[Fasces]

Singapore is autocratic now?

[JohnRawls]

Sure, Beren. China is moving from promoting rapid growth to sustainable growth, and Xi has been calling this a period of transition for 8 years. I think we'll settle at a consistent rate of 3-5% growth for the next decade, and that's what the CPC is aiming for as they try to address the issues facing local governments relating to debt and investment as a means to reach growth targets.

I think this is where folks get lost in the weeds a bit. China sets growth targets and expects local leaders to meet them. This doesn't mean the Gdp growth is fake, but it does incentive unsustainable practices by local governments and the national government is realizing these need to be reigned in.

One thing is "sustainable growth" at 30k+ gdp/c and liberal democracy and the other thing is "sustainable growth" at 12-15k gdp/c with an autocratic regime.

[late]

Singapore is autocratic now?

" The People’s Action Party claims that the people of Singapore simply approve of their rule. Critics assert that Singapore is rather a thinly veiled autocracy. The truth, as is often the case with Singapore, is complicated.

On paper, there’s an independent judiciary. However, top judges are appointed by the President with the advice of the Prime Minister. While the courts occasionally rule against the PAP, they generally fall in line, especially in defamation cases or lawsuits against political opponents.

While democratic backsliding has occurred in most of Singapore’s institutions, recent years have seen a particular crackdown on civil liberties. Not only are foreign newspapers often sued for defamation, but all newspapers, radio stations, and tv channels in Singapore are government-controlled.

While the internet once enabled opposition parties to reach voters, the 2019 Protections from Online Falsehoods and Manipulation Act now requires companies like Facebook and Google to provide corrections or remove content deemed false by the state. However, foreign media continues to publish critical articles read by many in Singapore.

Singapore is no abusive authoritarian regime, but they are definitively not a liberal democracy. If they want to be considered one, serious reforms in election law, civil liberties, and the judiciary are required. Instead, however, it seems the People’s Action Party will continue to erode Singapore’s institutions to ensure their hold on power."

https://www.democratic-erosion.com/2022 ... singapore/[/url]

[Rancid]

One thing is "sustainable growth" at 30k+ gdp/c and liberal democracy and the other thing is "sustainable growth" at 12-15k gdp/c with an autocratic regime.

Your thesis is basically that in order for an autocratic regime to maintain it's legitimacy, it has to attain higher levels of growth compared to more democratic regimes? Correct?

My question on this, is there any sort of study that goes through this exercise?

[ingliz]

@Rancid

There is a lot of wishful thinking going on in this thread.

Your thesis is ...

@JohnRawls's thesis is bollocks.

For example, India is an electoral autocracy. And according to Sweden's V-Dem Institute, its democratic slide is set to continue.

Last quarter 2022 growth: 4.4% y/y

GDP per capita: $2,601.36 nominal ($11,247 per capita PPP.)

Is it in danger of imminent collapse?

[AFAIK]

I remember when people who wanted to dispute China's GDP figures would point to electricity consumption or freight volumes on the rail network. I guess they're too lazy to justify themselves anymore.

[Rich]

@Fasces as a decidedly non expert on the Chinese economy, I'd be interested to know your view on the post Mao GDP figures. Do you think there has been a significant overestimation of GDP growth over the last five decades or for any significant part of those five decades. I mean you could lose half a percent or even a percent every single year and the figures would still look impressive.

[Rugoz]

The CCP has no commitment to transparency beyond what is useful. GDP figures will be whatever the CCP wants it to be. Not necessarily wrong, but who knows.

I remember when people who wanted to dispute China's GDP figures would point to electricity consumption or freight volumes on the rail network. I guess they're too lazy to justify themselves anymore.

I guess you're too lazy to search for it.

[Beren]

There is a lot of wishful thinking going on in this thread.

The only good wishful thinking I ever saw was mine.

[Fasces]

@Fasces as a decidedly non expert on the Chinese economy, I'd be interested to know your view on the post Mao GDP figures. Do you think there has been a significant overestimation of GDP growth over the last five decades or for any significant part of those five decades. I mean you could lose half a percent or even a percent every single year and the figures would still look impressive.

The central government sets GDP targets and those that reach those targets get promotions, so yes, perverse incentives exist for regional and municipal leaders, to hit certain numbers.

I think that many people look at Chinese GDP figures and hear they're 'fudging the numbers' and imagine that some low-level bureacrat is paid to literally make up some figures in a book and deliver that to Beijing. I'm sure this happens now and then, but the Chinese government tends to send people who do this to prison, and as such, I don't think its common. GDP by itself is easy to fudge without risking prison.

Instead, regional and municipal authorities do one of two things, or often, both. The first is to take out debt and build shit. A new bridge, a new road, a new railway station - this is direct investment and can bring up your yearly GDP figure. Does the infrastructure need to be built? Is the old stuff insufficient? Can we afford it? Who cares - build it anyway and bring our GDP to its current target. The number isn't so much 'fudged' in this case. Just that some of the GDP growth is 'artificial'. You'd expect a lot of municipal debt to start piling up, and low and behold, it has.

The second is to create a bunch of local tax incentives to bring companies in. Municipal governments own all their land, so maybe you lease it to them on very generous terms for thirty years and get a bunch of new factories built by foreign or domestic corprations and you look good and maybe get promoted long before the lease runs out - and when the lease runs out and its time to renew, heyo, the company jumps town to the next group of bureacrats offering more and better prizes, unless you can offer the same sweetheart deals (which means you are selling out your own tax base from under you and have to fund other projects through more and more debt).

The real problem in China isn't that it is hiding its true GDP or that the GDP figures are completely untrustworthy - rather that GDP itself may not be the best measure of a country's economic performance, and that Chinese officials have incentives to act in unsustainable ways to game the number, a number which is ultimately very easy to game.

For a long time this was fine. China was starting from so far behind that 'eventually' unsustainable still meant 'fifty years from now'. Over the past few years, the first signs that Chinese localities may be hitting the red zone have started to motivate the government to start moving past GDP alone. Covid, and the crash, also motivated that. The central government has started emphasizing sustainable development, both in terms of climate and debt, and de-emphasizing rapid growth - even outright saying that the 'era of rapid growth is over'.

Saying that the CPC will fall because their people won't accept any growth below 5% doesn't ring true to me, in my experiences in China - many people recognize the unsustainability of the past few decades of perpetual growth, and the cultural problems it has brought with it (breakdown of local culture, environmental degradation, expenses in raising a family, work-life balance, etc) and would be happy with a slowing of growth and a more people-focused economy. China isn't a hermit kingdom and its people aren't blind to the world around them, either.

This is a problem every country in the world has to eventually grapple with. Perpetual growth on a finite planet with finite resources makes no sense. Every country will need to make plans for an economy with 0% (or even negative) growth, probably in the next century. There is an upper limit on how much it is possible for humans to produce and consume.

[Rugoz]

This is a problem every country in the world has to eventually grapple with. Perpetual growth on a finite planet with finite resources makes no sense. Every country will need to make plans for an economy with 0% (or even negative) growth, probably in the next century. There is an upper limit on how much it is possible for humans to produce and consume.

Oh God, how often do we hear this nonsense.

[JohnRawls]

Your thesis is basically that in order for an autocratic regime to maintain it's legitimacy, it has to attain higher levels of growth compared to more democratic regimes? Correct?

My question on this, is there any sort of study that goes through this exercise?

That is correct but the problem is much more broader. There were studies on many topics in this regard and I have noted that the quoted growth under which the Dictators/Autocrats of the modern era seem to woble is 5%. This has been the statistic/case with several people I read on and listen to on the subject. Although condensing the problem in to 1 domain is problematic because there are way more factors at play than just economic growth.

The basic idea why modern dictatorships, even like China, Orban, Turkey, Putin are not sustainable is that:

1) They rely on economic growth to be in power. To come to power, you need some initial push. Usually economic growth or stability is that push. (They can do it for some time until they reach the threshold since they are moving from nothing to exported based/export based manufacturing economy)
2) They can not achieve economic growth over long period of time that is comparable to democracies:
2a) The dilemma here is that modern economic growth beyond an industrial export level requires a creation of highly educated creative class. It doesn't matter if its IT or fashion or whatever the industry suitable for
it might be.
2b) The problem with high educated creative class is that they do understand what the hell is going on, so you need to buy their loyalty of sorts and you don't have infinite resources for that. So either you make this "class" small which prevents growth or you need to spend more and more money to continue coopting this class in to the system which is resource wise costly and probably impossible since not all will sell out.
Meaning that protests will happen.
3) So at some point the classical understanding of modernisation theory kicks in, that you move in to a democratic state OR they revert to fear. There are plenty examples of both.

The point 1 is needed because the leader somehow needs to proove his "Competence" in my opinion. Without the first part, the rest will hardly slide in to place. One notable distinction here, is that I am talking about modern autocracies that like to pretend to be democracies and not the old style of Stalin or Hitler which would publicise your death on Television no problem.

The reason is why I make a distinction, is because old style Autocracies or Dictatorships wouldn't even reach the growth part in the modern world. Modern Autocrats and Dictators dress and talk the same as Western politicians, they have a nice suit to attract investment, to build that industrial export base in sweatshops etc, to attract the corporations, they might even allow some small amount of controlled opposition but they won't allow free and fair elections and of course mass media would mostly be controlled by the government or owned by friends of government. The opposition would be harassed and jailed just enough to pretend that they are a democracy.

The long story short here, even the more advanced, evolved style of dictatorships is a dead end. It works better than the old just fear style but the dilemma is still there. They just have a different road block now.

On the topic, a decent book in layman terms instead of just studies: https://spindictators.com/



If you like youtube very condensed and missing a lot of smaller points:

[AFAIK]

I guess you're too lazy to search for it.

I'm not the one contesting the figures, lazybones.

[JohnRawls]

The central government sets GDP targets and those that reach those targets get promotions, so yes, perverse incentives exist for regional and municipal leaders, to hit certain numbers.

I think that many people look at Chinese GDP figures and hear they're 'fudging the numbers' and imagine that some low-level bureacrat is paid to literally make up some figures in a book and deliver that to Beijing. I'm sure this happens now and then, but the Chinese government tends to send people who do this to prison, and as such, I don't think its common. GDP by itself is easy to fudge without risking prison.

Instead, regional and municipal authorities do one of two things, or often, both. The first is to take out debt and build shit. A new bridge, a new road, a new railway station - this is direct investment and can bring up your yearly GDP figure. Does the infrastructure need to be built? Is the old stuff insufficient? Can we afford it? Who cares - build it anyway and bring our GDP to its current target. The number isn't so much 'fudged' in this case. Just that some of the GDP growth is 'artificial'. You'd expect a lot of municipal debt to start piling up, and low and behold, it has.

The second is to create a bunch of local tax incentives to bring companies in. Municipal governments own all their land, so maybe you lease it to them on very generous terms for thirty years and get a bunch of new factories built by foreign or domestic corprations and you look good and maybe get promoted long before the lease runs out - and when the lease runs out and its time to renew, heyo, the company jumps town to the next group of bureacrats offering more and better prizes, unless you can offer the same sweetheart deals (which means you are selling out your own tax base from under you and have to fund other projects through more and more debt).

The real problem in China isn't that it is hiding its true GDP or that the GDP figures are completely untrustworthy - rather that GDP itself may not be the best measure of a country's economic performance, and that Chinese officials have incentives to act in unsustainable ways to game the number, a number which is ultimately very easy to game.

For a long time this was fine. China was starting from so far behind that 'eventually' unsustainable still meant 'fifty years from now'. Over the past few years, the first signs that Chinese localities may be hitting the red zone have started to motivate the government to start moving past GDP alone. Covid, and the crash, also motivated that. The central government has started emphasizing sustainable development, both in terms of climate and debt, and de-emphasizing rapid growth - even outright saying that the 'era of rapid growth is over'.

Saying that the CPC will fall because their people won't accept any growth below 5% doesn't ring true to me, in my experiences in China - many people recognize the unsustainability of the past few decades of perpetual growth, and the cultural problems it has brought with it (breakdown of local culture, environmental degradation, expenses in raising a family, work-life balance, etc) and would be happy with a slowing of growth and a more people-focused economy. China isn't a hermit kingdom and its people aren't blind to the world around them, either.

This is a problem every country in the world has to eventually grapple with. Perpetual growth on a finite planet with finite resources makes no sense. Every country will need to make plans for an economy with 0% (or even negative) growth, probably in the next century. There is an upper limit on how much it is possible for humans to produce and consume.

The main problem in China is that GDP is basically an input in to the system while in the West it is an output.

This might seem a bit vague so here is a translation in simpler words: In the west, we do not rely that much on state enterprises on state investment and majority of the growth is handled by private enterprises that sort out investment on a free market basis. We also don't have GDP targets in the same way as China so state investment is under control of whatever the preference of the elected government might be which makes it accountable to a certain extent to the wishes of the people. So mostly it is an output.

In China it is an input to a large degree. While there are enterprises that work for the export market in manufacturing and resource extraction sectors that operate almost exactly as in the West, there is a large category of state enterprises and government projects that do not operate under the same ideas. Since GDP targets are set then local governors can and do manipulate GDP growth using state investment to inflate GDP figures. Since GDP is calculated by private consumption + government investment + government spending + (Export - import) then it is a nifty way for those local governments to reach those targets artificially. Not all that investment is remotely useful but it does grow GDP for the years this investment is panned out. So basically China is stuck in a loop of building more and more and more infrastructure and other local government projects because of that which will NEVER be able to pay for themselves. A large portion of the problem was the real estate sales/land sales that helped fund the whole scheme but that seems to be having a lot of issues lately.

While the initial infrastructure that China built using this scheme was good, nowadays it seems a lot of things are just being built for the sake of gdp and not really to be useful or being able to pay for itself in the long term. Look at it this way, if you build the first bridge over a river then it is extremely useful. If you build 3-4 more then they are still useful to some degree but a bit less. But if you build 20 then most of them are useless since there is no need for that many.

So it is a unique mostly China problem. The West does have this to a way, way, way lesser extent. To the point that one might argue it is also detrimental that infrastructure does need more investment in US for example.

[Fasces]

And of course, even that isn't so simple. How do you define "pay for itself"? Often many analysts look at something as simple as revenue when discussing China's high speed rail, ignoring the positive externalities a high degree of labor and capital mobility bring to the country and municipal economies. The government has the ability to provide public goods even if they're an example of market failure. American infrastructure is a profound victim of this sort of thinking.

While many projects exist which are not necessary, I suspect that many Western analysts fail to consider the long term benefits these projects may bring to many regions. The famous mid 2000s ghost cities are today cities of more than a million inhabitants, for example. The fact that this can be tricky gives bureaucrats some cover for their decisions, for better or worse.

[JohnRawls]

And of course, even that isn't so simple. How do you define "pay for itself"? Often many analysts look at something as simple as revenue when discussing China's high speed rail, ignoring the positive externalities a high degree of labor and capital mobility bring to the country and municipal economies. The government has the ability to provide public goods even if they're an example of market failure. American infrastructure is a profound victim of this sort of thinking.

While many projects exist which are not necessary, I suspect that many Western analysts fail to consider the long term benefits these projects may bring to many regions. The famous mid 2000s ghost cities are today cities of more than a million inhabitants, for example. The fact that this can be tricky gives bureaucrats some cover for their decisions, for better or worse.

Sure I totally agree that not all public projects need to be valued in the realm of revenue. But a lot of it has to be either payable for itself or provide intrinsic value to the people which is not monetary. For example it is fine if it is unprofitable but it does provide GDP growth or better life expectancy that leads to more taxes.

Having said that, there is definitely a large flaw in this regard for China. You can't be just building infrastructure projects to manipulate GDP growth because you have a target. That will definitely lead to some(extreme?) amount of waste depending on the situation.

In Europe for example, we evaluate both long term profitability and impacts on the economy and other criteria and there is little outside factors that make us choose or not choose the project besides that.

I don't think that there is a way to properly calculate it if it is a waste or not after so much have been built but time will definitely tell. May be someone knows but nobody as hell gonna tell us that. I just see a flawed/Abusive process and I can point it out.

[Rancid]

Sure I totally agree that not all public projects need to be valued in the realm of revenue. But a lot of it has to be either payable for itself or provide intrinsic value to the people which is not monetary. For example it is fine if it is unprofitable but it does provide GDP growth or better life expectancy that leads to more taxes.

Having said that, there is definitely a large flaw in this regard for China. You can't be just building infrastructure projects to manipulate GDP growth because you have a target. That will definitely lead to some(extreme?) amount of waste depending on the situation.

In Europe for example, we evaluate both long term profitability and impacts on the economy and other criteria and there is little outside factors that make us choose or not choose the project besides that.

I don't think that there is a way to properly calculate it if it is a waste or not after so much have been built but time will definitely tell. May be someone knows but nobody as hell gonna tell us that. I just see a flawed/Abusive process and I can point it out.

Obsession with metrics often leads to poor decisions. We see this everywhere in life, including private companies.

I see that shit every day.

[JohnRawls]

Obsession with metrics often leads to poor decisions. We see this everywhere in life, including private companies.

I see that shit every day.

Yeah well, you can't also function without any metrics on the other hand. You can't just build to build with no objective in mind that can't be counted in some way. It is even worse than building just for the purpose of inflating your gdp. Since you don't know why you are building it.

[Rancid]

Yeah well, you can't also function without any metrics on the other hand. You can't just build to build with no objective in mind that can't be counted in some way. It is even worse than building just for the purpose of inflating your gdp. Since you don't know why you are building it.

Of course.

Metrics are important, but they have to be thoughtful. There needs to be a strategy/philosophy beyond those metrics and why they are important. It's also important to have the right metrics. That's my life in a nut share. Debating if the metrics we are going after, are actually the metrics we should care about.

[Potemkin]

Of course.

Metrics are important, but they have to be thoughtful. There needs to be a strategy/philosophy beyond those metrics and why they are important. It's also important to have the right metrics. That's my life in a nut share. Debating if the metrics we are going after, are actually the metrics we should care about.

Most people use metrics as a substitute for thinking. They just flash up a powerpoint slide with another graph or bar chart on it, printed in lots of bright colours, as ‘proof’ that their targets are the right ones. As someone or other once said, there are three kinds of lies - lies, damn lies, and statistics. Lol.