Wednesday, September 2, 2015

Roll over Mao Tse Tung (and Mussolini)

Why couldn't he have died sooner? China took its true great leap forward after he was dead and gone say economists Anton Cheremukhin, Mikhail Golosov, Sergei Guriev and Aleh Tsyvinski;
In order to evaluate the contribution of the post-1978 reforms, we construct a counterfactual where Mao’s policies ... continued in the post-1978 period. We find that reforms were very successful. Compared with the continuation of Mao’s policies, reforms generated an additional 4.2 percentage points of annual GDP growth and a 23.9 percentage point decrease in the share of labour force in agriculture. Without reforms, China’s GDP per capita would have been $2,536 rather than $10,274 (both numbers are in terms of 2012 PPP US dollars), and the share of labour force in agriculture would have been 57% rather than 33%.
Our bold (because a four-fold increase deserves to be highlighted) in the above. But, it would have been even better had less of the state remained in place;
... we further analyse the factors behind growth of non-agricultural total factor productivity by dividing this sector into state and non-state firms following Brandt et al. (2008). We confirm their finding that the growth of productivity in the non-state firms and reallocation of labour and capital from state-owned enterprises are responsible for the bulk of growth of non-agricultural total factor productivity.
Let's hear that again;
...we do not find any evidence that state capitalism is responsible for growth in China. We show that the growth rate of total factor productivity in the state non-agricultural sector was the same post-1978 as in Mao’s era. Rather, non-state total factor productivity growth, relocation of labour and capital from the state to the non-state sector, and the reduction of consumption and production distortions explain virtually all (that is, nearly 100%) of the growth and structural transformation in China.
Everything (or most things) without the state did well. 

1 comment:

  1. George Orwell wrote the book "1984" about the endpoint of government. O'Brian is a high party official who famously said "If you want a picture of the future, imagine a boot stamping on a human face -- forever."

    Horrible. But there is worse. Imagine a conference room with eight senior party managers around a large table and their assistants sitting against the walls. They are discussing the progress of the latest 5-year plan in the second-quarter meeting of year three for the production of something or other. VP of the SE district is thumbing through a thick binder, reporting the difficulties he sees in meeting the plan. He has been talking for 25 minutes, and is the third manager to talk.

    The difficulties include a lack of knowledgable and/or motivated group managers, theft, bad reporting, nepotism, favored contracts for kickbacks, the need to offer bribes to other government departments to get supplies, unreliable supplies, the need to give jobs to various nephews of higher-ups, not enough budget, returns of defective output, the need to return defective inputs purchased from other departments, lazy salespeople, and 40 pages of other failed details. They are a year behind at this point, 2.5 years into the plan. He announces that "in summary" he will talk only a while longer, but does so for another 15 minutes.

    Five more managers have presentations to make, similar to his.

    If you want a picture of the future, imagine thousands of meetings like this every quarter -- forever.