Thursday, April 1, 2010

Two articles on China, Thoughtful Thursday

Constitutional Choice of Villages in China, Jianxun Wang

This was presented at the Public Choice Conference in 2005. It seems to be part of his Dissertation

Villages in e China were relatively independent of the Central Government and the author compares the village independence in China to that Tocqueville observed in American small towns.

In some cases, lineage resolved itself into a sort of 'direct democracy' When dealing with some important lineage affairs, all lineage members participated in decision-making process. Usually, the meetings were held in the ancestral hall, and lineage leaders led the discussion and junior members voiced their assent (citing Hsiao 1960, 332)

They also mentioned that councils did NOT have a head.

Yongjing Zhang Public Choice and China, An Introduction, Also part of the 2005 Public choice Conference

China may be overinvesting. Obviously, China has had a dramatic increase in its economy, export prowess, and standard of living, especially for those living in cities. He recognized the problem of waiting to reward people when we really know they did good work. In his case, he talks about those who managed towns and municipalities encouraged to get two much foreign direct investment, perhaps at economic cost. The managers are encouraged to show good economic growth in the short term. The government bureaucrats move on, the people move on (fiscal federalism) and then things collapse in the town.

We have at the same time the problem of CEO's of public companies. They are rewarded for showing a short term profit. And stock turnover is very high, managed mutual funds turn over their stock holdings within a year on average. And individuals (77% for males, 53% for females) and investment clus are in the middle at 66%. Thus, the person who invested in 1980 in stock X probably does not hold it in 2010.

He argues that just shifting to a market economy and taking advantage of abundant labor (its competitive advantage), was responsible and outweighed any problems due to inefficiency or corruption in government. But this may not be true any longer. Note that this article ws published in 2005 and China enjoyed economic growth although it has suffered due to the drop off in demand for its exports during the Great Recession.

Lastly, Dr. Zhang took the time to analyze what articles the Chinese who were publishing public choice cited in their articles. He found it very uneven with classical works in Public Choice, especially those not translated into Chinese not being cited. Of course, my first question was is this the same in other social science disciplines in China? Do other countries, where some have published in Public Choice, also show this unevenness?

To be in future Future Thoughtful Thursdays

  1. Hsiao, Kung-Chuan 1960, Rural China: Imperial Control in the Nineteenth Century, Seattle University of Washington Press
  2. Economic Reform and Constitutional Transition

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