The Wonders of Developmental Autocracy

A few days ago, the always enlightening Marketplace broadcast a rather interesting report compering the Chinese economic stimulus package to the US’. They made the point that the Chinese economic stimulus package was a lot better than the US package: (i.e. the Chinese stimulus package is actually designed to stimulate the economy).

The Chinese are pumping their $586 Billion into projects most (neo-Keynesian) economists believe will stimulate their economy. For example, 38% goes directly to public infrastructure (like roads, bridges, tunnels, irrigation canals, etc.) By contrast, our $787 Billion stimulus package is a bit of a red herring. We’ve devoted 37% ($288 Billion) to tax cuts for individuals. On lots of worthy programs, I assure you. These cuts will make it easier for people to tackle the myriad problems created by this recession. Congress also allocated 18% for state and local tax releif, mostly going to Medicare and education. Again, these are great, necessary programs that deserve funding, but not the kind that really stimulates the economy in the way that it needs to be. Republicans got angry because the stimulus package included funding for things like…the National Endowment for the Arts. Democrats get angry because of the tax cuts. Both bad elements stay in, neither stimulates the economy and funding for “shovel-ready” infrastructure projects is necessarily reduced, with the far off hope that our watered-down, non-stimulative, Frankensteinian stimulus pack will work. Great.

Now, take China. China did not have to deal with bureaucratic infighting between Democrats and Republicans over what percent of un-stimulative BS to include in the bill. Beijing just sent out it’s feelers into the people, and decided to do what was best for them, not what could potentially get them reelected next term (or ever, for that matter). That’s what’s so great about China. If Beijing sees a problem, (barring interference from local government and corruption, and all of China’s extensive systematic problems,) it can take the most appropriate steps necessary to fix it. The US system suffers greatly for our inability to take decisive action, when such action is necessary. Todd Buccholz does argue that China has bigger problems of a demographical nature, but I don’t think that’s why they wrote an effective package. They wrote an effective package because China bases its economy on continued economic growth and this stimulus is a way of maintaining/ensuring that. It’s not going to do nearly enough to fix China’s rampant unemployment/disenfranchisement problems (though it will take recognizable steps, especially in Wenchuan), nor can it do anything to change China’s ridiculous gender imbalance. What it can do is provide an example to the people to say: “hey! Look! We’re still legitimate. You have problems, we really can’t fix them, but you don’t base out legitimacy on your ability to find a wife. You base it on our ability to keep you mostly employed!”

I can almost forgive congressional Republicans for advocating tax-cuts. That’s about all they advocate; it’s about 1/5 of the Republican platform besides opposing civil rights for gays, opposing abortion, opposing Nancy Pelosi, and supporting tea-bagging. But the democrats really need to get their act together. Instead of providing lots of funds for pet projects (they’re not the only ones guilty, btw) they’d better serve the country and perhaps even the electorate by actually stimulating the economy and getting us out of this mess.