Looking for prosperity in all the wrong place

An interesting essay, not so much for the information it provides (some) but for the insight it provides into the thinking of left-leaning public intellectuals.  From Where China is beating the world by Noah Smith.  The subheading is On high-speed rail, EVs, and solar, China is doing truly amazing things.

Over the past two years I’ve written a lot of criticism of China’s economic policies. There were basically two reasons for that: First, China really did make a bunch of policy blunders during that time, and second, there was a narrative of Chinese economic infallibility in the late 2010s that needed correcting. Now I think that correction has largely been accomplished, and I see the possibility of an opposite narrative of Chinese economic incompetence taking hold. That would also be a mistake. The truth is that China has some serious weaknesses but also some amazing strengths, and we need to pay attention to both.

And what are those strengths one might ask?

If you thought those strengths might be in terms of cultural homogeneity, rising productivity owing to forty years of a partial market economy, increasing longevity, increased real GDP per capital, and improving morbidity, etc. you would be wrong.

Smith thinks that measured progress in terms of High-speed rail, electric vehicle production, solar power capacity and renewables capacity are the important measures of success.  

In other words, an authoritarian regime has excelled in the practice of central planning and coercive development.  

High-speed rail, EV production, and solar power/renewables are not measured in terms of their economic efficiency and effectiveness.  They are the darling of the authoritarian West.  But they, of themselves, add nothing to the productivity and prosperity of a nation.  Productivity and prosperity depend on systemic structures and institutions.  Building any particular thing faster or in greater volume is the mere accomplishment of coercive decision-making.  And that is what Smith is admiring.

High-speed rail is a prestige project of little or negative national economic value.  Occasionally worthwhile under the right conditions of regional productivity and population density but otherwise relatively immaterial.  Freight rail is a different matter entirely, usually crucial to the productivity to a nation.  But the bien pensant never focus on freight rail, only high-speed passenger rail.  

EV production?  Pffft.  Call me when it is more than 15% of the global auto market (not including China).  As best I can tell, EVs are 1% of the market in the US where consumers have a choice and perhaps 9% everywhere else where consumers have a varying degree of choice.  In China, where 59% of the 6 million vehicles sold are EV, consumers get to choose that which the government allows them to choose.  And the government wants them to buy EV.

Basically, currently, the freer citizens are, the less likely they are to buy EV.  EV sales are highest in nations and states where the government is most active in subsidizing or regulation EVs into existence.  

To that extent, EV sales are not a measurement of accomplishment but of repression of citizens.

And Solar?   Please . . . China, again through regulation and subsidies has indeed cornered that global market and are, apparently making solar and renewables an increasing portion of their national electric generation.  In a non-free planned economy, that is easy.  It is a government choice.  Will it work?  We'll see.  Everywhere else in the world, increasing dependence on solar and renewables is characterized by decreasing grid reliability which is significantly harmful to productivity and prosperity.  Will China buck that trend?  Maybe.  But it is not clear that they have or that they can.

Smith admires authoritarian economic development through central planning which shows best in such measures as miles of high-speed passenger rail, EV production, and solar power/renewables.  

Are those good measures in terms of economic productivity, prosperity and national well-being?  Typically not.  Mussolini famously focused on making the trains run on time but most historians and economists agree that those sort of narrow totalitarian measures are inadequate at reflecting the well-being of a nation.

Taking a systems view of China's prospects (instead of focusing on the Western clerisy obsessions with high-speed rail, EV production, and solar power/renewables), and I think there are legitimate rising concerns about China's future prosperity.  We should all want increased prosperity for everyone.

But the easy growth from partially transitioning to a market economy are just about over.  Instead of instituting more freedom and allowing citizens more economic choice and autonomy, China's current leadership is instead doubling down on the planned economy which bodes ill for productivity.  Even though the high-speed rail, EV production, and solar power/renewables numbers might appeal to a certain market.  The Western clerisy market.