I feel the article speaks to my own cultural bias, and I liked it but now I'm suspicious I liked it because I agreed with so much it said.
The last comment, about re-joining the TPP: It is unstated but I feel true (none the less) that if the US rejoins the TPP it will be a vastly different outcome to a US led TPP. Australia was screwed over by the last trade round, and significant economic disadvantage lay in the major US ally in the region (Australia is one of "five eyes" in the secrets sharing intelligence circuit) agreeing to roll over on trade for sectional US interests. The current TPP may suck, but it sucks a lot less regarding US demands on IPR, and other US favouring trade positions.
If the US rejoins, these will not be core issues for the current participants. If they negotiate a China facing TPP you can be sure its both favouring China, and very probably more equitable to the other participants than a US cast one, for clear reasons: It helps China in the long term, to the be the centre of the trading nexus.
I don't think the author understands what free trade is:
"Regardless of the mystical properties claimed for it, the invisible hand of self-interest depends on the visible and often heavy hand of government. To take only one instance, British gunboats helped impose free trade on 19th-century China — a lesson not lost on the Chinese."
I.e. the gunboats removed the Chinese heavy hand on trade. The "invisible hand" cannot operate when the government restricts it.
The role of government in free trade is to prevent forcible interference with it.
"It was Hamilton’s formula, rather than free trade, that made the United States the world’s fastest-growing economy in the 19th century and into the 1920s."
That's quite a reach. The US's biggest market at the time was itself, and the Constitution ensured free trade between the states. It was the world's biggest free trade zone.
"World War II proved only a brief interruption in Japan’s policy of protection."
Japan was not an economic powerhouse before WW2. It was massively unable to compete with the US economically. It could not replace the combat losses of equipment. Etc.
I don't think you've read so closely. What he claims here is that Britain developed its economy using a protectionist scheme and then, in a predatory fashion, imposed "free trade" (specifically the "right" of the British to sell opium) on the Chinese. This had disastrous effects on them (opium addiction is the most obvious, I suppose). Chinese people are not thankful to the British for liberating them from restraints on the free market in the opium wars.
The gunboats didn’t create a free trade scenario. They created merchantilist, extraterritorial trade zones.
They bought Chinese goods with opium, not because they were fighting for liberty and free trade, but because they didn’t want to buy silk and other goods with silver. The hard currency was needed to hire the mercenaries (who are all about cash and carry) that kept Indian peasants growing poppies.
The result of this forced trade and loss of control was devastating inflation and collapse of governance within China and the circumstances that led to to horrors of the 20th century.
It doesn't help these days that when you hear a 'free trade agreement' being signed between countries its usually not actual 'free trade'but highly regulated for mutual self interest.
> Japan was not an economic powerhouse before WW2. It was massively unable to compete with the US economically. It could not replace the combat losses of equipment. Etc.
At that time there wasn't any nation in the world that could compete with the US in war production mode. (Well, maybe the Soviet, and that's it.) You might as well say that Germany and Britain weren't economic powerhouses.
>I.e. the gunboats removed the Chinese heavy hand on trade. The "invisible hand" cannot operate when the government restricts it.
In other words, there was no free choice or democracy about it, and what the people want (which can very well be protectionism, or at least, not to allow opium sales in their country) didn't matter.
> But to grasp China’s economic achievement, and its ramifications, it is imperative to ask: Why has a market economy directed by a Communist state become the world’s second-largest?
Was China ever really a communist state? They've said so, of course, and talked the talk. But maybe it's more accurate to say the China remains a Confucian state. With an overlay that looks a lot more like fascism / national socialism than communism.
Come on. China is no utopia—it isn’t even a country I would want to live in—but equating them to Nazis instantly discredits your arguments.
The Chinese model is unique, and why shouldn’t it be? They are the first country in history of their size to industrialize and become a world power.
Let’s stop making cute generalizations that only serve to make ourselves feel better and think of what we actually don’t like about their system of government so we can fix it in our own. “The Chinese are Nazis!!” doesn’t help anyone.
What's communist and isn't needs to be defined by what happens in reality, instead of being defined by comparing it to the kindest interpretation of a utopian ideology. One might also tiresomely argue that Nazi Germany wasn't really fascist, given how radically it departed from Mussolini fantasies of a fascist state, or even Hitlers own fantasies of a thousand year Reich. But we don't, because at this stage it's tiresome. Communism is no different.
There are few if any states that actually consider themselves to be communist. China considers itself a socialist state that is the middle of a long process of transitioning to communism. The ruling party is named the Communist party because of what its stated end-goal for governance is, not because of their current methods of governance.
I don't think China is the only winner of Free Trade here. China did have a large surplus, but isn't that most of the profits go to American and European companies? Why that money wasn't going back to America is a myth itself.
After three decades of industrialization, China's environment undergoes tragic damage, and the country gradually loses the ability to feed itself. Today China imports more than 20% of its food supply. As the aging workforce retires, China's future outlook is not very bright. I hope you understand, not all the grass is green in China.
The most recent thing I have heard about china, repeated by people who man editorial positions in news papers you read, is that China is now the dominant super power. America just doesn't know it yet.
I suspect this is entirely true.
And as added ammunition for this article - the poor prime minister, but excellent finance minister of India - Manmohan Singh, focused on the Korean Model a lot earlier on. It influenced the way the Indian markets opened.
There's only 1 book written about MMS, and in that book theres a telling interaction, where Manmohan (Much before his days as PM) was upset that the author (then a reporter), didn't mention Manmohan's stance on the Korean model in an article.
True, but China is also at the very top of it's game, and it's success came at a rather extreme cost. Mind-boggling debt, smog in all the major cities up to LETHAL levels at times (and something like 80% of the time above cancer-in-10-years levels), no army to speak of, legendary levels of corruption (and centuries of history of corruption).
And to top it all off, China's labor market is currently the highest it'll be for the next century or so. It's all downhill from here. China's economic dominance through cheap labor is under severe threat, and they're losing. That loss is causing economic unreast (tens of millions of job losses) in the China.
China also legendary when it comes to outright lying about their accomplishments. From scientific advancements in Fusion energy to amounts of iron ore in ports, China has been caught lying so often that economists seriously think 80%-90% of government statistics are outright falsified, with often strong arguments about the remaining 10%. Unfortunately, their leadership is equally famous for believing the lies, right up to the point that they marched a fleet of ships under British cannons, with substandard hulls and without ammunition. You see, the general of that fleet had assured them the ammunition was there, several of his officers had written the central government that he was lying. Whichever was the truth, the fleet was devastated, the general survived and wasn't even fired. Thousands of soldiers and something like 40% of the total Chinese navy was lost. Legendary.
There are so many things that could go incredibly wrong here. Economists aren't kidding when they say China might start WW3. They might have to.
Pity, MMS didn't learn the real lesson from the Korean story, or any other story for that matter: Half measures get you no where.
Korean model involved the state putting extreme pressure
on the big business houses and at the same time going out of their way to help them as well, with the goal being to become world leaders in their respective sectors by making quality products. Some firms collapse under such weight and others thrive.
Instead though Indian companies were encouraged to focus more on exports, they by and large never managed to establish quality and leadership. Also, though they are renowned for mediocrity, they have still managed to capture large parts of the economy, thanks to government compliance.
MMS's life has been a saga of half measures, and though people rightly know him as a calm, intelligent man his failure and weakness as a leader will always define him rather than his virtuous character.
Free trade vs protectionism is not a one dimensional spectrum. I can't recommend How Asia Works highly enough as a source of nuance in why protectionism has worked for some and not others.
Finally after the middle class in US has been hollowed out and everything that could be shipped over there was, we get the real story. There are scoundrels in (former) US government and industry who sold out this country lock, stock, barrel for their own greed.
I more or less agreed with the thesis before reading the piece, but I found this piece quite interesting. I usually like Pankaj Mishra (and have since I read his stinging takedown of Niall Ferguson's work). Thank you for sharing this.
The US has been the champion of free trade assuming that it was win-win or that if would win when others loose.
As soon as it looses while others are winning (in some areas) they are trying to bend (again) the rules on their favor.
The American era has been a waste: one country trying by all means to impose its agenda, to claim its divine right to progress and dominance, to unfairly try to control the rest of the economic actors. Let's hope the Chinese era is more fair and balanced.
Ha! Chinese economic policy is proudly mercantilistic. They have no pretentions towards a balanced playing field. China will do what is best for China.
Ah, really? You mean the modern world, in which violent conflict is at an all-time recorded low? Wars between major powers have been almost entirely absent for 70 years. Global famine and poverty is at an all-time low. Child mortality has plunged radically and is at an all-time low. Truly vast progress has been made across all aspects of science and technology. The real standard of living at the global median is at an all-time high. Global economic growth and trade has been extraordinarily consistent and enduring. Annexation of territory by powerful nations - a commonality throughout all prior history - has been brought nearly to a stand-still.
Sure doesn't sound like a waste to me. The last ~70 years have been the best 70 years in all of humanity's existence.
I sense a lot of mood affiliation in the title that I'm sure will earn the New York Times a lot of clicks. China is the biggest success story of free trade in the history of the world, and the contrarian take presented here is absurd to the point of silly.
Liberalization is a matter of degree. You can't cherry pick a particular protectionist policy South Korea had and then say, "Oh look see they used import substitution and still had a good outcome." You have to also explain why that import substitution policy didn't ruin the Korean economy the way it did Argentina, or in an extreme example, Maoist China. And what you'll find is that they became much more liberal in other ways.
If you're going to claim that liberalism doesn't matter you need to show your work. You need to show that in aggregate, countries that liberalize their economies do less well than countries with less liberal economies. But when you look at the data, you will find just the opposite: Countries that move in a liberal direction, like China, South Korea, and Chile, tend to improve their outcomes, while those that do not, like Argentina or Zimbabwe, tend to stagnate. And almost every wealthy country in the world is either highly liberalized or sitting on an ocean of crude oil. The fact that even liberal countries have illiberal policies doesn't disprove the benefits of liberalization.
Most likely, Asia succeeded in spite of protectionism, not because of it.
China succeeded because it was in the prime position to take advantage of western manufacturing looking to move production facilities elsewhere for wage arbitrage. Right place, right time to reap massive export surpluses - and they were smart enough to use the opportunity to have built up a domestic market/technical knowledge base when wages inevitably started to raise and manufacturers began to move elsewhere again. You're going to see a lot less 'liberalization', and probably some reversals, in China in the coming years.
I would also point out that the author conflate two tightly-coupled but distinct spheres - the political and the economic. China, Japan, South Korea, and Singapore have all been massively successful because they acted aggressively in the political realm to foster growth and development (with little to no regard for Democratic norms). Conversely, their economic systems were and are fairly liberal (China being both the least developed of these as well as the biggest laggard on this front). Chinese citizens may not be politically empowered, but it is far easier to set up a company, hire and fire, etc. in Shanghai than in New York.
What your thoughts on states like Somalia and Libya? They are, without a doubt, the freest market feasible. There's no government to control any economic policy. Why are they not succeeding?
This article makes me sad. Not because I believe its true but because other people will.
I really don't want to write a 3000 word comment in response to this article. After all, only a few people will read it and those that do will not read it with the seriousness of a New York Times article.
I'm very disappointed in this piece. Half truths, omitted details, and bad history all rolled into Communist apologia.
For those who do not have time to read paste the headline: one sided "free" trade agreements benefit one side. Who would have thought? All other "conclusions" the author draws from this fact have no bearing on reality.
Please don't post unsubstantive comments or snarky dismissals to HN. All a comment like this is likely to do—and did do—is lead to a tedious back-and-forth that sucks oxygen away from interesting discussion. When feeling annoyed in this way it's much better not to post at all.
It's particularly important to avoid generic commentary about ideological themes like "Communism" and (worse) "Creationism", which is where you went downthread.
I don't really care for commentary like this. Either argue with the piece or don't; don't bore us with how you're sad that people will find it persuasive without bothering to refute any of its ideas.
[+] [-] ggm|8 years ago|reply
The last comment, about re-joining the TPP: It is unstated but I feel true (none the less) that if the US rejoins the TPP it will be a vastly different outcome to a US led TPP. Australia was screwed over by the last trade round, and significant economic disadvantage lay in the major US ally in the region (Australia is one of "five eyes" in the secrets sharing intelligence circuit) agreeing to roll over on trade for sectional US interests. The current TPP may suck, but it sucks a lot less regarding US demands on IPR, and other US favouring trade positions.
If the US rejoins, these will not be core issues for the current participants. If they negotiate a China facing TPP you can be sure its both favouring China, and very probably more equitable to the other participants than a US cast one, for clear reasons: It helps China in the long term, to the be the centre of the trading nexus.
[+] [-] WalterBright|8 years ago|reply
"Regardless of the mystical properties claimed for it, the invisible hand of self-interest depends on the visible and often heavy hand of government. To take only one instance, British gunboats helped impose free trade on 19th-century China — a lesson not lost on the Chinese."
I.e. the gunboats removed the Chinese heavy hand on trade. The "invisible hand" cannot operate when the government restricts it.
The role of government in free trade is to prevent forcible interference with it.
"It was Hamilton’s formula, rather than free trade, that made the United States the world’s fastest-growing economy in the 19th century and into the 1920s."
That's quite a reach. The US's biggest market at the time was itself, and the Constitution ensured free trade between the states. It was the world's biggest free trade zone.
"World War II proved only a brief interruption in Japan’s policy of protection."
Japan was not an economic powerhouse before WW2. It was massively unable to compete with the US economically. It could not replace the combat losses of equipment. Etc.
[+] [-] emodendroket|8 years ago|reply
[+] [-] Spooky23|8 years ago|reply
They bought Chinese goods with opium, not because they were fighting for liberty and free trade, but because they didn’t want to buy silk and other goods with silver. The hard currency was needed to hire the mercenaries (who are all about cash and carry) that kept Indian peasants growing poppies.
The result of this forced trade and loss of control was devastating inflation and collapse of governance within China and the circumstances that led to to horrors of the 20th century.
[+] [-] twelvechairs|8 years ago|reply
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] yongjik|8 years ago|reply
At that time there wasn't any nation in the world that could compete with the US in war production mode. (Well, maybe the Soviet, and that's it.) You might as well say that Germany and Britain weren't economic powerhouses.
[+] [-] coldtea|8 years ago|reply
In other words, there was no free choice or democracy about it, and what the people want (which can very well be protectionism, or at least, not to allow opium sales in their country) didn't matter.
[+] [-] mirimir|8 years ago|reply
> But to grasp China’s economic achievement, and its ramifications, it is imperative to ask: Why has a market economy directed by a Communist state become the world’s second-largest?
Was China ever really a communist state? They've said so, of course, and talked the talk. But maybe it's more accurate to say the China remains a Confucian state. With an overlay that looks a lot more like fascism / national socialism than communism.
[+] [-] jonathanyc|8 years ago|reply
The Chinese model is unique, and why shouldn’t it be? They are the first country in history of their size to industrialize and become a world power.
Let’s stop making cute generalizations that only serve to make ourselves feel better and think of what we actually don’t like about their system of government so we can fix it in our own. “The Chinese are Nazis!!” doesn’t help anyone.
[+] [-] HumanDrivenDev|8 years ago|reply
What's communist and isn't needs to be defined by what happens in reality, instead of being defined by comparing it to the kindest interpretation of a utopian ideology. One might also tiresomely argue that Nazi Germany wasn't really fascist, given how radically it departed from Mussolini fantasies of a fascist state, or even Hitlers own fantasies of a thousand year Reich. But we don't, because at this stage it's tiresome. Communism is no different.
[+] [-] TheCoelacanth|8 years ago|reply
There are few if any states that actually consider themselves to be communist. China considers itself a socialist state that is the middle of a long process of transitioning to communism. The ruling party is named the Communist party because of what its stated end-goal for governance is, not because of their current methods of governance.
[+] [-] emodendroket|8 years ago|reply
[+] [-] muninn_|8 years ago|reply
[+] [-] evadne|8 years ago|reply
[+] [-] chj|8 years ago|reply
After three decades of industrialization, China's environment undergoes tragic damage, and the country gradually loses the ability to feed itself. Today China imports more than 20% of its food supply. As the aging workforce retires, China's future outlook is not very bright. I hope you understand, not all the grass is green in China.
[+] [-] intended|8 years ago|reply
I suspect this is entirely true.
And as added ammunition for this article - the poor prime minister, but excellent finance minister of India - Manmohan Singh, focused on the Korean Model a lot earlier on. It influenced the way the Indian markets opened.
There's only 1 book written about MMS, and in that book theres a telling interaction, where Manmohan (Much before his days as PM) was upset that the author (then a reporter), didn't mention Manmohan's stance on the Korean model in an article.
[+] [-] candiodari|8 years ago|reply
And to top it all off, China's labor market is currently the highest it'll be for the next century or so. It's all downhill from here. China's economic dominance through cheap labor is under severe threat, and they're losing. That loss is causing economic unreast (tens of millions of job losses) in the China.
China also legendary when it comes to outright lying about their accomplishments. From scientific advancements in Fusion energy to amounts of iron ore in ports, China has been caught lying so often that economists seriously think 80%-90% of government statistics are outright falsified, with often strong arguments about the remaining 10%. Unfortunately, their leadership is equally famous for believing the lies, right up to the point that they marched a fleet of ships under British cannons, with substandard hulls and without ammunition. You see, the general of that fleet had assured them the ammunition was there, several of his officers had written the central government that he was lying. Whichever was the truth, the fleet was devastated, the general survived and wasn't even fired. Thousands of soldiers and something like 40% of the total Chinese navy was lost. Legendary.
There are so many things that could go incredibly wrong here. Economists aren't kidding when they say China might start WW3. They might have to.
[+] [-] unknown|8 years ago|reply
[deleted]
[+] [-] fellellor|8 years ago|reply
Korean model involved the state putting extreme pressure on the big business houses and at the same time going out of their way to help them as well, with the goal being to become world leaders in their respective sectors by making quality products. Some firms collapse under such weight and others thrive.
Instead though Indian companies were encouraged to focus more on exports, they by and large never managed to establish quality and leadership. Also, though they are renowned for mediocrity, they have still managed to capture large parts of the economy, thanks to government compliance.
MMS's life has been a saga of half measures, and though people rightly know him as a calm, intelligent man his failure and weakness as a leader will always define him rather than his virtuous character.
[+] [-] refurb|8 years ago|reply
Dominant in the region? Sure, but that's been true since the rise of the Communist party.
[+] [-] cheriot|8 years ago|reply
https://www.amazon.com/How-Asia-Works-Joe-Studwell/dp/080212...
[+] [-] vfulco|8 years ago|reply
[+] [-] emodendroket|8 years ago|reply
[+] [-] gonvaled|8 years ago|reply
As soon as it looses while others are winning (in some areas) they are trying to bend (again) the rules on their favor.
The American era has been a waste: one country trying by all means to impose its agenda, to claim its divine right to progress and dominance, to unfairly try to control the rest of the economic actors. Let's hope the Chinese era is more fair and balanced.
[+] [-] rm_-rf_slash|8 years ago|reply
[+] [-] adventured|8 years ago|reply
Ah, really? You mean the modern world, in which violent conflict is at an all-time recorded low? Wars between major powers have been almost entirely absent for 70 years. Global famine and poverty is at an all-time low. Child mortality has plunged radically and is at an all-time low. Truly vast progress has been made across all aspects of science and technology. The real standard of living at the global median is at an all-time high. Global economic growth and trade has been extraordinarily consistent and enduring. Annexation of territory by powerful nations - a commonality throughout all prior history - has been brought nearly to a stand-still.
Sure doesn't sound like a waste to me. The last ~70 years have been the best 70 years in all of humanity's existence.
[+] [-] baq|8 years ago|reply
[+] [-] jvm|8 years ago|reply
Liberalization is a matter of degree. You can't cherry pick a particular protectionist policy South Korea had and then say, "Oh look see they used import substitution and still had a good outcome." You have to also explain why that import substitution policy didn't ruin the Korean economy the way it did Argentina, or in an extreme example, Maoist China. And what you'll find is that they became much more liberal in other ways.
If you're going to claim that liberalism doesn't matter you need to show your work. You need to show that in aggregate, countries that liberalize their economies do less well than countries with less liberal economies. But when you look at the data, you will find just the opposite: Countries that move in a liberal direction, like China, South Korea, and Chile, tend to improve their outcomes, while those that do not, like Argentina or Zimbabwe, tend to stagnate. And almost every wealthy country in the world is either highly liberalized or sitting on an ocean of crude oil. The fact that even liberal countries have illiberal policies doesn't disprove the benefits of liberalization.
Most likely, Asia succeeded in spite of protectionism, not because of it.
[+] [-] blindwatchmaker|8 years ago|reply
[+] [-] FelixP|8 years ago|reply
[+] [-] shorttime|8 years ago|reply
[+] [-] emodendroket|8 years ago|reply
If liberalization is all that matters, why isn't a libertarian dream-country like Georgia rich?
[+] [-] rukittenme|8 years ago|reply
I really don't want to write a 3000 word comment in response to this article. After all, only a few people will read it and those that do will not read it with the seriousness of a New York Times article.
I'm very disappointed in this piece. Half truths, omitted details, and bad history all rolled into Communist apologia.
For those who do not have time to read paste the headline: one sided "free" trade agreements benefit one side. Who would have thought? All other "conclusions" the author draws from this fact have no bearing on reality.
[+] [-] dang|8 years ago|reply
It's particularly important to avoid generic commentary about ideological themes like "Communism" and (worse) "Creationism", which is where you went downthread.
[+] [-] emodendroket|8 years ago|reply
[+] [-] HumanDrivenDev|8 years ago|reply
Maybe it's time we all stopped taking New York Times seriously. They do not have a fantastic track record.
[+] [-] andrenth|8 years ago|reply
[deleted]