Category: Current Affairs

  • Self-Referential and Self-Serving

    I recently attended a really interesting conference at Penn State called Global Asias. Like many interdisciplinary “pan-Asia” conferences, I found myself representing both the token Southeast Asianist and the token political scientist. Most everyone else was a China humanities person; there were a couple of India and Japan humanists too, but that’s about it. So I spend a lot of time at these things translating their regional and disciplinary interests into something that I can understand.

    Over lunch, I found myself (surprise!) at a table full of China people. Three of them, in particular, were easy and fun to talk to. I had given a presentation on political business relations in Southeast Asia, so the topic turned to political business relations in China. They told me fascinating stories about the absolutely nauseating levels of corruption in China, how the CCP is frantically forcing the state-owned banks to pump billions of yuan into the wobbly property sectors around the coastal cities to keep the country’s economic system afloat, and thereby to keep the CCP in power. After we complained about the state of affairs, we had a quiet moment. Then one of them said, “Yeah, but I just hope that China can maintain this system.”

    Huh? Well, OK, maybe I don’t know what this means. We got to talking further about the plight of China’s urban labor force, which outside of the high-skill industries is really vulnerable to the business cycle and is politically marginalized (they are all basically illegal migrants within China because they have no local residency status, therefore are ineligible for most government services). They talked about these horrible stories of factories poisoning workers, then firing them, and forcing them to return to the countryside, crippled and broke and now a burden to their families. Again, the conversation wound down for a moment, and the second one said, “I really hope that the Chinese can keep this system together.”

    Wait, what? Before I could probe further the conversation turned to the countryside, to the ways in which urban China has grown at an astonishing rate since the early 1990s while the countryside has stagnated, how the CCP–which ones lavished favors on the local village enterprises–has turned essentially into an urban big business party. How rural smallholders have no property rights, no political voice, yet they get to participate in fake elections every couple of years which foreign Polyannas think are some sort of sign of orderly society rather than firm social control. As we paused to get some dessert, the third one said, “I just look at China and hope that the Party can figure out how to protect the system.”

    The f***? At this point I had to intervene. “What,” I asked, “do you three mean when you express this desire for the Chinese regime to keep the country together? The story that you’re telling me is one of a brutal and repressive dictatorship, corrupt to the very core and basically indifferent to the plight of 90% of its population. You guys are academics in U.S. universities. None of you is Chinese. You all expressed disgust and hope for political reform in the countries that I study. Why do you hope that the system in China will remain intact?”

    Their answers were instructive, and at the risk of generalizing too far from their informal remarks, I think that they illuminate something fundamentally rotten about much of the recent contemporary China scholarship in the U.S. Many–not all, but a good many–China scholars are self-referential, and they are self-serving.

    My lunchmates responded to my question like this: we have to keep the current system going because the risks of it coming apart are too great. I pushed further on what they meant. Well, they replied, do you want another 1911 or 1949? They are referring here to the Revolution of 1911 (which ended the Chinese imperial dynasty) and the end of the Chinese civil war (20 years of nationalist versus communist). Both of these events were marked by huge social unrest, economic collapse, and untold human death and suffering. These were really bad. It would be nice not to repeat them.

    But the point here is that their referents for what it would mean for the CCP to come apart were exclusively Chinese. There was no sense that the political and economic experiences of, oh, Russia or Brazil or Indonesia or Mexico or Egypt or South Africa or whatever could possibly be relevant for the Chinese experience. I ask them directly about this, and they looked at me like I was crazy. But think about it–if you wanted to guess what would happen in China without the CCP, would you look to the fall of the Qing Dynasty or would you look to the collapse of another one-party state in with a rapidly modernizing economy? I’m not saying that China will be just like Brazil; far from it. I’m saying that it is peculiar not to even consider that another country’s experience could have anything to contribute to a China scholar’s view of what China is like. Political change is always difficult, but it is usually not genocidal. China, for them, is sui generis. There’s nothing like it, and China can be (nay, it must be) understood completely on its own terms.

    This view, like its parallel in U.S. politics of “American exceptionalism,” bugs me to no end. Maybe it’s just because I’m a Southeast Asianist, but no one in political science thinks that Indonesia that special anymore. The risk of this sort of self-referential China scholarship is that it leads to asymmetric parochialism. Indonesianists, Latin Americanists, Middle East scholars, we all are required by our discipline to know the broad canon of comparative politics of developing countries. China scholars just need to know China. That’s nonsense.

    But of course, there’s a deeper critique that I want to make, and this brings me to the second point. Fine, due to the way that China scholars tend to think, they believe that political change cannot lead to anything other than humanitarian disaster. You know who else thinks that, and consistently reminds Chinese people that any political or economic reforms that are not directed from the center are going to result in disaster? The CCP–that is, China’s own political elite. They say this because they obviously stand to lose the most from reform. To put it crudely, they are first up against the wall.

    My lunchmates expressed no sympathy for the CCP leaders or the corrupt new politically-connected capitalists. But I believe that like China’s elites, my lunchmates (like a lot of China scholars that run in certain circles) stand to lose a lot from political and economic reform. Why? Because the current Chinese political-economic system makes it very lucrative to be a U.S. scholar of China.

    It’s lucrative in a couple ways. First, in purely monetary terms, there is great demand in China for the prestige that a U.S. degree brings. If you speak Mandarin and can show up to say “I am the professor of Blah at the university of Blah” you can almost certainly arrange for yourself and your family a sweet gig at Beida or Nanda and make a pile of loot (we academics almost never make piles of loot, so it matters). It’s also lucrative because China funds Chinese studies around the world, most recently through the establishment of Confucius Institutes. They bring teaching and research funds that are unmatched, which can be used to do great things (like, have conferences on Asia that invite people like me).

    There’s a second, less monetary way in which the current system is lucrative: people seems to understand it and it makes sense to them. China scholars know how this Chinese system works, and it would be costly to have to learn how a new Chinese system works.

    This does not make China scholars support the regime. But it makes them indirectly interested in the same sorts of things that the CCP is interested in: stability, not change; and orderly if astoundingly unequal society, not what they fear would be the chaos of a country in which ordinary Chinese have political and economic rights and exercise them. The distaste for reform, in other words, is not just self-referential, it is also self-serving.

    To return to our conversation: after hearing them out, I asked them, “so, surely, you would advocate some sort of reforms, right? You don’t support the continuation of every single policy or practice in place now, right?” Of course, they said. But from their perspective, what China needed was gradual reform, from the top, with the CCP clearly on board and the military actively supporting the decisionmakers. That way Chinese society will adapt to the new changes at the proper pace. Sounds familiar to me. “Is such change likely,” I asked? Well, they responded, probably not: when you look at specific events like the Shanghai rail disaster, or chronic problems like internet censorship, you definitely get the sense that the elite may talk about small reforms, but that the system cannot tolerate real reform.

    Sounds to me like hoping for gradual reform is another way of hoping that the current system hangs together.

  • Stabilization Games Revisited

    OK, since my body clock still thinks I’m in Australia, I (TP) think it’s OK to violate our no-posting-in-the-US rule for just this once, to follow up on my earlier post on the debt ceiling.

    The question here is, how did my little model do? The answer is, good not great. There are a couple of issues here. The outcome–a near complete capitulation by the Ds to the Rs–is not my final prediction, so that’s not good. But there are several reasons why a little model might not predict reality.

    • The model is wrong somehow. I don’t think is it. For what I intended the model to do, I think it stands up very well in explaining the essential logic of the debt ceiling crisis. The logic of the positions is correct, from what I can tell. It’s just that the Rs stood firmer than I anticipated, a prediction which only comes out informally at the very end of my discussion.
    • The model makes technical simplifications. This is part of it: due to the fact that I’m not any good at math I only entertained a 2×2 game structure with discrete strategies (vote yes or no), and clearly any actual debt ceiling negotiations involved negotiations allowing for continuous strategies. The model sacrifices reality to be more tractable, with obvious consequences.
    • Actual events are random draws from a distribution of possible outcomes. Maybe relevant too. This is what ever good poker player knows, and most critics of formal theories of politics forget. Think about it this way: if you’re playing no limit Hold ‘Em and find yourself raising pre-flop with pocket aces, but get beat by someone who flops a boat, you probably didn’t make a mistake by raising pre-flop, you just got a bad beat.
    • People aren’t rational. Possible. I think in the case of Obama himself, there’s evidence that he is not responding to incentives and new information about his opponents in a way that a rational Bayesian learner would. He seems to believe things about the Rs’ willingness to compromise that don’t seem compatible with reality. [ed.–Would love MGr’s and MGl’s reactions to this claim.] Beyond that, everyone else seems pretty rational to me.
    • Games are nested. I think that this the real issue. We can’t forget that the final debt ceiling crisis is part of a much larger game between the Ds and the Rs, and a lot of the relevant considerations for players calculating optimal strategies are external to the specific vote on whether or not to raise the debt ceiling and the small number of parameters I’ve included. I’ve long thought that the very fact that we had a debt ceiling crisis at all means that the Ds had already lost the ability to make and defend coherent economic policy positions. I just thought that they would stand firm.

    The good news, as I mentioned before, is that in capturing the essence of the interactions between Ds and Rs over the debt ceiling, and understanding why the crisis looked the way that it did and lasted as long as it did, my exposition does well.

    The real news now though is the market reaction (not great) and the subsequent economic data which has been released (very discouraging). What is striking to me now is a point to which I alluded earlier: the complete and utter refusal of US politicians to advocate for a coherent policy response based on basic economy theory. We used to know that when interest rates were really low but banks still weren’t lending and the economy was still stalled, governments should spend. Today, no politician–not a D, not an R, not a president–is willing to take this position. Instead, Washington is obsessed with debt and tax cuts. The reason why no politician will explain to you precisely why cutting taxes and decreasing spending over the next 20 years will help the US economy over the next 5 is because, well, it won’t.

    There are various reasons for our politicians’ current ignorance. One is the really terrible state of economic literacy among the Americans. Lots of people study business in college, fewer study macroeconomics. The really smart ones who do study macroeconomics work in the financial sector, not politics, and they are screaming for more government spending right now. One is that macroeconomics is difficult, and that leads people to try to look for analogies in how you run a national economy in how they run their household or their small business, which create a huge fallacy of composition (if your household is almost bankrupt you should stop borrowing, and that is not necessarily true if you’re a national economy). One is possibly naked greed, but I don’t think that that is it really, because a greedy person would be willing to trade a higher tax bracket for a much higher income (which a good economy will give you), and that doesn’t seem to describe the nature of the debate right now.

    But there also might be something in the way that leaders lead. I think that this is important, and not something amenable to game theoretic analysis. I can pick on Obama, but it’s not just his fault, it’s a general problem among the Ds, the party that would have the ability to advocate a classic Keynesian response to the current crisis. They seems unwilling or unable to stand up and recite the lessons of Econ 101.

    UPDATE: Another obstacle to embracing a coherent policy response to our current economic maladies might come from academic economics, in the form of real business cycle theory. For better or for worse, RBCT enjoyed great prestige in the 1980s especially, and its intellectual champions remain active and influential. Simplifying greatly, RBCT starts with the assumption that all markets for goods, labor, and capital clear, which means that the business cycle–that is, the variation around the trend in how economies perform over the long term–must be explained by random shocks (yes, literally) to the economy. You get terms like “adverse technology shocks” to explain why recessions occur (Noah Smith discusses the logical implications of this sort of view applied to the current crisis).  Sneakily, then, economists who follow this line of thinking don’t have to think carefully about the origins of recessions, because they are unanticipated and unpredictable, or else they wouldn’t be random. One additional consequence of this line of thinking is that government action (monetary policy or fiscal policy) can at best do nothing to redress the business cycle. Here is an early, devastating critique from Larry Summers.

    What makes this relevant for my discussion is that this sort of thinking is currently popular among many of the libertarian types of economists who tend to have blogs and lots of readers. The internet and libertarians go together like PB and J. It’s unlikely that many of these people strictly believe that RBCT is a good model; rather, they like the implication that government action can never be useful, and they sort of latch onto RBCT from time to time because that’s one of the things that  RBCT says. Blog readers usually don’t know that ins and outs of the models that produce these predictions but my sense is that they are still influential among the commentariat.