Nial Ferguson is richer, more famous, cleverer and better looking than I am but I still think there's something that needs to be pointed out to him. On the basis that even a cat may look at a King and so on.
It's about his slightly hysterical views on the rise of China as an economic power:
As China approaches global economic supremacy, Harvard professor Niall Ferguson - whose three-part television series on the growing superpower begins tomorrow - reveals his fears for an ominously powerful nation.
China has a long way to go to reach global economic supremacy which is one point. But it's also true, according to many economists, that they won't actually get there unless they stop doing the sorts of things that Ferguson is worrying about.
By contrast, he said he errs away from the “apocalyptic view” on China. “There is the German scenario, with China becoming increasingly aggressive. But I think there is a low probability that will play out, not least as we have learnt from history. Both sides have a hell of a lot to lose. My money is on continued growth, market reform and, while not democracy, more constraints on party power and greater rule of law.”
Here's the thing. It's one thing to play catch up economic growth. It's quite another to keep growing when you've either reached the technological frontier or even got anywhere close to it. This is a good Paul Krugman essay on the point.
The takeaway point from this branch of development economics is this rather pleasing one. Yes, you can grow out of the results of Marxist or Maoist idiocy simply by letting the markets rip. Even if there is still uncertainty over property rights, the rule of law, who has political power, how they gain it and how you can get rid of them.
However, you cannot continue growing the front rank of the wealthy nations with such uncertainty. The list of countries who have gone from destitution to what we might call lower middle class incomes is a long one. The list of those who have, in the past century, entirely caught up with the truly rich ones is very short. And all of those who have managed it have managed it by having the rule of law, security of property rights, democracy and so on.
Now I don't insist that this is inevitably true, that it must be so (although there are plenty of economists who would). But what Ferguson is worrying about is that China becomes a truly rich nation without having that democracy, rule of law, certainty of property rights and so on. But we don't think that you can become a truly rich country without those things.
Thus, we can have the end game where China does not have those things but is not a rich country, or where China is a rich country but which by definition must have those things.
Perhaps historians should speak to economists more often?
