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November 07, 2012

The Value of a Vote and China's Governance Deficit

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Whatever you think of the outcome this morning, it's clear that American voters placed a high value on their chance to choose the next president. In the East Coast states buffeted by Hurricane Sandy, where many are homeless or without power, turnout was heavy.

That's not how it is in China, where the next leadership will "emerge" in a few days' time from the communist party's eighteenth national congress.

Although not a professional China watcher, a few months ago I began to notice a rash of articles telling us how much better off China is with its supposedly meritocratic leadership selection process. What's more, we are told, it's such a great system that the Chinese people themselves endorse it. China's leadership, although selected in secret by unknown rules, is apparently "legitimate." I saw this first in February in an influential article in the New York Times by the Shanghai "venture capitalist" Eric X. Li on Why China's Political Model is Superior. In August the China-based academic Daniel A. Bell was extolling the merits of China's meritocracy in The Huffington Post. A few days ago the China pundit Martin Jacques repeated the same message in the BBC Magazine.

Some contributions in this vein refer to the empirical research of the Harvard political scientist Tony Saich. Saich has carried out repeated opinion surveys in China. These indicate that Chinese respondents are generally more critical of the lower tiers of government. However, high proportions are "relatively or extremely satisfied" with higher tiers, and their satisfaction rises with distance so that at least 80 percent are satisfied with China's central government. Moreover, satisfaction levels have been rising over time.

An alternative source gives a different picture. The Worldwide Governance Indicators dataset measures perceptions of the quality of government in over 200 countries since 1996 on six dimensions -- Voice and Accountability, Political Stability and Absence of Violence/Terrorism, Government Effectiveness, Regulatory Quality, Rule of Law, and Control of Corruption. Each indicator is based on hundreds of individual underlying variables, taken from a wide variety of data sources. Each indicator is scaled from +2.5 to -2.5, with the global average set to zero. (The dataset is described by Daniel Kaufmann, Aart Kraay, and Massimo Mastruzzi, "The worldwide governance indicators: methodology and analytical issues," Policy Research Working Paper Series 5430, issued by the World Bank in 2010; RePEc handle:

The advantage of the Worldwide Governance Indicators is that they are worldwide; they allow one country to be measured against others on a uniform methodology. For China I'll give you the 2011 results, but the Worldwide Governance Indicators go back to 1996 and they are fairly stable over time.

In the table below, the first column shows that the data include most countries in the world. The second column shows the percentage of countries that score below China on each of the six dimensions. The third column shows China's score. Since we are also given the standard errors associated with the scores, we can also work out whether China's difference from the world average (zero) is statistically significant. An asterisk indicates that China's score is significantly above or below zero at 5 percent.

China in the World Government Indicators 2011

Three things stand out:

  • China scores below the median country in the world in every dimension except one: effectiveness. China's citizens definitely agree that their government can make decisions and carry them out.
  • In two dimensions, effectiveness and regulatory quality, China's score is not signficantly different from the world average. In the other four, it is significantly below.
  • In voice and accountability, China is grouped among the worst countries in the world.

How can we reconcile China's deficit in the Worldwide Governance Indicators with praise for the "legitimacy" of the communist one-party state? I'd start from Tony Saich's finding that Chinese people are least critical of the level of the government that is farthest from them. It would seem that in their society there is still a place for the myth of the "just monarch": the benevolent ruler in the faraway capital city.

According to this myth, the just ruler thinks of nothing but the plight of his people. But his will is said to be distorted by ambitious and corrupt intermediaries -- his ministers, the provincial barons and local authorities, who stand between the people and the king. The king relies on the people to tell him of the injustices from which they suffer; supposedly, only he can put them right. If they will reach out to him directly, bypassing those that pervert his intentions, he will answer their prayers and petitions and right their wrongs.

People who believe this can thus reconcile personal experience of oppressive and corrupt rule with the idea of a kindly but distant ruler who will eventually vindicate them.

One reason the myth endures is that it is open to manipulation. A ruler who is not benevolent but self-interested and power-seeking can exploit it to remain in power. From time to time he will give up some local princeling to assuage popular anger and build his own legitimacy. Stalin did this; Mao did it; today's Chinese communist party does it.

But managing the mythology of benevolent dictatorship is like riding a tiger. For the myth of the just monarch does not make the people passive; on the contrary, from time to time they may rise up in the name of the ruler to act directly against those that oppress them. (See for example Daniel Field, Rebels in the name of the tsar, published by Houghton Mifflin in 1976.)

Finally, in many peasant societies, as China was until quite recently, this myth has persisted until the illusion is shattered by some collective blow. There will be some setback, some outrage, or some scandal that is too deep for the myth to endure -- at least, until some new ruler emerges who can once more take up the mantle of the true king.

March 13, 2009

G20: Gordon Brown's Got It … Anyone Else?

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On March 4, the Prime Minister told the United States Congress:

... never before have the benefits of cooperation been so far-reaching.

On jobs, you the American people through your stimulus proposals could create or save at least 3 million jobs. We in Britain are acting with similar determination. How much nearer an end to this downturn would we be if the whole of the world resolved to do the same?

... Just think how each of our actions, if combined, could mean a whole, much greater than the sum of the parts ... the impact multiplied because everybody does it - rising demand in all our countries creating jobs in each of our countries - and trade once again the engine of prosperity, the wealth of nations restored.

I guess the President was listening. But did he really get it? My point is this. Brown was not just indulging in the easy rhetoric of let's-all-pull-together and unity-makes-us-strong. What he said is literally, word-for-word true. But you have to get the economics to really get it.

Why? A fiscal stimulus by one country acting alone creates a spillover benefit (economists call this an "externality") for other countries. There is an increase in our national debt, which is a cost to us, but part of the benefit, the global increase in demand, is received beyond our borders through our demand for imports. Because it is costly to us, and others reap part of the benefit of what we do, the incentive is for us to do less than we should.

This barrier to action can be overcome by everyone agreeing to help themselves and each other at the same time. We can pull each other out of the hole. Through international coordination, each country can reap the benefit at a lower cost measured by the increase in the national debt.

Without coordination, in contrast, each country gains privately from protectionism, which internalizes the benefit of a national stimulus package at the expense of other countries; hence, beggar-thy-neighbour. The resulting losses from despecialization will be long-term and the damage to the international economy will take decades to undo. Sounds familiar? Yes, it happened before. That, with a few twists, is the story of the 1930s.

When I heard Gordon Brown's speech I thought to myself: "Yes! He's got it!" Did Barack Obama get it? I hoped he did. According to this morning's papers, maybe not. Maybe Obama thought Gordon's words were just special-relationship type rhetoric. Or maybe he figured: the United States economy is so big that the Americans can go it alone more easily than any other country. A  huge loss for the world, but only a small loss for America. (Hmm. I hope that's not what he figured. I'd prefer to think he just didn't get it.)

Much harder for us to understand is the cowardice of France's Nicolas Sarkozy and Germany's Angela Merkel. France and Germany are not giant economies that can go it alone. Yet this morning's papers report Merkel, following joint discussion, sending "a common signal" to the G20 summit that France and Germany will stand aside from any further fiscal coordination (unless you call it coordination when everybody does nothing at once). Merkel said:

The issue is not spending even more but to put in place a regulatory system to prevent the economic catastrophe that the world is experiencing from being repeated.

I see ... We're sliding towards disaster, but the right thing to do is not avert it, just hold a seminar about not doing it again. If we're still there at the end of it, that is.

The denial that is currently at the heart of Europe extends to the fate of Europe's East. I know Merkel and Sarkozy don't want this, but almost certainly we will have to bail out others as well as ourselves. There will be no choice over this; it's just another thing that Merkel and Sarkozy don't get yet.

One thing we will be able to choose: Eastwards, how far will the European bail-out extend? Can the EU risk letting longstanding members like Greece (and Ireland in the West) go to the wall? Surely not. New arrivals like Poland, Hungary, the Czech Republic, the Baltic? Hmm. And beyond EU borders, there lie Ukraine and Turkey. Somewhere, either within or beyond current EU borders, a line will be drawn. Inside the line, we will prop up what we can. The countries beyond it will go to the wall.

Don't underestimate the importance of that line. The countries that lie beyond it will be greatly impoverished compared with their position a year ago. They will have been impoverished by Europe's indifference, our lack of coordination, our failure to lead.

The Great Depression was followed by a recovery, it's true. But by the end of the Great Depression every poor country in Europe was ruled by a dictator.

November 23, 2008

My President is Black

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On a trip to Washington and Philadelphia, it seems like everywhere there are Obama T-shirts on sale. Sometimes it's Obama on the front, sometimes with his smiling family, and often they are all wrapped up in the Stars and Stripes. Captions: "My Commander in Chief." And "My President is Black." I liked that one so much, I tried to get it for my wife, but they didn't have her size. I wondered why I wasn't trying to get one for myself, but they so much more didn't have my size, and anyway I thought the sequins wouldn't suit me.

Out on the street some black kids had set up a stall and were noisily telling a small audience not to fall for the Obama illusion. I looked at a placard and saw something about the lost tribes of Israel. I didn't read too closely because it seemed like a bad place to linger. A colleague wondered if they knew Al-Qaeda was trying to put the same message across. There must be hope -- Christians and Muslims coming together before Christmas!

Later, I read "An interview with Shelby Steele." Steele, like Obama, has a mixed racial heritage, but he resents Obama's victory. He rejects the proposition that Obama was a post-racial candidate. (It's a fact: I Googled "Obama" and "post-racial" and got 528,000 hits in 0.19 seconds.) Steele says white folks voted for Obama to prove they were not racist, and black folks voted for him to prove they were not inferior to whites. So, he says, Obama got elected because he is black.

I agree Obama is not "post-racial," whatever that means. The polls show clearly that black voters favoured him more than white voters. Still, Obama got a lot of white votes. The TV pictures showed clearly that a huge number of people around the world, black and white, are inspired that "My President is Black" -- even if for many Obama is not, strictly, their president. In fact, I am one of them. I think it's inspiring that Americans have elected Obama. But to claim that Obama was elected because he is black seems to me to have a firm grip on a seriously wrong end of the stick.

Let's think:

  • Would the voters have put in anyone who was black? I don't think so.
  • If Jesse Jackson had been the Democratic candidate, would he have won? Surely not.
  • Politics aside, did Obama have to demonstrate a lot more competence and leadership than McCain to win? Probably. 

So, Obama was not elected just because he is black. Being black was not enough. Most likely, being as good as the white guy was not enough either. That's the down side: Obama had to be twice as good as the white guy to win. But there's an upside, too: being black did not stop him winning! So, my conclusion is: there's a double bonus in this. Good for Obama, and good for America!

All Obama has to do now is govern America and lead the free world for four years without messing up in a context of financial and environmental meltdowns, a military quagmire in the Middle East, America's global unpopularity, and an undefeated terrorist threat ... And, if he can do that, he can be reelected and get to do it again!

One more reason to be hopeful of America: The cab driver from my hotel to the Union station in Washington DC was talking on his cellphone in a language I could not begin to recognise. When he finished, I asked where he came from. "Afghanistan, seven years ago," he said. I asked how he liked it here. "You know," he said, "I feel at home. This is my country now."

I told the driver he was lucky not to have sought refuge in England; seven years on, he would be living miserably in the British equivalent of a refugee camp in Peshawar, and complete strangers would call him a Paki. That set him off in another direction, saying that Peshawar belonged to Afghanistan until the conniving British gave it to Pakistan. Later, I looked this up on and the story does seem a little complicated, but it notes that "to this day many Afghans claim large swathes of Pakistani territory, including the bustling frontier cities of Peshawar and Quetta, rightfully belong to Afghanistan."

My driver said he was reading The Kite Runner, so in his honour and in honour of America I bought it at the next bookstore to read myself. At my conference in Philadelphia I told this story to an old friend. He told me he'd refused to read The Kite Runner, although his wife had read it, because the small midwestern college town where they live had adopted it under the slogan "One Town -- One Book!" Isn't that called totalitarianism? I asked. He smiled uneasily and changed the subject.

I am a professor in the Department of Economics at the University of Warwick. I am also a research associate of Warwick’s Centre on Competitive Advantage in the Global Economy, and of the Centre for Russian, European, and Eurasian Studies at the University of Birmingham. My research is on Russian and international economic history; I am interested in economic aspects of bureaucracy, dictatorship, defence, and warfare. My most recent book is One Day We Will Live Without Fear: Everyday Lives Under the Soviet Police State (Hoover Institution Press, 2016).

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