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Jon Talton

Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.

June 4, 2014 at 10:28 AM

The opportunity costs of Tiananmen Square

Today is the 25th anniversary of the massacre of protesters at Tiananmen Square in Beijing and the crackdown of similar demands for democracy in hundreds of other Chinese cities. Amnesty International estimated the deaths in the square at up 1,000. No one knows for certain the total number of people killed, injured and imprisoned. Deng Xioping was determined that the Chinese Communist Party would not follow its Soviet counterpart into the dustbin of history.

For the sake of the dead alone, and the CCP’s aggressive censorship campaign since, we are obliged to remember the anniversary.

But a quarter century later, China has the world’s second-largest economy (it’s Washington state’s largest trading partner), is the world’s manufacturing powerhouse thanks in no small part to huge investments by American multinational corporations, mints millionaires and billionaires and is capitalist in every way but the government. China has high-speed rail. Its investment power is felt around the world.

Deng essentially said, Here’s the deal: Stay out of politics and you can get rich. The deal “worked,” after its fashion.

China is also dogged by terrible pollution, a large share of its rural population living in poverty, increasing friction with its neighbors, an aging population, rising manufacturing costs, heavy and dangerous debt, ongoing protests over local issues and, in the west, terror attacks. The Communist Party’s lock on power seems absolute to everyone except leaders of the party, which ought to tell us something.

Is giving up one’s freedom and the rule of law in exchange for a market economy a good deal? Surely there are opportunity costs: the talent that left, the genius that was suppressed, the wealthy Chinese who hedge their bets with houses in Vancouver, B.C., or the United States, the rural dwellers not allowed into cities and hence not allowed to bring their talent and energy to bear, the rough edges of authoritarianism that scrape the likes of Google over censorship, the efficiencies and trust that come from the sanctity of contracts and law made by the people…

If China were a small place of no consequence, the world would still be making its leadership pay for the massacre. Instead, the world flocked to Chinese-style capitalism. We are invited to wall off the unpleasant past and present for economic gain — some of us, certainly not the millions of American factory workers left to greet at Wal-Mart, find fulfillment in Amazon warehouses or shovel fast food.

And apologists might say, who am I to talk? America now has its own oligarchs running the government. But that, dear readers, is comparing apples to main battle tanks. At least so far.

Once upon a time, Reagan UN Ambassador Jeane Kirkpatrick posited that the fundamental contradictions between capitalism and communism meant that a communist state couldn’t stand for long once it began market reforms. Thomas Jefferson wrote of individual life, liberty and the pursuit of happiness, as well as a people’s right to overthrow a tyrannical government, as universal truths. Deng proved them both wrong and is largely remembered for his reforms, not his bloodshed. For now.

And Don’t Miss: Can Seattle’s minimum wage politics work in other cities? | BusinessWeek

Today’s Econ Haiku:

Wall Street is quiet

That makes the Fed quite nervous

Bubbles just can’t quit




Comments | More in China economy and business


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