CHINESE LESSON
We hear a
great deal about China these days. They seem to have difficulties on a number
of fronts: economic; social; environmental. And what else is there? One message
that comes through all of it is that the survival of the party comes
first. All else is subordinate to that. And this leads to an amazing
involvement in every aspect of Chinese life.
As an
example, the government (party) recently decided to embed Internet police in
every technology company. Wow, what a jobs program. But who knows what Chinese
citizens might be up to if left to their own devices? It’s well known that many
of them don’t care for the party. Some have paid with their freedom.
But this
piece isn’t about China’s rulers, except to hold them up in illustration of
what happens when governments seek to micro-manage their citizens and
enterprises. The governments become, in effect, the motivating factor in
every enterprise and pubic action. Will China succeed by providing rewards to
those whose actions support the party while deploying a huge bureaucracy to
catch and punish the deviants? Will these bureaucrats yield to the obvious
temptation of accepting, and then soliciting, bribes to look the other way?
Of course, we
have absolutely nothing to learn from China, their human nature is different
from ours. Sure. Nevertheless, we are in a low-growth situation. Why? Could it
be that we’ve slipped into a micro-managing situation wherein the government
diddles with motivations, and business managers, along with individuals, react
in perverse ways? One indication is that we’ve gone from being in the
top1, or 2, countries for ease of doing business, and ease of starting a
business, to 7th for ease of doing business, and 47th for starting one.
Meanwhile, regulations have been piling up at a record pace. All for the good
no doubt, but there is the little matter of compliance and associated costs.
Additionally, we’ve experienced amazing growth in the power of regulators. The
assessment of fines without due-process has risen to the level of a competitive
sport. Of course the companies, or individuals, can spend 3 ½ years in
expensive litigation. The regulators see that the fine is less expensive.
Most
Americans have never run a business and have difficulty seeing how regulations,
and regulators, are anything but a force for good. Some go so far as to cheer
whenever our government sticks it to a business. But many, including most who
will read this, have experienced the cost (time, effort, money) involved in
complying with our tax code. Businesses employ legions of clerks, accountants,
and lawyers just to ensure compliance. And the tax code is often used to coerce
behavior deemed to be good, or bad. Simple tax, anyone? Nah, too much payola at
stake.
Back to
China. I believe that they have set themselves an impossible task; the level of
detail, the vast number of people involved, and the perverse motivations
created will weigh heavily, and they will try to remedy the problems with more
control.
In my novels,
I often try to end with the denouement (the wrap up) left somewhat to the
reader’s imagination. Many don’t like that. But, in this cast, the Chinese
lesson is just too obvious. Think about it.
Joe Bakewell
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