China and the politics of austerity

by Elias Isquith on November 6, 2011

PRC

An interesting story from Al Jazeera has got me thinking about the less savory places Leftist politics in the 21st century could go:

As the global financial crisis continues to hit the eurozone, Nicolas Sarkozy, the French president, and other European leaders have been banking on China to step in and wave its magic wand. But is China prepared to bail out Europe?…

Jin [Liqun], who has served as China’s deputy minister of finance and vice president of the Asian Development Bank, manages $400bn worth of the nation’s money through the sovereign wealth fund. He says that unless Europe changes its labour laws and adjusts its welfare system, he does not consider it to be a profitable investment.

“If you look at the troubles which happened in European countries, this is purely because of the accumulated troubles of the worn out welfare society. I think the labour laws are outdated. The labour laws induce sloth, indolence, rather than hardworking. The incentive system, is totally out of whack.

“Why should, for instance, within [the] eurozone some member’s people have to work to 65, even longer, whereas in some other countries they are happily retiring at 55, languishing on the beach? This is unfair. The welfare system is good for any society to reduce the gap, to help those who happen to have disadvantages, to enjoy a good life, but a welfare society should not induce people not to work hard.”

Austerity politics has the welfare state very much on the run right now, in Europe and America both. But for all the Tea Party’s rhetoric in favor of fiscal responsibility and cuts to government spending, the fact is that citizens in both regions are more or less on the same page when it comes to the prospect of drastically reducing the outlays of the big-spending social programs — that is, they’re opposed to the idea on principle. The point of disconnect, then, is the perception of who is paying for these services and who is benefitting from these services. Most Tea Party types don’t think they’re one in the same; and, incidentally, they don’t imagine the two groups to share identical levels of melanin in their skin, either.

But what I see in this Al Jazeera report — and the many more like it almost certain to come in the years ahead — is an opportunity for the Left in the Western world, if they’re inclined to seize it. It’s not a particularly noble or commendable opportunity, from an ethical standpoint; but politics ain’t beanbag, right? Because if there’s anything people in the West (and in America especially) find more threatening, aggravating, and distasteful than the prospect of Chinese global hegemony, I’ve not yet seen it. It’s been the barely-concealed subtext of the President’s entire “Win the Future” campaign; and it was (in)famously evoked in this now-classic midterm campaign ad:

I would imagine that a Left-wing party is more likely to hit on a xenophobic chord in Europe than America, simply for the reason that the Democratic Party is about as enamored with global finance as anyone else in this world, and generally not inclined to use this kind of demagogic populism. And, really, it’s not certain that it has to be a Left-wing party, anyway. Europe’s had a resurgence of the right as of late, but the center-left parties that were so dominant until recently were rather comfortable with neo-liberalism politics. Whoever is the incumbent and thus in the unenviable position of pushing austerity measures is vulnerable this assault.

But a little-appreciated fact of successful Leftism is that it often is undergirded by a less-than-PC strain of nationalism and tribalism. The line between populism and demagoguery is always thin; and the seductive power of closing ranks against a designated Out group is considerably more potent than that of simple, noble-hearted communitarianism. It’s playing with fire, though, to play upon these kinds of often irrational fears and prejudices; I’ll not shy from admitting it. But someone is going to — already has! — profited significantly from tapping into widespread antipathy towards rising China. There’s maintaining your conscience on the one hand, and there’s self-sabotage in service of naïve prissiness on the other.

As we charge headlong into the politics of austerity and the consequent jockeying to determine who bears the pain and makes the sacrifice, Left-wing parties in the West are going to have to find the sweet spot in-between — whether they like it or not.

{ 30 comments }

1 b-psycho November 6, 2011 at 8:29 pm

Reading that statement by the Chinese finance guy, I half expected him to throw in a few words about young bucks buying T-bone steaks.

2 Elias Isquith November 6, 2011 at 8:52 pm

Ha!

3 Koz November 6, 2011 at 9:16 pm

There’s no traction on this angle.

4 Kolohe November 6, 2011 at 10:45 pm

It’s too bad one can’t make irony a prime mover of an AC generator, otherwise the notion of manager of a sovereign wealth fund of what is, on paper, still a Communist country, lecturing the Eurosphere on their welfare policies would knock out this global warming thing in a jiffy. You know who’s the one percent? That guy, Mr Jin, and the other 13 million people who are doing rather nicely with Chinese globalization*

To that end, that is one avenue of the Left – to make common cause to the proles of China, who suffer some basic rights violations on a daily basis (and not that speech or assembly stuff, things like being an illegal immigrant in your own country). Plus enough pollution to choke a horse (and most other four legged creatures). And so on.

But either way, China is thoroughly fished in the medium term, since they have no plan B** when the easy growth pickings of industrialization are finally gone. It’s not a matter of if the bubble will burst but when. (betting against it is another matter, the whole irrational/solvent thing. Though worldwide austerity politics should in theory, bring about the crisis sooner)

*this is not to say that the 300 million other people that are approximately middle class (by world standards) and the 500 million people living on 2-3 dollars a day vice 1 dollar a day have not themselves benefited from the Chinese government’s post Deng posture. It certainly beats dying in a Great Leap Dance Revolution.

**theoretically, they could try to thread the needle of trying pluralistic democracy with current elite retaining power. (under the CCP brand or not) But it rarely been successful and not at this scale.

5 Murali November 7, 2011 at 2:48 am

I dont know, kolohe, it is still too premature to say that china will go the way of Russia. If it manages to reform its economic policy and implement the correct market reforms, it will have a good chance of becoming the world’s largest economy very quickly.

When I read this,
The incentive system, is totally out of whack.
I got a neolib-gasm. Someone who appreciates the value of incentives (and is in power for the indefinite future) has a pretty good chance of reforming economic policy in the right direction.

6 DensityDuck November 7, 2011 at 2:56 am

It’s easy to say that the incentive system is out of whack. It’s hard to convince those listening for dogwhistles that you actually mean it and aren’t just trying to hide your hate for poor brown people. Indeed, in this very post we see Isquith arguing exactly that.

7 Murali November 7, 2011 at 4:53 am

What brown people are we talking about? This is Europe. Most of them are white.

8 DensityDuck November 7, 2011 at 12:46 pm

Isquith insists on comparing a Chinese politican’s statements about Europe to an American political movement’s statements about the American government, and he declares that the former is protectionism and the latter is pure racism.

9 Kolohe November 7, 2011 at 7:19 am

It’s not the economic system I’m worried about – indeed its reform is what brings us today. Any economic system, though, will have down cycles, and *politically* China is not quite equipped to handle their first big one, imo. (Though they did handle 2008 well enough)

The trajectory taken by Russia, from more or less bloodless revolution (particularly by Russian standards!) to Putin bringing the sexy back, is actually one of my best-case scenarios for the PRC. (The best best case would be the trajectories undertaken by Korea and your own Singapore from authoritarianism to political pluralism)

But China is so much more massive, and also has plenty in the way of its own separatists yearnings.

10 Kimmi November 7, 2011 at 4:15 pm

Ha.Ha.Ha.
You want the Corporate Oligarchy to turn into an Anarchy? And you consider this to be a good thing?

11 Kolohe November 7, 2011 at 10:13 pm

Ok, seriously, explain to me how the heck you derived that from anything I wrote.

12 Kimmi November 8, 2011 at 11:37 am

You say China’s best case is to become like Russia. I translate to what their socio-political states currently are (which you may indeed object to, on grounds or without). I find the trajectory you sketch out implausible at best, which is why I laugh.

13 Kolohe November 8, 2011 at 4:26 pm

I said China’s best case is to follow the path of South Korea. I think a plausible scenario is for the Chinese Communist Party Government to collapse, go through a decade of economic (but not so much political) turmoil, and re-emerge with an illiberal democracy (basically what happened in Russia). And I consider this to be one of the least bad options, because I think the most *likely* scenario involves a lot of people dying. Like in the last few Chinese Revolutions. (and in the first Russian revolution of the 20th century)

14 Tom Van Dyke November 8, 2011 at 5:17 pm

Intriguing analysis, Mr. Kolohe. Do you think China is already in the same phase as authoritarian SKorea up until 1960?

A quick Wiki recap:

The First Republic, arguably democratic at its inception [1948], became increasingly autocratic until its collapse in 1960. The Second Republic was strongly democratic, but was overthrown in less than a year and replaced by an autocratic military regime. The Third, Fourth, and Fifth Republics were nominally democratic, but are widely regarded as the continuation of military rule[citation needed]. With the Sixth Republic, the country has gradually stabilized into a liberal democracy.

15 North November 8, 2011 at 7:03 pm

China has a demographic problem the likes of which the world has never seen which they have to navigate before I’ll start feeling good about em. Their environmental issues aren’t anything to sneeze at either.

16 Burt Likko November 8, 2011 at 11:16 pm

The PRC, however, has been under an authoritarian dictatorship since 1949 (maybe even 1943). Only since 2000 has it even been willing to embrace the idea of western-style liberal freedoms in isolated areas (Hong Kong and Macau). Its rural areas are being depleted of population in favor of urban migration along the lines of England in the 17th century, but without Australia, the Americas, and South Africa as available places to emigrate those surplus workers, who wind up in Shanghai or Gangzhou instead. Chinese products are as cheap as they are because of this surplus of urban labor and the refusal of the leadership in Beijing to learn from the experience of the West accrued three hundred years ago as capitalism displaced feudalism. The Little Red Book contains nothing about capitalism displacing the Glorious Socialist Revolution and as much as there are western-educated technocrats in the middle ranks of The Party, the leaders still get ahead by adherence to an ideology whose ultimate foundation is “power springs from the barrel of a gun.” China’s leaders proved in 1989 that this, at the end of the day, is what they truly believe in.

There are capitalists in China, to be sure, and they will behave lke capitalists everywhere. But Beijing is a long march away from Seoul.

17 Murali November 6, 2011 at 11:47 pm

Hi Mr Isquith, just a few comments

seize it. It’s not a particularly noble or commendable opportunity, from an ethical standpoint; but politics ain’t beanbag, right?

The mere fact that politics is dirty (i.e. people behave unethically in politics) doesnt mean that we should do the same. The whole point of something being a moral requirement is that it is required of us whether or not other people comply with them. Now, you could try to make the case that “dirty” tactics are ethical if done for the greater good, but you did not explicitly make the case.

But a little-appreciated fact of successful Leftism is that it often is undergirded by a less-than-PC strain of nationalism and tribalism

But this is more than just un-PC. This is genuinely morally problematic stuff. Unless, of course you dont think there is anything stirring up ugly xenophobic sentiments. The casual way in which you just say its merely un-PC seems to give the idea that the less than political correct-ness of this is its only flaw.

. The line between populism and demagoguery is always thin;

In fact, it is so thin as to be non-existent. One man’s meat populism is another’s demagoguery. Of course, for me all populism is demagoguery. But you dont have to become such an elitist as me in order to find the line so thin as to be problematic. What do you see as the distinction between the two

18 Tom Van Dyke November 7, 2011 at 12:21 am

Mr. Murali, if & when Singapore falls on hard times, I shall be curious how its ethnic fault lines [1/2 Chinese, most of the rest South Asian, yes?] break.

Egalitarianism or even mere tolerance has an easier go of it in prosperous times.

19 Murali November 7, 2011 at 1:32 am

70% chinese 5% indian 14% malay and the rest are Eurasian or “others”

As it stands, local chinese are more likely to be pissed off at people coming in from mainland china. Anti immigrant sentiment is ubiquitous even in immigrant countries, even among first and second generation immigrants.

20 Tom Van Dyke November 7, 2011 at 4:06 am

That makes Singapore a plastic place. You also appear to have a significant %age of resident aliens.

“Some studies have attempted to cast light on the demographic profile of Singapore’s non-resident population. According to ‘The Encyclopedia of the Indian Diaspora’ (published in 2006), “independent surveys approximate the number of South Asians on work permits to be between 30-35 per cent of the total ‘Indian’ population in Singapore, or approximately 90,000-100,000.” Based on this, we can estimate that, as of June 2006, the Indian population formed 12.5% of the non-resident population, and therefore numbered between 415,000 and 430,000, or about 9.5% of the total population of about 4.5 million. It is likely the population of ‘others’ is similarly greater than suggested by the figures for the ‘resident’ population. Conversely, it is likely that the Chinese form significantly less than 75% of the total population of 4.5 million.”

We’ll see what happens when prosperity fails, as it must, cycles being what they are. I’ve listening to a lot of smoke and mirrors about how wonderful society/government/systems are that are only a half-century old. America may be a “young” nation, but as far as stability and continuity go, aside from Britain, we’re grandpa.

21 Plinko November 7, 2011 at 8:36 am

Perhaps it’s too delicate to manage but I think there’s a valid political tactic here, but it ought to be directed at the Chinese government, not Chinese people in general.
The Chinese government looks out for its own interests, not those of Europe or the U.S. They’re interested in doing whatever to preserve the value of their bond assets, not in promoting long-term economic growth in the West.
One can take that line, why are Republicans looking out for the Chinese government and not unemployed Americans? That is not necessarily racist or xenophobic. It’s not as if there isn’t a command economy, not to mention that whole crushing of dissent
thing going on.

22 Elias Isquith November 7, 2011 at 9:09 am

+1

23 Tom Van Dyke November 7, 2011 at 12:18 am

Kudos for posting this, Elias, albeit unnecessary to drag the Tea Party in, let alone insinuate racism*.

The issue here is that even the Chicoms find the Eurostate an unsustainable dream in the real world, and they’re commies for crissakes.

Even they can see what happens when entire societies devote themselves to rent-seeking.
__________________________
* It behooves the honest man to take “studies” like the one linked “proving” racism with a sackful of salt.

http://slatest.slate.com/posts/2011/11/03/fake_science_dutch_psychologist_made_up_results.html

Even when not fabrication, confirmation bias is such that I’d have been surprised if the academy DIDN’T “prove” the racism of its enemies.

24 DensityDuck November 7, 2011 at 2:27 am

There is no topic so far removed from American politics that people like Isquith cannot find a way to call out the goddamn racist phonies in the Teabagger Party.

25 b-psycho November 7, 2011 at 1:43 pm

Since people are starting to gripe about Elias’ bringing up tea party types and race…

There’s a reason why interpretation of their views on social programs from others tend towards racial politics: it’s either that or a huge amount of contradiction. The biggest parts of U.S. government spending are benefits for old people and the military. Meanwhile, a significant chunk of total spending goes straight to debt, since enough tax revenue to pay for it all isn’t coming and hasn’t in forever. Tea partiers say they want the budget balanced, and to do so they claim to want deep spending cuts. Yet, ask about the categories of spending that actually make the largest dent — old people and the military — and they largely say no to cutting either. When they volunteer responses it tends to be to cut spending like on welfare or aid money going overseas — basically, poor people and foreigners. Foreign aid actually makes up an insignificant part of the budget, so the perception is that they care less about the amount then that it is simply money going to “them” and not “us”. Then they have a distinction between general anti-poverty programs and the kind of benefits older people get regardless of income that suggests recipients of the former are simply mooches getting over on Uncle Sucker while recipients of the latter are merely getting what they’ve earned — despite many (I’d guess most) SS & Medicare recipients consuming much more in benefit than what they put into the system with their taxes.

Without the resentment case, the claim to want deep spending cuts while balking at cutting where it actually matters suggests straight up ignorance. Honestly, I think the resentment case is the more charitable one, in that I’d think higher of a view that boiled down to “I know, I just don’t care/I prefer it this way” than the same view arrived at through misinformation.

26 North November 7, 2011 at 12:37 pm

Fail. Tsk.

27 North November 7, 2011 at 3:24 pm

Err for the record this comment was flagging a particularily egrigarious violation of the commenting policy which was most properly deleted and left this tiny condemnation to fall onto the main article.

28 North November 7, 2011 at 3:24 pm

Comment #19 that is..

29 Elias Isquith November 7, 2011 at 3:48 pm

Yeah, I didn’t want to delete your comment, too. Collateral damage, etc.

As to the whining about my noticing that race plays a central role in American politics, I’ve got this for all the aggrieved.

30 Brosef Stalin November 9, 2011 at 1:51 am

Can’t you see that they are just post-racial at this point. It’s really the liberals who are the racists here.

Comments on this entry are closed.

Previous post:

Next post: