Tuesday, October 26, 2021

The central planners looked at the shiny pattern not the causal substance.


I have been saying from the 1990s that there is an inherent contradiction in China between free markets and unfree people.  That if you are going to enjoy the benefits of a free market, at some point you will need to address that contradiction.  Free markets will cultivate the attributes and desires of a free people.

Either the government would slowly loosen its constraints on people or it would retreat from the free market.

I think we are seeing exactly that contradiction going on in several ways right now.  The resolution seems to be that the Communist Party has set control ahead of personal freedom.  Free markets generate the wealth they need but they do not want to accept the freedom behaviors it induces in the populace.

The people are not rebelling but the Party is not waiting.  They see cultural trends which alarm them and are heading those trends off before they blossom into something serious.  But easier said than done.

Xi is bringing the big companies, especially the tech companies, to heel.  Tycoons are being leashed and occasionally prosecuted.  

The national debt burden has ballooned as productivity has failed to keep up with national expenditures.  
GDP growth has dropped from 10% a year in the boom times to a still extremely respectable 5%.  Its just not what people are accustomed to.

There is the additional complication that China must get rich before it get's old.  The old one child policy has come home to roost.  Though abandoned a decade or more ago, the population has not blossomed.  The country's fertility rate is only 1.3 children per woman, one of the lowest levels in the world and nowhere near replacement level.  

Demographics is such, that this sort of problem can last for several years and not make much difference over the longer term.  But at some point, after two or three decades, suddenly the impact starts accelerating.  First slowly, then quickly.

This article is interestingly consistent with all that.  It focuses on many things, youth culture, government, education, meritocracy, etc. and in many places the themes (though not the details) echo those in the US.  

The pleas are everywhere. Newspaper editorials urge young people to “strive in the prime of their life.” City governments team up with famous brands to encourage young people to consume more. Young couples visiting neighborhood party committees to obtain permission to get an abortion find themselves subjected to earnest lectures on the delight of childrearing.

The Chinese Communist Party is using the whole of its propaganda might to push a simple message: The young must throw themselves into work and life with a zest befitting China’s glorious “New Era.”

The party has reasons to worry. There’s a counternarrative getting in the way of its determination to turn young Chinese into good producers, whether of GDP or children. Young Chinese are curtailing their expectations and ambitions. Many of them are downgrading lifestyle choices around diet, travel, and more. They fill social media with talks of the futility of endeavoring and the hollowness of desire. And they are not ready for marriage and children, and don’t know if they will ever be.

There have been concerns around young people in China for decades, as in any society. But two factors have made the leadership there more anxious than ever to address their social and economic withdrawal: the COVID-19 pandemic and the country’s upcoming demographic crisis. Although China experienced a robust economic recovery from the pandemic, the stimulus measures it had required further distorted the country’s debt-laden economy. The corrective that Chinese leaders are hoping for—a giant wave of pent-up demand from young Chinese—has yet to materialize.

And deeper trouble looms in the near future: The country’s fertility rate—the number of children a woman is expected to have over her lifetime—stands at just 1.3, one of the lowest in the world, according to the results from the latest census released in May. It laid bare the fact that the government’s move to end the one-child policy in 2016 has failed to produce the increased number of births the country desperately needs to slow the rapid aging of its population.

But getting young Chinese to live and strive will be a heavy lift for the party. Beyond the harsh economic realities that limit their options, the pessimism and reluctance of young Chinese have deeper roots—ones that the state itself has created. An ultracompetitive, tightly controlled, meritocratic system was once a powerful engine that propelled China’s economic rise but has now run up against its own inherent limits.

I am intrigued by this latter issue of the self-destruction of meritocracy.  We have something like that going in the US right now.  Some 90% of the population are committed to our deep traditions of freedom (personal and market), liberties, rule of law, individualism, etc.  An alchemical mix which has produced remarkable wealth and riches for all citizens compared to even the recent past.  It is not equally distributed but everyone has benefitted phenomenally.  

But what it has also done is make us so rich that we are able to indulge behaviors and beliefs (Postmodernism, Critical Race Theory, Social Justice Theory, etc.) which are in themselves in conflict with reality and, pursued, will lead to all the voyage of our life to be bound in shallows and in miseries. (to echo the Bard).  Our success has bred our defeat if we are not careful.  We need to revert back to the tried and tested successes of Age of Enlightenment values.  

China's flirtation with free markets without the corresponding personal freedoms has given them temporary prosperity but their authoritarian system is reacting against the induced behaviors of free markets.  It has run up against the limits of that experiment.

Nothing embodies the meritocratic promise of the state better than the education system. The playing field was never truly level in China, as is the case everywhere, though state efforts made it far flatter than it could have been. Its famously rigorous curriculum was effective in equipping a large swath of the population with basic literacy and math skills, as well as inculcating in them diligent and disciplined work habits. Thanks to these strengths, education paid off splendidly for its recipients in the first decades of the economic reform by allowing them to take advantage of the opportunities that early reform brought.

The shortcomings of the system are equally glaring: Its focus on ranking and testing creates enormous stress for students, while its reliance on rote memorization deprives students of intellectual autonomy—they may be able to recite Tang dynasty poems, but they aren’t accustomed to grappling with the complexities of the world and their places in it, and to forming understandings independently without falling back on received narrative. In the past decade, the system has taken an ideological turn that worsened this problem. The teaching of such subjects as history and political science was always superficial and didactic; now it has become little more than regurgitating Communist Party dogma verbatim.

Chinese students may be the first to complain that the system turns learning into dronelike drudgery. But when they are engaged in brutal and high-stakes academic competition, the simplicity of its rules and the clarity of its standards can also be reassuring, as they seem to be proof of the system’s incorruptible objectivity and fairness. Students know that if they work hard in following those rules and conforming to those standards, the system will reward them with what they deserve.

The education system had the additional advantage of security, or so it seemed to young Chinese while they were in school in the 2000s and early 2010s. The economic boom, by then two decades long, gave them reason to expect that the strong work ethic they acquired in school would be fairly rewarded with bright careers and generous salaries in the future.

Woof.  That sentence "The teaching of such subjects as history and political science was always superficial and didactic; now it has become little more than regurgitating Communist Party dogma verbatim" sure has an unpleasant resonance.  Recognizing that Postmodernism, Critical Race Theory and Social Justice Theory are not Communist Dogma but are rather derivatives of Marxist theories, the encroachment and occasional dominance of these ideas in our universities and K-12 does feel like an issue of "regurgitating Communist Party dogma verbatim."

Their faith in meritocracy manifested in the massive increase in higher education enrollment, which jumped from 4.13 million to 26.25 million between 1999 and 2015. Guided by the government’s ambitious development plans, young Chinese who took the route of higher education gave up the freedom and agency they might have had as migrant workers and devoted themselves to learning the skills that they believed would give them an edge in the new economy. This was still a minority of people: While the undergraduate enrollment rate for high school graduates is much higher nowadays, at over 50 percent, the majority of those who drop out do so long before graduating high school, or even sometimes middle school. But they were also a prominent and celebrated group.

The real world is not what the system promised them. The number of college-educated workers far outstrips the white-collar jobs that are available. Those with jobs struggle to make do with salaries that are a fraction of those of their Western counterparts, in cities where housing prices rank among the world’s highest.

This recapitulates what has happened in the US and some parts of Europe in the past thirty years.  It follows the age old pattern of misunderstanding cause and effect.  Most advanced nations usually used to send only 5-10% of its population to university.  Then circa the 1960's they began, with the US leading the way, to send increasing percentages, usually on the order of 25-50% of the population.
The old visible pattern was that if you went to university, you became wealthy through high income.  And high income came from high ability.  University added some small quantum of the success mix but it was primarily a signal - "This person has above average potential."

Wearing the mental model of the central planner, the obvious logic was: if you want to become wealthier, send more people to university.  Ignoring that university has a cost and that not everyone benefits from going to university.  Particularly, the deeper you dip into the IQ barrel, the lower will be the return on an expensive university education.  It is not going to university which is beneficial.  It is having a high IQ, some appropriate behavioral traits (self-discipline, time discounting, goal focus, etc.), and sufficient motivation which creates value.  The central planners looked at the shiny pattern not the causal substance.

This is a pattern many recently independent former colonies fell into in the 1960-80s.  After independence, seeing the pattern of university education and personal prosperity and without understanding the underlying causal elements, they flooded their universities.  Consequently, by the eighties there were tens of thousands graduating with dubious education credentials and no jobs for them to go into.

There is much more in the article.  Worth reading.


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