So obvious we can't see it

From a gloomy article on the prospects of China sustaining its unparalleled multi-decadal 9% growth, China Will Need A Series Of Miracles To Sustain Growth by John Maudlin. We get so accustomed to changed realities that we forget what went before and we lose a sense of magnitude and proportion.

Every time I go to Singapore I hear this story about Deng Xiaoping. It is said he came to Singapore in the late ’70s and saw the progress there under the leadership of one of the great men of the last century, Lee Kuan Yew. Supposedly he said something like, “These are Chinese people doing this. We can too.” He went back to begin the reforms that produced the results we see today.

In my opinion he is one of the most important of a small handful of leading figures of the 20th century. It is impossible to think of a modern China today without Deng Xiaoping.

Inheriting a country fraught with social and institutional woes resulting from the Cultural Revolution and other mass political movements of the Mao era, Deng became the core of the "second generation" of Chinese leadership. He is considered "the architect" of a new brand of socialist thinking, having developed "socialism with Chinese characteristics" and led Chinese economic reform through a synthesis of theories that became known as the "socialist market economy". Deng opened China to foreign investment, the global market and limited private competition. He is generally credited with developing China into one of the fastest growing economies in the world for over 30 years and raising the standard of living of hundreds of millions of Chinese. (Wikipedia)

When we discuss the future of China, it is important that we develop some perspective. Go back to 1978 and the economic disaster that Deng Xiaoping faced. China was coming off the Cultural Revolution, which had seen Deng himself purged at least twice, forced into menial work, and his son tortured. The hard-core party elite saw Deng as a huge threat.

If in 1978 someone had shown you a photo of a city like Shanghai or Beijing today and asked you the odds of that happening within 36 years in China, you would have laughed at them. What if that someone had told you then that 250 million people would be moved from the country into the cities and modern jobs created for them? That some of the most important companies and richest citizens the world would be based in China? And that China would be the second largest economy in the world with the potential to become the largest not long thereafter? By this time you would be rolling on the floor laughing, tears in your eyes. Such a thing would have been impossible to imagine in 1978.

A couple of points. I agree that Lee Kuan Yew is a currently overlooked near-history character whose stature, I think, will be greater in the future. Apart from his personal strengths and weaknesses, Lee demonstrated convincingly that a small, resource poor, multi-ethnic/multi-community nation surrounded by large and expansionist neighbors could could go from nothing to OECD status in a generation. Economic development is a choice of trade-offs, not an exercise in hoping for the best. It is not easy and the trade-offs are not pleasant but it can be done and Lee proved it. Hard work, postponed consumption, calculated risks. Technocrats tend to have a sullied name, but Lee showed what could happen when done right. It used to be easy for countries to complain that they were the victims of colonialism, discrimination, geographical circumstance, geopolitical challenges, economic poverty, etc. and that the West owed them money to fund their development. Lee showed that these were not the root causes. Root causes lay in choices made by the country and its institutions.

Lee's position in history becomes even more pivotal if the Deng Xiaoping anecdote is true.

Deng is an example of what I mean by loss of perspective. If we ask who was most instrumental in reducing world poverty in the 20th century, I think most people would struggle to provide a reasoned answer. I am guessing that nominees might include the UN or something like the Red Cross. Perhaps 1 in 1,000 might justifiably mention Norman Borlaug (father of the green revolution which raised so many out of nutritional poverty.)

But how many would mention Deng Xiaopeng? Depending on the count, Deng and his policies raised 2-400 million out of poverty in China in the span of twenty years.

And what would people answer if you asked them what was the most effective economic development program of the twentieth century? Many might answer again, the UN, but also likely candidates would be hydroelectric power, perhaps the green revolution. But how many would answer competitive markets? But between India and China, some 6-800 million humans have moved from near poverty into the middle class in thirty years. Amazing.