lion's share of the benefits of economic growth. This is how you can combine 'Tardean mimetics'- i.e. imitating what more successful countries are doing- with 'incentive compatibility'- i.e. those with the power to make changes are rewarded for making changes which raise economic growth by boosting productivity.
India could have done (indeed, it did in some places) both these things. But bad governance in many parts of the country meant a criminalized environment and low participation rate for women and lots of young people wasting their time sitting for Civil Service exams. A habit of virtue signaling prevented its intellectuals from seeing that concern with equity worsened the life chances of the poorest. An example is the following essay by Arun Maira, a celebrated Business Consultant, published by Scroll.In.
What India can learn from China:
Reward those who raise productivity. Punish those who make a nuisance of themselves by clamoring for Diversity, Inclusivity and Equity. Edwin Lim, of the World Bank, did a great job in China in the Eighties. When he came to India and met Manmohan, Montek etc., he thought India could do even better than the Chinese. Then he discovered that the 'andolanjivi' backed by international NGOs could make more money and gain greater fame by preventing the World Bank from financing infrastructure. The thing would get done- but by Adanis and Ambanis who could buy newspapers so as to directly alter how they were perceived. The andalonjivi could be driven out of business as Medha Patkar was driven out of Gujarat by a counter-mobilization.
Dictatorship, democracy and the road not taken
Dictators can be stupid and can do stupid, evil, shit. So can democracies. In India, there was never a road towards the creation of a Chinese type Empire. True, the Mauryans or the Mughals or the Brits might establish an Empire. But power at the local level remained vested in ancient princely lineages. There could be a 'steel-frame' bureaucracy, but it would either be costly and ineffective or confined to a narrow 'night-watchman' type role. At the local level, the District Commissioner might have to turn a blind eye to how particular feudal lords- or their musclemen- managed matters.
India must not slavishly follow Western models any longer.
India did not try to follow Western models because Indians believe that the vast majority of their fellow Indians are utterly shit.
Nor can India be China. What is the way forward then?
Disintermediate the politico/bureaucratic class. Reduce 'compliance costs' by defunding enforcement. Ignore the Supreme Court.
The only thing that matters is getting girls out of rural shitholes where they will have babies like crazy. Get them into factories.
The Indian economy has grown fast and poverty has reduced considerably since the “opening up” of the economy and the International Monetary Fund’s bailout in 1991.
Could India have done better? More importantly, should it do better? These were questions Manmohan Singh posed to me when I joined the Planning Commission in 2009.
The answer was 'in China, if you want to set up a factory, local officials will meet you at the airport and personally guarantee that you will get everything you need to start production as quickly as possible. You can focus just on making and selling your product'. Moreover, they had learned how to do infrastructure from the best and, because of their huge internal market, they had gained economies of scope and scale. Furthermore, the aim was to create Marshallian industrial districts with external economies which could capture, indeed monopolize, global markets. The thing wasn't rocket science. What mattered was that those who facilitated productivity growth got paid a lot. Those who moaned got a bullet in the back of the head. This is called 'incentive compatibility'.
I was surprised by his invitation to become a member of the Planning Commission and asked him if he might have made a mistake. I pointed out that I was not an economist, nor an academic and I had no experience of working in government – qualifications which seemed necessary for a country’s apex policy-making body.
Plans don't matter. Budgets do. The Planning Commission was created to prevent industrialists getting richer and, potentially, financing parties opposed to the ruling party.
On the contrary that was why he wanted me, he said. The country already had eminent economists in the Planning Commission and other advisory roles.
India's economic performance was shittiest when all the greatest economists in the world were advising it. I recall my father asking a senior Banker whether he was happy that Sukhomoy Chakrabarty, described by Samuelson as the best Development Economist in the world, had been appointed by Indira to the Planning Commission. The Banker, a fellow Bengali who had known Sukhomoy in College, said the fellow was utterly useless. Minhas was good. But he had resigned to protest the idiocy of the Government taking over the grain trade. Minhas, I need hardly say, was Sikh.
Moreover, he himself was considered a good economist, he admitted shyly. Yet, the country’s economic policies were failing to create enough employment
in other words Manmohan was asking this stupid fellow to say 'please scrap Labor and Land laws. That way, the organized sector can generate millions of jobs. In particular, we want to get rural girls into big factory dormitories making i-phones and other cool stuff.'
though its gross domestic product was increasing fast.
My perch in India’s governance cockpit gave me a perspective of India’s complex socio-economic system.
That wasn't why Manmohan had brought him into the Planning Commission. He should just have kept shouting about getting rid of crazy labor laws. Since he was a former Tata man (Tata is considered a good employer) people would have to listen to him. It was obvious that workers in the organized sector were doing much better than those condemned to sweated labor in the unorganized sector.
I had been a consultant to organisations in many countries on how they could accelerate their learning to reach their aspirational goals.
Fuck learning. Doing stuff which makes you more money is what matters. India's problem was too much virtue signaling talk of 'equity' and very little 'incentive compatibility'.
The special task the prime minister assigned to me required learning how other countries governed their economies.
No. Manmohan just wanted this cretin to shout about how no other country had such shitty labor and land laws. Arun was already 66 years old. If he didn't already know how other countries ran their economies, he was simply too old and too stupid to learn.
With the World Bank’s support, I was able to consult with the best economists in industrial policy.
They would be too polite to say 'you have shitty labor and land laws. Fuck is wrong with you guys?'
They also provided me with insights into the economic development processes of other countries, including the United States, China, Japan and other developing countries. Experts in these countries explained the histories of their progress and the evolution of their planning processes.
How come Malaysia's Five Year plans didn't fuck up their country? Is it because Malays like earning good money and buying nice things?
“Development” and “progress” are processes of learning.
No. They are about doing. Only a fucking cretin goes in for 'learning' at the advanced age of 66.
Countries, organisations in them, and teams and individuals within those organisations must learn to do what they could not do before.
They must imitate those who are doing better than them. This is called Tardean mimetics. True, if you are shit, you have to choose shittier mimetic targets. But you could also think about ways of becoming less shit.
In a competitive world, those individuals, organisations, and countries who learn fast can catch up with others ahead of them,
Only if they have an incentive to do so. If 'catching up' means getting less money, don't do it. Emigrate.
and if they keep up their pace of learning and progress, even overtake them.
You overtake others in business when you supply a better product at a cheaper price. This means getting economies of scope and scale. Even if you go on learning this lesson, you won't overtake anybody because overtaking involves doing not learning or talking.
I asked the World Bank’s experts who assisted me to compare pairs of countries who were in similar positions in 1991 and whose paths of progress had diverged since then.
An obvious pair was India and China – both their economies were comparable in size and per capita incomes in the 1980s. By 2009, per capita income and GDP was five times higher in China, its manufacturing sector eight times, and its high-tech sector 50 times larger than India’s.
Why? Edwin Lim says that andolanjivis got a better reward from preventing development than bureaucrats who went in for it. That's why Manmohan tried to crack down on foreign funding for NGOs.
Sadly, politicians saw that buying votes was safer than going for growth by getting rid of paternalistic labor laws or challenging a vast class of intermediaries- e.g. arhatiyas in Punjab.
The 20th century was a historical test of competing economic ideologies – socialism and capitalism; and competing forms of governance – liberal democracy and authoritarianism.
No. The 20th century was a period of scientific and technological progress. Those with the better tech- especially military tech- dominated. Governance did not matter because you could always put up a wall to prevent your people running away or foreigners getting in.
When the Soviet Union collapsed in 1991, victory was declared for the Washington Consensus of free market capitalism and liberal democracy. Washington’s ideology was forced onto socialist Russia with a “big bang”, with disastrous consequences for its economy and society.
There was already a scissors crisis. Gorby's mistake was to give up the Party's residual control rights over the economy. The Chinese didn't make that mistake. Also, they didn't have a President who was a drunken buffoon.
China did not yield. It stayed its socialist course with single-party governance.
It was pretending to do 'local democracy' with assistance from Jimmy Carter's Institute. Then, by about 2012, it was strong enough to drop the pretense.
India’s reformers adopted the Washington formula in 1991. They abandoned industrial policies for growing domestic industries,
because those industries didn't fucking grow.
which China continued with, and opened the market for foreign companies without requirements to transfer technology.
Stealing technology is cheaper and faster.
The growth of China’s economy is a miracle, economists say. The US has been alarmed by China’s remarkable economic growth and industrial strength, despite China not following Washington’s economic formula.
Which country did? South Korea? It was a military dictatorship. Taiwan. Ditto. Singapore? You could go to jail for chewing gum. On the other hand, Franco's Spain was very democratic.
The Washington Consensus is cracking within Washington: ideological divisions have appeared within the US where inequalities have increased and working people have become restive.
Maira doesn't seem to understand that the Washington Consensus was merely that debtor countries would not be bailed out just because their people were starving. But Bankers have always followed that rule.
The US is threatened by China’s rise. China straddles India’s northern borders where their armies continue to skirmish. The US is pressing India to come closer to it. India is wary. It must become self-reliant and stronger much faster than it has so far. Reforms must increase incomes faster for India’s masses and build stronger domestic industries.
Maira is clearly senile. Still, it is good to know that, thanks to Manmohan, he was able to learn from World Bank economists that
1) China is next to India
2) To become strong you must become stronger.
India is at a crossroads. Both, political Left and Right agree the economy needs substantial reform but disagree on what direction it should take.
Manmohan hoped this nutter would shout 'Scrap paternalistic labor and land laws!' till he was hoarse. Instead he went around the place learning that China was next to India and that to learn to become strong requires learning to become stronger.
The progressive Left wants more socialism and more liberal democracy;
No. They want Hindus to slit their own throats. Sadly, they are not yet demanding compulsory gender reassignment surgery for all heterosexual males.
the conservative Right, more free-market capitalism and is willing to tolerate curbs on liberty.
No. They want Hindus to kick the asses of those who try to slit their throats.
The Middle is muddled. India’s leaders should study China for lessons before pushing harder with economic policies based on the West’s failing free market model.
Very true. Muslims should be sent to 're-education' camps. If an industrialist seems critical of the government, he should be 'disappeared'.
Three recent books offer insights into how socialism and capitalism have been combined to achieve China’s inclusive fast growth.
Xi's eradication of absolute poverty in remote parts of China is worth looking at.
China’s leaders are good learners,
they are good at 're-education'. Sometimes this involves a bullet in the back of the head.
says German political economist Isabella M Weber, in How China Escaped Shock Therapy: The Market Reform Debate.
You only get Shock Therapy if you run out of foreign currency.
Like Mohandas Gandhi, they kept their minds open, allowing ideas to come in from all directions without being blown off their feet.
Unlike Gandhi, they killed their enemies.
They listened to Western economists but applied only what suited China.
They applied what had already worked in Dictatorships like South Korea or Taiwan.
She says, “The famous Harvard development economist Dani Rodrik represents the economics profession more broadly when he answers his own question of whether ‘anyone [can] name the (Western) economists or the piece of research that played an instrumental role in China’s reforms’ by claiming that “economic research, at least as conventionally understood” did not play “a significant role”.
Because China had concrete models to follow. A lot of fdi was from Korea or Taiwan or Hong Kong and Singapore.
Chinese economist Keyu Jin, a professor at the London School of Economics, who grew up in China and experienced the Chinese system from inside, explains how the socio-economic-political system works in The New China Playbook: Beyond Socialism and Capitalism.
She outlines why Western economic models, which strip out cultural and social forces from economics,
They don't. Western economists have always said 'this works for us because of our history and culture. It won't work in some shithole country.' Herbert Spenser advised Japan to retain traditional political forms. Alfred Marshall warned his Indian students that the quality of entrepreneurship in India was low. Don't expect much out of Listian policies. You guys aren't smart like the Americans or Germans.
cannot comprehend how China works – or even how Western economies work. She makes visible the “invisible hand” that free market economists cannot explain.
Maira is too stupid to understand that when the Chinese arrest you and beat you or just 'disappear' you, their hand is visible and very heavy.
She explains why the Chinese government keeps financial markets and the private sector reined in to ensure
the Party retains 'control rights'. Industrialists must toe the line or run the fuck away.
the market produces welfare for all, especially the poorer and least powerful citizens.
Poor Muslim women are being 're-educated'. That raises their welfare. Even more fortunate are those who are shot in the back of the head.
“The number of financial crises in China is exactly zero.
There is an ongoing property sector crisis since 2020.
It is also an oddity (from a Western perspective) that despite the nation’s preternatural economic growth, its stock market has been one of the worst performing in the world,” she says.
Nope. It just means that Chinese companies don't get much equity funding.
The Chinese government has added citizen satisfaction and environmental sustainability
& disappearing or re-educating people
to GDP to measure its own performance, and as measures of performance of all local governments. Though private firms grew nine-fold in China from 2000 to 2019 (their number now exceeds the US by far), “A more striking fact”, says Jin, “is that private owners with state connections owned about a third of the capital registered by these companies showing how pervasive equity linkages between state and private businesses has become in China’s corporate sector”.
Institutional investors don't play a big role in the stock market.
While the government has reduced the numbers of state-owned enterprises and pushed the remainder to add profits to their social objectives, it also demands that private firms comply with societal needs. Large, private, property and technology firms that have strayed from the socialist path have been cut down.
Capitalist CIA agents disguised as poor Muslim women have been lovingly reeducated by the Benevolent Leader. Some who have strayed from the Socialist path have been shot in the back of the head in a very kind and generous manner.
Three distinctive features of China’s governance are:
1) Killing
2) disappearing
3) 're-educating' minorities in prison camps
1. The purpose of the state, throughout China’s long history from Imperial times to the Communist era, has been
to reinforce the power of the center.
the provision of welfare to citizens.
Mao had no problem with 30 million starving to death. Like Stalin, he showed the peasantry that the alternative to obedience was man-made famine. Previously, there had been a cycle of agrarian revolts such that the 'mandate of Heaven' was withdrawn and a new dynasty was installed. Stalin and Mao showed that food could be taken from the countryside and discontented farmers could be safely left to starve.
The best Emperor is the one who provides the most welfare to all citizens, not the one who wins the most wars. The leadership of the Communist Party has continued this role, says Chinese political scientist Zheng Yongnian, in The Chinese Communist Party as Organizational Emperor: Culture, Reproduction, and Transformation. Jin explains (in The New China Playbook) how commitment to this role has shaped the Communist Party’s socio-economic policies, resulting in widespread support for the Communist Party, even from young people born in the 21st century.
Jin doesn't want to be 'disappeared'. He isn't utterly stupid. There is a Chinese saying 'Science students look down on Arts students. Arts Students look down on Politics students. Politics students look down on their teachers'.
2. The governance of China is highly decentralised.
Because local leaders can be shot in the back of the head. Their entire family can be wiped out.
Local communities are given freedom to create solutions suited to their needs; the performance of local party officials is measured by the satisfaction of their communities with progress. The Party-government structure is meritocratic, continuing a centuries long Confucian tradition. All who rise to the top of the Communist Party and government must first prove their mettle by managing a large city or state successfully. There are no “professional politicians” in China, unlike other multi-party democracies where citizens are becoming increasingly disenchanted with their political systems and even with liberal democracy.
A professional politician is a guy who is afraid of losing elections. None such exist if your motivation is to not get shot in the back of your head.
3. China’s leaders and its economists are “systems thinkers”.
Its leaders get things done. Economists- especially 'systems thinkers'- are useless.
They see the economy as only a component of a complex social system.
Not that complex. Shooting people in the back of the head is pretty simple to understand.
For them the purpose of economic growth is the production of societal well-being, especially for less powerful people.
Everybody is less powerful than the dude who can order your disappearance or execution.
Whenever the economy begins to fail this purpose, reforms are made to bring it back to its socialist moorings.
Mao created a big famine so as to establish those moorings.
India is a remarkable country.
It took an unusual path at its birth in 1947.
It took the same path as every ex-colony of Britain. Unlike Pakistan and Burma, the civilian administration did not invite in the Army to do Martial Law. The Army is like a vampire. Once it is invited into the house, it sucks the blood out of the residents. Sri Lanka weakened the Army fearing a coup by 'Burgher' officers and remained a democracy. But it did stupid shit and paid a price.
It chose to follow a democratic path for its development.
There was no alternative. Autocracy is tempered by assassination, as Indira and Rajiv discovered.
There were concerns inside and outside India whether so diverse a country, formed of peoples with many religions, many languages and many ethnicities, would be able to hold itself together.
Hindus had to hang together or else hang apart and succumb to Muslim or Communist salami tactics.
Independent India was a very poor country at its birth. The Indian economy, which was the richest in the world in the 18th century, had been exploited by its imperial coloniser to provide resources for its own economic growth and to fight its wars.
This man has shit for brains. If India was so fucking rich why didn't it protect itself? The plain fact is Indians with power or wealth preferred British paramountcy. Why? Killing Daddy or Uncle was rejected by British judges or Governors as the natural way to inherit property. Also, if the Brits offered you a pension if you surrendered a fortress, they actually paid the pension not just to you but to your descendants. The 'hoondi' Bill of Exchange of John Company traded at par across the country. Sound finances- based on burgeoning oceanic trade- is what maintained British paramountcy.
India had become one of the poorest countries in the world when the British finally left India to Indians to govern themselves.
Famine returned once Provincial autonomy was established. Soon there was ethnic cleansing. After that begging bowl diplomacy kept the people fed. India could neither feed nor defend itself nor wipe its own arse. It kept 'learning' from Nobel prize winning economists without doing shit. Admittedly, this is because money quickly ran out when it did some specially stupid type of shit.
Some economists believe that development must precede democracy. Poor countries must be managed autocratically initially to build their economic infrastructure, they imply. They also think that when income levels have increased to a higher level (though economists are no longer sure what that level is) democracy will emerge automatically.
Who cares what economists think? Rothbard's law applies. Economists specialize in what they are worst at. Their job is to keep saying the same thing decade after decade. Look at Amartya Sen.
History tells another story.
China was equally poor as India 70 years ago.
It was powerful enough to stop the US from taking North Korea or North Vietnam. It was militaristic. India wasn't.
Now, China’s economy is five times larger.
Because it needed a strong economy to finance military modernization.
This may prove the theory that dictatorship should precede development. But it does not support the thesis that democracy, in the Western version, will follow development. On the contrary, there is increasing concern that rich Western countries are becoming undemocratic.
This man is a cretin. People may say 'Trump is a Nazi' but they may also say 'Kamala is a Communist'.
India’s own path to its destiny
Destiny comes to you. You don't need a path to it.
When I joined the Planning Commission, my brief was to suggest ways to accelerate the growth of industry and employment.
Shout about the need to scrap stupid, paternalistic, land and labour laws. Reduce compliance costs. Get rural girls into giant factory dormitories. Prosecute andalonjivis for getting money from foreign NGOs to oppose vital infrastructure projects. That was your job but you didn't do it because you wanted everybody to think you were Mother Theresa.
China’s planners had done much better than India’s. Starting at similar levels 50 years ago, China’s GDP and per capita incomes are now five times higher. I was invited by a Western economic journal to debate a Chinese economist. The subject was, “Should dictatorship precede democracy for economic development?”
Dictators can do even stupider shit than democracies. What you do matters. How it is done is irrelevant.
The host of the debate contrasted China’s and India’s economic progress. His first question was to me. Did I think India had made a mistake in setting out to be a multi-party democracy when
there was no other fucking option? The Army's recruitment base was too narrow for it to take power. However, if the civilians relied upon it to implement Martial Law, then it might decide to get rid of the civilian administration.
it became independent, and should it have followed the Chinese one-party, authoritarian model instead?
Indira did impose an Emergency. Then she realized that being the Emperor of Delhi means that sooner or later your son's cronies will arrange a nice little 'accident' for you. She had to hold elections before this happened. Still, when she returned to power, Dynastic autocracy was what she offered. But assassination tempers autocracy.
Before I could reply, my Chinese counterpart intervened and told our host he was asking the wrong question. China and India’s journeys could never be the same and should not be compared, he said.
He explained Chinese statesman Deng Xiaoping’s metaphor of economic development as a process of crossing a turbulent stream by feeling the stones underfoot. There is no map to follow. A path must be found step by step. Each step should enable one to take the next. Sometimes one will wobble and may have to pause. Development, he said, is a process of experimenting and learning in action.
Mao had established the supremacy of the party. Deng could do as he pleased because people understood that if he went, there would be a second 'Cultural Revolution' with big famines and people being sent off to the countryside.
He contrasted India’s and China’s journeys. Both India and China had entered the same turbulent stream, on the same side, and at the same time.
No. China suffered Civil War. India had a peaceful transition first to Dyarchy, then to full Provincial Autonomy and then to full Independence. Sadly, Indians emulated the Laskian economic model and focused more on equity than growth. The problem with dividing up a cake which hasn't been baked is that nobody has an incentive to actually bake the fucking thing.
Both wanted to reach the same place on the other side of the stream, to become nations in which the welfare of all citizens is improved, and to become self-confident nations.
The difference between India and China was that India's leaders would feel bad if lots of people starved. Mao had no such compunction.
They had entered the stream from different places on the bank, therefore they would have to find their own paths by feeling the stones their feet will encounter as they step forward.
There was no stream. Either you went towards the market and made a profit there or you wandered around saying 'be nice to the poor. Poor peeps are so nice. Let's all be nice. It's nice to be nice.'
China and India had acquired their freedoms to chart their own courses in different ways, he explained. China’s independence came with a violent revolution
No. It came when one party's army defeated the army of the other party which had to run away to Taiwan. But Taiwan did a lot better than mainland China as did Hong Kong. Imitating both was a fucking no-brainer.
with the power of the gun. He even quoted Mao Zedong – “power springs from the barrel of a gun”. India’s independence was obtained by
democratic politics introduced by the Brits. The INC was started by a Scottish Civil Servant.
a non-violent revolution, and with aspirations to progress democratically. If India wants to follow China’s path, it will have to turn back mid-stream to return to shore and start again from the place China started. He would not recommend such a dangerous manoeuvre mid-stream. India and China must evolve in their own ways.
I suppose the reason the Chinese dude was talking such bollocks was because he knew the Indian dude was a fucking cretin. The Whites would laugh at a fellow 'Asiatic'.
India’s leaders are at a crossroads. India must not slavishly follow Western models any longer.
Modi is slavishly following Western models. That is why he wears miniskirt and high heels. Amit Shah should ask him to dress more decently.
Nor can India be China. The time has come for India to find its own way, a more Mahatma Gandhian way than Western or Chinese way, to create a more equitable society.
Reading this shite alters our opinion of Manmohan. He was surrounded by virtue signaling cretins. This fucker was given a simple task. Demand internal reforms. Do so loudly. Instead the cunt started babbling about Mahatma Gandhi. Does he not know that Gandhian economics was tried and that it failed immediately?
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