A belated reply to Giles Wilkes on China

I wrote a piece shortly following the publication of the Tory’s One World Conservatism on how it was full of crap.

The recommendations of this paper were not particularly different from the policies of our current Administration. Of course it continued within the dreadful framework of the post-Washington Consensus (and therein lies the problem).

I divided my discussion into several subtopics for easy navigation, as it ran to some 3,000 words.

Contradictions, Choosing Winners and Losers, Gimmicks: “Bhutan’s got Talent”, Turing up in pair of flip-flops offering to build a school, Vouchers, Microfinance, Rejecting Universal Education, Rejecting Universal Healthcare, Fixation on Private Sector Wealth Creation, The Sanctity of Property Rights, Fighting the Wrong Battles, Some good points made it though

One topic provoked particular criticism from Giles Wilkes of freethinkingeconomist and CentreForum fame.

China-60.svgUnder the heading “Choosing Winners and Losers” I criticised the Conservatives for withdrawing aid from China despite it still being particularly poverty stricken. The offending paragraphs follow below.

China and the Chinese are often treated as a political football. Those wishing to vacillate on Climate Change can use China’s pollution as an excuse to do nothing.

It appears that the suffering of the Chinese people in sweatshops, mines and factories is now to be rewarded with a banner which reads “Mission Accomplished.”

Please allow me to put this move into perspective, in 1750 England’s GDP per capita (likewise measured in 1990 dollars) stood at $1,328. In 2006 China’s per capita GDP stood $128 below this.

Today, on the brink of the worst global recession in a generation, China’s GDP pet capita is still only half of what the UK had achieved by the end of the 19th Century. The Tories announce that “Every life is precious” but when those live are collectively labelled “the People’s Republic of China” their well-being becomes a necessary sacrifice.

Giles contends that he “smells a rat.” He argues that I am ignoring the clear differences in Purchasing Power Parity (PPP) that exist between modern China and Victorian Britain.

I start with Angus Madison’s data.  In “1990 International Geary-Khamis dollars“, he has China’s GDP in 1800 at about $600.  Two centuries of woe, caused by both internal and external factors, as well as the disasters of totalitarianism, mean that it is still around $600 in 1960.

There is SOME growth to 1980, bringing us to $1000, but then the new freedoms growth starts motoring from a change in ideology. By Madison’s data, this puts Chinese GDP in terms of 1990 dollars at over $4000 in 2003 – in line with IMF figures. In terms of Purchasing Power Parity, it has grown even faster, to $8500 – reflecting, no doubt, the strengthening currency – from $248 in 1980.

Purchasing Power Parity probably explains much of what Left Outside has Left Outside his analysis.  It is what counts in this sort of discussion: what matters is how much you can get for your buck, not the state of international markets in tradeable items.

I have to accept that I was playing a little fast and loose with the facts in my last post. Giles excellently underlines what was “Left Outside” of my post, however the point I was trying to briefly outline remains valid. (Hopefully only slightly wounded by my slapdash short hand argument.)

Left Wing Imperialism

However, Giles oversteps the mark when he accuses me of “Left wing Imperialism.” He is wrong to do so on a number of counts, however for brevity I will try to limit to discussion on China’s relative wealth and poverty. More general discussions on aid and global justice along Marxist, Rawlsian and Humanitarian lines will have to wait for another time.

No one is going to argue that China’s per capita GDP is not still very low. Using the IMF’s Data Mapper China’s 2009 per capita PPP GDP at current international dollars is $6,546. As Giles argues this is significantly more than our Victorian forbears, however the structure of China’s society makes this simple fact increasingly difficult to map onto concrete reality.

Firstly, I would like to turn to Dave Osler’s recent post on Soft Sinophilia, mainly because it caught my eye recently, but specifically because it addresses an important element of Chinese society.

The sycophancy of many on the left to China’s dictatorial, murderous, exploitative, repressive and capitalist rulers is peculiarly disturbing. While China’s GDP has soared since 1978 the results have clearly not led to as widespread a rise in living standards as could be expected. Speaking about a contemporary calculation on the rate of exploitation Dave says…

…perhaps the closest equivalent metric in mainstream economics is the overall wages bill for a given country, expressed as a proportion of gross domestic product. This is, crudely, the workers’ share of the social product. Even despite the onslaught of neoliberalism, it typically amounts to around 55% throughout western Europe.

But a recent study by Chang Xiuze, an economist with a National Development and Reform Commission think tank, revealed that the salary component of China’s GDP dropped from 17% in 1980 to just 11% in 2007. In other words, the bosses are taking a dramatically greater cut.

It appears that the Chinese are getting a smaller cut of a bigger pie. Some would argue that this is a good thing if the pie is big enough, I would argue that this is a sign of the failure’s of China’s economic model and this sort of imbalance will lead to massive problems soon.

Furthermore, Giles argues that the health of the Chinese is one of the most obvious ways in which modern China is a better place to live than Victorian Britain. However,  as always in China it is far more complicated than that.

It is mostly agreed that “wealthier is  healthier.” However, evidence from China is doing a great deal to prove that the form of society and social institutions matter a great deal for how much healthier a society gets for its wealth.

In this paper form the New Left Review (gated) evidence is provided that shows that China is getting healthier far more slowly than other comparable countries as they got wealthier. Again, it appears that the Chinese are getting a smaller cut of a bigger pie. I don’t think this is good enough, because evidence exists from other countries that it can be done better.

According to this report from the UN Development Programme 15.9%  of China’s population live on less than $1.25 a day and 36.3% live on less than $2, my preferred metric. This is the sort of Dickensian poverty which can be missed if you insist on looking at the number of skyscrapers going up in Shanghai.

When you insist on looking at the number of skyscrapers you can be so awestruck by the shear scale of the things that you fail to notice that up to half of the commercial property in the city sits empty.

This dislocate is what interests me. China is no nut, but the sledge hammer that is being used to crack this society is massive.

Football

While I concede that Giles makes some excellent points I find his casual dismissal of my argument that “China and the Chinese are often treated as a political football” somewhat bemusing.

First of all, there is the historical context. In 1949 Mao’s forces declared the foundation of the People’s Republic of China. In the West this was not treated as a mere violent change of government. Repeated, again and again, was the idea that “we have lost China.” We was the West and implicit in that statement is that China was ours to lose in the first place. The fall of China became a central plank of anti-Red hysteria throughout the 1950s and onwards.

China’s many economic successes are used to underline how powerful the development consensus of free-markets and free-trade is.  It is responsible for the majority of those lifted out of poverty in the last few decades. Dani Rodrik argues that China’s development path could hardly be further from the consensus of the last 30 years, and he is right. However, when some argue that it is bogus to include China’s growth and poverty reduction when discussing global poverty reduction strategies they are described as trying to stage “Hamlet without the Prince.”

And the Tories. They want to act tough on aid by cutting help to China. Despite  the dubious ground on which they stand for cutting aid to a country with such manifest problems they were applauded by the right of their party. 60 years ago, 6 years ago and 6 months ago, China is used again and again as a political football.

It is only in the minutiae of real life that the suffering of the Chinese working classes can really be assessed. Per Capita Purchasing Power Parity Gross Domestic Product can’t illustrate the 72.5% of workers who have had their wages paid late or not at all; although perhaps it does include the 6%-12% of GDP estimated to be contributed by the sex industry (page 20 of the preview). I’m no prude, but nobody can fail but to be taken aback by the prevalence of sexual exploitation in China.

The fact is that China is still poor, that there are those in desperate need in China and that the CCP will not provide the assistance necessary to help them.

Further posts will explain exactly why I think that the institutions that helped China to succeed so far as a country of cheap, healthy, educated and disciplined workers are being undermined. I will argue further that the very process of marketising their economy and opening up to the world economy that initiated its tremendous growth, is also undermining it.

My preference is for those involved in multitude of protests, strikes and industrial actions that take place in China on a daily basis to wrest power and control back from those exploiting them. But until then I don’t feel supporting a transfer of wealth, institutions and knowledge from the rich world to the poor as left wing imperialism.

An Argument in Favour of the CAP

EU FlagThe Common Agricultural Policy of the EU is one of the largest subsidies in the world “it represent[ed] 48% of the EU’s budget [or] €49.8 billion in 2006.” That is a lot of money in anyone’s book, but when it appears hardly anyone is happy with the outcome generated it starts to look anomalous.

From the right, it is attacked by The Economist, which itself is flanked by the Adam Smith Institute.

[European consumers and taxpayers] will have to continue paying for this wasteful and wicked system. It is terrible for poor-country farmers, who have long suffered from being shut out of rich-world markets, and having rich-world products dumped on them. Now they can hear the gates of fortress Europe clanging shut just when world prices should be triggering an export boom. And it is dreadful news for the hungry poor, because restricting trade in food exacerbates shortages.

Similarly, the left attack the CAP for hurting smaller farmers while handing huge handouts to a handful of larger producers.

In a detailed breakdown of aid payments across the EU in 2000, the EC calculated that 78 per cent of EU farmers receive less that 5000 per year in direct aid. Furthermore, fewer than 2000 of Europe’s 4.5 million farmers between them rake in almost €1bn in direct aid from the CAP. Farm subsidies also vary in scale across Europe. In Portugal, approximately 95 percent of farmers receive less than 5000 each year, compared with 43 per cent in the UK. Moreover, 380 of the UKs landowners and large-scale agricultural businesses glean aid in excess of the 300,000 per farmer ceiling on annual payments proposed in the mid-term review.

By concentrating subsidies in the hands of its richest agricultural landowners, EU agricultural policies are hastening the demise of smallholder agriculture in Europe. (pdf)

Please allow me to take you back a century and a half.

The British Corn Laws were import tariffs designed to protect British agricultural workers and the landed aristocracy. In a way, they worked similarly to the CAP. Their effect was certainly similar, higher domestic prices and a reduced market for the agricultural products of the developing world. Of course at this point the developing world was Western Europe and the USA.

The Economist argues that the CAP is terrible for the contemporary developing world because it artificially deflates the value of their agricultural products and it hinders their access to markets for these products.

Famed free marketeer Richard Cobden may have taken an altogether different view on matters. He was a prominent member in the Anti-Corn Law League and argued voraciously for their abolition so as to lower the cost of food for the British.

But he did not argue for the abolition of the Corn Laws out of a sense of altruism for the poor wronged American, German and French citizenry.

He argued that the continuation of the Corn Laws positively aided the catching up of the developing world with Britain.

The factory system would, in all probability not have taken place in America and Germany. It most certainly could not have flourished, as it has done, both in these states, and in France, Belgium and Switzerland, through the fostering bounties which the higher priced food of the British artisan has offered to he cheaper fed manufacturer of those countries.

Perhaps The Economist is wrong. Perhaps the CAP has the potential to act as an additional stimulus to the developing world to move from agriculture  to higher value added activities like manufacturing.

Perhaps the abolition of the CAP is just another form of free trade imperialism designed to keep the third world in its place, out on the periphery.Well, done, you highlight when you read just like me and this white text has shown up. I’m hoping this post might cause some controvery so I’m hiding a disclaimer here. In my opinion the abolition of the CAP wouldn’t be a piece of free-trade imperialism, nor would it hurt the industrialisation of the developing world. Of course on the other hand its abolition wouldn’t be the panacea some describe it as, as always I think you’ll find it’s a bit more complicated than that. (Previously white on white. I’m sick of people thinking I’m a moron unnecessarily. There’ll be enough reasons for the Working Class Tory to hate me without making extra ones up)

Still a cunt: Peter Hitchens caught abusing the Holocaust

Yesterday the Irish voted YES to the Lisbon treaty. Septicisle surmises the reaction from the blogosphere [inserted below] but I personally don’t really have an opinion.

On the Irish yes vote to the Lisbon treaty, although some wrote before the result was known,Lenin bemoans the victory for neoliberalism, Bob wonders where this leaves the Tories, as does Jamie, while Nosemonkey critiques the view that having a second vote was undemocratic.

Having studied it at University the only thing I am certain about is that the EU is incredibly boring. So dull I can barely finish this sen…

…where was I? Ah, for the record I am vaguely in favour of supranational institutions but think that the EU is a particularly badly run one. [1] One run in the interests of the few at the expense of the many.

I’m more interested in the thoughts of Peter “if I had come first, it would have been hitchenary not reactionary” Hitchens.

Peter is of course livid that the Irish have voted to adopt the protocols of the Lisbon Treaty. But he decides before attacking the EU, or the treaty, or our own Government, he would attack Jews.EUIRELAND

I don’t think he’s an anti-Semite, Jews are probably one of the few groups towards which he does not regularly pour his vitriol. But this throwaway paragraph really took my breathe away [my emphasis].

The Passport you hold is not British, but European. You are a European citizen. British Embassies are European Embassies – as they already show by flying the EU’s meaningless and tasteless blue and yellow dishcloth.  Shouldn’t somebody have pointed out that in the recent history of the Continent, yellow stars call up only one dismal image, the mass murder of Europe’s Jews.

The jaw dropping ignorance of the man is palpable. The coy manipulation of history is truly sickening.

The holocaust still matters. It is as impossible to understate the horror as it is to visualise the scale of what occurred. And Peter “in fact, just shorten that to Cunt” Hitchens wants to use it to attack the fucking EU?

You might not like the EU, but you do not use the holocaust to attack a fucking flag you don’t think is as good as the Union Flag. That makes you a colossal fucking prick.

Peter Hitchens is one of your common and garden Armchair Imperialists, and I understand his hostility to the EU. Not only that but I can see his target market every time I stumble into an Agricultural Show.

He often claims to be speaking from history – he even approvingly quotes Hugh Gaitskell in this same article – but this vile display of manipulation puts pay to any notion of objectivity or historical insight.

As I’ve written this post I’ve gradually become more and more angry, and have inserted sweary things where once were polite ripostes. Fucking Bastard.

[1] In the EU’s defence, it was one of the first transnational institutions and had to make all the mistakes other learn from.

UPDATE: NoseMonkey has also noticed this ridiculoous article and has rightly pointed out the Peter Hitchens represents exactly what is wrong with Euroskeptics today.

China at 60: Misunderstood

China-60.svgMao’s China has been annihilated. 60 years on from its founding on the 1st October 1949 there is little recognisable about it.

Although some on the left will lament the loss of this slightly more presentable face of state Socialism, this is a cause to celebrate. The Cultural Revolution and Great Leap Forward are two of the biggest tragedies to hit humanity. The gains which accrued under Mao are too small to outweigh the horror which occurred.

From ardent globalisers to hardline socialists it seems everyone can find something to celebrate in the New China.

Unfortunately the things highlighted by Andy and Tim underline the misunderstanding that surrounds the success of modern China.

But as the scholar and writer Perry Link has observed, it is more accurate to say that the people lifted the Communist party out of poverty – once it had the sense to get out of the people’s way.

This? This good sense in The Guardian?

Tongue-in-cheek, Tim highlights the Guardian’s coverage of China’s 60th and approvingly asks “So when do we start applying it in the UK?

The only problem is that Communist Party hasn’t got out of the way. Or at least not in the way Tim implies.

From the earliest days of agricultural reform to the performance of state owned industries now, the party has very much got in the way. The Chinese have found a recipe that works for them, for the moment.

That Tim wants to score political points from it is telling of the difficulty that the libertarian/classical liberal/free trading right has discussing China.

xin_5021006010642328146348Of course elements of the left are little better at understanding the complexities of modern China.

For some bizarrely reason, Andy Newman of Socialist Unity uses a PRC propaganda photo as evidence of the change in China.

It is certainly worth celebrating the victory which Mao won in 1949, however, to use it as a a reason to stifle legitimate criticism of the regime and its policies is ludicrous.

Both Tim and Andy fall into the same trap that most analysts of China do.

Although most people recognise that China cannot be easily placed on a continuous Left and Right, people still want to label elements of its economy as a left-wing or right-wing policy. I apologise for these caricatures of left and right but they illustrate major failings in some analyses of China.

The leftist penchant for state intervention can be totally inappropriate for China.

China’s agricultural economy was only really successful once peasant farmers once the Household Responsibility System was set up. In this, after selling a set amount of their crop at the low state determined price, peasants were allowed to sell their surplus at market rates. This fermented a boost in productivity not seen since the redistribution of land which followed the establishment of the PRC.

The right have of course been as wrong as the left when it comes to China.

In a developing economy state intervention is essential in creating, extending and maintaining a market. The traditional rightist view that state intervention equals bad does not hold.

It must be made clear that a lack of state involvement is not synonymous with the free market. The withdrawal of the state in China is often applauded, but institutions which were smashed by the retreating party cadres have not been replaced.

In a survey quoted in Hart-Landsberg and Burkitt’s China and Socialism 72.5% of respondents had at some stage had their wages withheld. David Harvey uses this as an explanation for how so much wealth has been accumulated by so few in such a sort amount of time.

In fact, most of the time this is presented as the evidence of how “extreme” capitalism has become in China. But the theft of labour is not part of capitalism. This is evidence of how poorly China has instituted its new economy. Capitalism relies on functioning markets and as Chris Dillow argues, markets can be undersupplied like all public goods.

It is this difficult framework which has made it so difficult for the big L Left Left and big R Right to discuss China. This is why I think the work of Karl Polanyi is so important to understanding China. In the next post I will outline some of Polanyi’s thought and why it is so useful when discussing China.

Honduran Coup: Zelaya under siege in Brazilian Embassy

Earlier today forces commanded by interim leader Roberto Micheletti surrounded the Brazilian Embassy (H/T Calvin via Socialist Unity).

At some point in the previous 24 hours the democratically elected leader of Honduras Manuel Zelaya returned and took shelter in the Brazilian Embassy.

Following this reports have become increasingly confused, and little is known for certain. For one thing it is claimed that Zelaya’s arrival was a surprise to those working in the embassy, although he was welcomed.

Nonetheless it is clear where the sympathies of the Brazilian authorities lie. They regard Mr Zelaya as the legitimate president of Honduras and say there is no question of either handing him over to the military forces outside or asking him to leave.

One official told me “he is welcome to stay for as long as he wants”

Hondurans in civil resistance surrounded the Brazilian Embassy in Tegucigalpa yesterday to greet their returning president. This morning, coup regime troops attacked them violently, sending 24 wounded to hospitals. D.R. 2009 Mariachiloko, Chiapas Indymedia.

In the short term, the overnight curfew due to last from 4pm to 6am has been extended to 6pm and is expected to last into the night. As pictured, many appear to be in open revolt.

Supplies, power and water have been cut off from the Brazilian Embassy and there is something of a siege situation emerging.

Brazil’s President Lula has called for a cessation of hostilities and the immeidate withdrawl of troops from near the embassy. He has also called for Obama to voice his support for Brazil and Zelaya.

The only anti-coup TV station Channel 36 has gone off the air. Radio Globo’s Internet site is down too. There are also efforts to scramble mobile phone usage.

From Al Giodarno

3:18 p.m.: Micheletti blinks:

Honduras’ de facto leader, Roberto Micheletti, said on Tuesday he has no intention of confronting Brazil or entering its embassy where ousted President Manuel Zelaya has taken refuge to avoid arrest.

“We will do absolutely nothing to confront another brotherly nation. We we want them to understand that they should give him political asylum (in Brazil) or turn him over to Honduran authorities to be tried,” Micheletti told Reuters.

Meanwhile, at least two popular barrios in and around Tegucigalpa have defied, en masse, the curfew order and chased National Police out of their communities: El Pedregal and Colonia Kennedy. They’ve erected barricades and declared the coup regime and its security forces non grata.

More information as it comes in. Narco News will carry more up to date information than I possibly could, subscribe.

Texas Kills an Innocent Man

If you need a reason to oppose the dealth penalty than the execution of an innocent man couldn’t be a better one. From the Daily Kos:

…the Texas fire marshals, using a combination of old wives’ tales and junk science, managed to take an accidental and tragic fire in which three little girls perished and turn it into a murder case, ginning up enough false evidence to convict the girls’ father and sentence him to death.  The errors in the forensics were discovered with plenty of time before the execution date, but Governor Rick Perry (in the single most craven act of cowardice from a politician since Martin Sheen used a baby for a shield in “The Dead Zone”) declined to intervene and to further his own career as a “tough on crime” politician allowed an innocent man to die by lethal injection.

I’ve nothing more to say on this. It speaks for itself.