One of Branko Milanovic’s tasks in completing his book Global Inequality: A New Approach for the Age of Globalization was to take
current knowledge about global inequality and project what the future might
hold. In order to assess what his
prospects for success might be, he went back and read a number of authors who
had made similar attempts over the period from the late 1960s through the
1990s. He was not encouraged by what he
discovered.
“We know that purely economic
forecasts tend to be very wrong. But I
thought that less formal discussions of the political and economic forces that
were considered most important for shaping the future would provide more
accurate insights and projections. I
discovered that was not the case.”
“To generalize, all of these
works share three types of mistakes: the belief that trends that appear to be
most relevant at a particular time will continue into the future, the inability
to predict dramatic single events, and an exaggerated focus on key global
players, especially the United States.”
In particular, none of the works read predicted the rise
of China to its current stature. China
went unnoticed until it became too big to not be noticed. And now, of course, any number of attempts
are being made to project China’s future, all of which are hampered by the
three errors observed by Milanovic.
One of the most troubling aspects of the various
projections deals with China’s attempt to limit its population. The standard economic assumptions are heavily
influenced by the recent experience in Europe and the United States where
support for the elderly is provided partly by contributions from the wages of
those who are of working age. The
conclusion then is that a certain number of workers are required to support a
given retired person. A growing
population will then have a growing number of elderly requiring support—provided
longevity does not decrease. Since longevity
tends to increase over time, particularly in developing countries like China,
the number of workers may have to increase proportionately to cover the greater
fraction of the population that is elderly.
In other words, by this logic, an economically healthy
country must have an increasing population—forever!
Howard W. French recently weighed in on China and its
population in an article for The Atlantic:
China’s Twilight Years. According to French, China’s twilight is the
result of China’s conscious attempt to limit its population.
“Indeed, China’s fertility rate
began declining well before the coercive one-child restrictions were introduced
in 1978. By hastening and amplifying the effects of this decline, the one-child
policy is likely to go down as one of history’s great blunders.”
All developed nations seem to have concluded, via their
fertility rates, they would prefer to have declining populations, or, at least,
one no better than constant. To make the
world consistent with their boundary conditions, economists conclude that
immigration will be required to maintain population growth and thus economic
growth. The fertility rate in the United
States of natives hovers near or just below the replacement rate. It is the immigrants and their higher initial
birth rates that keep the population growing.
French believes that a growing population is inherently a good thing.
“With American Baby Boomers
entering retirement, the United States has its own pressing social-safety-net
costs. What is often neglected in debates about swelling entitlement spending,
however, is how much better America’s position is than other countries’. Once
again, numbers tell the story best: By the end of the century, China’s population
is projected to dip below 1 billion for the first time since 1980. At the same
time, America’s population is expected to hit 450 million. Which is to say,
China’s population will go from roughly four and a half times as large as
America’s to scarcely more than twice its size.”
Are we to conclude from this that French believes China
would be better off if it had not limited its population and allowed it to grow
to 2 billion in order to keep pace with the United States? Apparently so.
“Even as China’s workforce
shrinks, America’s is expected to increase by 31 percent from 2010 to 2050.
This growing labor supply will boost economic growth, strengthen the tax base,
and relieve pressure on the Social Security system. At the same time, Americans
will continue to enjoy a substantial advantage over the Chinese in terms of per
capita income. This advantage in wealth will continue to underwrite U.S.
security commitments and capabilities around the world.”
Before discussing the absurdity of an economic model that
demands ever increasing populations, let’s consider what the decline in
population has meant to China. Sheng
Yun, as one of those born at the beginning of the one-child policy period has had
the opportunity to observe and compare his generation with prior and succeeding
generations. He provides his insights in
an article for the London Review of Books:
Little Emperors. Sheng Yun is an assistant research professor
at the Shanghai Academy of Social Sciences and a contributing editor at the Shanghai Review of Books.
How about this for a beginning?
“By the 1950s China’s population
growth had already outstripped the state’s ability to deliver services.”
Population pressure and bureaucratic incompetence led to
famines that killed tens of millions of people in the late 1950s and early
1960s. As with most countries, trouble
in the fields led to growth in the cities.
Urban growth was
too great to be sustainable and something had to be done to control it. The solution chosen was to ship a generation
of young people, including Yun’s parents, out to the countryside to live with
the peasants for “reeducation.” Yen
would be born to them in 1980, the year China initiated its one-child policy
and the year it terminated its “Down to the Countryside” movement.
“…we only children are a lot
luckier than our parents and their many siblings (an average of between three
and five). They were the rusticated youth or zhiqing, also known as the ‘lost
generation’, who were sent to the countryside during the Cultural Revolution to
be ‘re-educated’ among the peasants. My mother was 16 when she was sent away:
she had barely finished middle school when she was told she would be leaving
Shanghai for an unknown world and an uncertain future. But she set off in high
spirits, eager to show initiative and prove she had the strength to break with
her family of bourgeois intellectuals. The
Down to the Countryside movement was deemed necessary because the population
had grown too quickly. Marauding bands of Red Guards were getting out of hand
in the cities, and bands of jobless youngsters were roaming the streets. Many
later poems and novels describe the tears shed by zhiqing as they boarded trains to the rural
areas, but it’s not clear that all of them were sad. My mother wasn’t. But it
was a radical experiment that robbed a whole generation of their right to
education.”
When Yun’s parents were allowed to return from the country,
China had changed.
“Some aspects of life in the
1980s were not so bad for those who’d returned to urban areas. The state was
investing heavily in public housing so every working family had a roof over
their heads and even if freedom from other kinds of want was rare, at least we
were all poor together. There was also a surge in attention to reading,
writing, the arts and philosophy, after the barrenness of the Cultural
Revolution. It was a golden age; many European classics appeared in translation
(often without permission), and every weekend my father took me to buy books.
People queued for new arrivals and talked about writers and their work. Popular
titles, both Chinese and foreign – usually philosophy or canonical literature –
sold in the millions.”
A new emphasis on education meant competition for the
best schools and the best jobs. As
always, there were way too many people for the number of positions
available. Yun’s parents were among the
generation whose interrupted education left them unable to compete.
“When I was young I was angry
with my parents for not continuing their education when they’d had the chance:
I thought they were lazy. Now I see how arrogant and wrong I was. In 1977, the
year the College Entrance Examination (gaokao) was reinstated (the Cultural Revolution
had done away with the national educational system), 5.7 million people sat the
tests and only 273,000 were given places. My parents didn’t exercise their
right to sit the exam: they knew they wouldn’t stand a chance after so long in
the rural areas.”
Things became worse for them when China’s economy began
to take off.
“The 1990s hit my parents’
generation hard, and their difficulties lasted into the new century. They were
not equipped to compete with the well-educated 1960s generation during the
economic boom. Their lack of schooling meant, too, that they were forced to
retire early (40-45 for women, 45-50 for men) to make room for younger workers.
They are lost in modern China, digitally illiterate, casualties of a radical experiment.
But compared to their parents, who could say that they are not fortunate?”
The 1990s would hit Yun’s generation hard also. The single children of that period were
pampered and fawned over as one might expect—thus the title “Little Emperors.” But overpopulation would strike back at them
as well.
“Some of us made it to a top
university; we were aiming for a better life and hoping to ‘make a difference’.
The irony is that we had already missed the boat: the opportunities associated
with China’s opening up were shortlived. The 1990s were boom years for people
born in the 1960s (Chinese count generations in ten-year intervals): young,
energetic, ready to inherit the new China. Soon they would take all the key
positions in the economy, the universities, the state administration, even the
arts, leaving their successors with little room for manoeuvre.”
“For the 1960s crowd 1989 was
the moment of transition. They were going through college at the time (often
with their siblings) and were, on the whole, idealists, believing in reform and
freedom. Tiananmen and 4 June changed everything.”
“From then on, instead of trying
to change the political system they would focus on wealth creation. From the ashes
of their hopes a shrewd, hard-nosed business elite emerged, driving China’s
economic performance indicators to new heights. After 1989, foreign
multinationals, impressed by the state’s iron determination and commitment to
stability, began to invest heavily in the country. Before long, the children of
the 1960s were basking in double-digit growth, and cleaning up as equity and
property boomed. Few laws or regulations constrained venture capitalism, and
China got its first good look at the filthy rich.”
“When the children of the 1980s
hit the job market, we found ourselves in an unenviable situation. The rental
on a small one-bedroom flat in a city like Shanghai is at least 5000 rmb a
month (double that in the French Concession); buying would mean a mortgage for
life. Many of us still live with our parents and are known as kenlaozu, ‘boomerang kids’: the
little emperors are stuck at home, and not very different from the West’s
generation of neets.”
Surprisingly, young girls would end up beneficiaries of the
one-child policy. Economically, the
lower birthrate was compensated by making jobs in the modern economy available
to both sexes.
“Traditionally females were used
as domestic help, birth machines or clan assets to marry off or trade. Women
didn’t go to school, and were encouraged to internalise the saying that ‘a
woman without talent is virtuous.’ Illiteracy was their proper condition: they
were there to clean, farm, and above all to give birth to a male heir. They
could not dine with men at the same table.”
The one-child policy has been viewed as encouraging
abortion and infanticide to ensure that the one child would be a boy. Those things occurred, of course, but they
had been occurring anyway due to the traditional Chinese patriarchy. The one-child law forced parents of a single
girl to reconsider how they viewed their female child, and, ultimately, helped
emancipate girls from the limited lives they had known beforehand.
“These issues were deadly
serious but they resulted less from the policy than from the nature of Chinese
patriarchy, which the policy threw into sharp relief. People were willing to
break the law, to pay a fine to have a second go at having a boy, even to
murder or abandon female babies. Paradoxically the one-child policy undermined
the atavism of tradition, even while seeming to encourage it. I grew up in
Hefei, about 500 km west of Shanghai, where I remember a striking young girl
from the countryside who attended a private violin class; she was the daughter
of peasant parents who spoke poor Mandarin. Without the one-child policy, her
father would have tried fanatically to conceive a second, third, fourth child,
until the family produced a male heir. His daughters would have led miserable
lives. Instead, he invested in his only child’s violin lessons.”
“The one-child policy meant that
growing numbers of rural and urban female students attended universities, once
a strictly male preserve. Before long we shall see more and more women in
positions of responsibility in many fields.”
“The one-child policy also freed
women from the burden of domestic work and childcare. Many more Chinese women
go out to work than Indian women, and full-time housework is no longer a choice
for the modern Chinese woman; only a few choose to quit their job after giving
birth. When the one-child policy was wound up last year (it was replaced by a
two-child policy), there was very little interest: Dinks (dual income, no kids)
are quite common in big cities – none of the seven commissioning editors at the
Shanghai Review of Books has
children – and the one-child policy was becoming an irrelevance.”
Yun is aware of the arguments of people like Howard W. French
that a falling population means fewer and more expensive laborers, and perhaps
a less-competitive China, but is unmoved by the argument.
“I am not an economist, and so I
can’t help wondering why it’s a good thing to exploit cheap labour, turn
ourselves into a vast manufacturing hub for the world market, and destroy our
own environment.”
Yun is personally more concerned with the difficulties
involved in feeding the existing large Chinese population.
“If we had allowed our
population to grow like India’s, we would be consuming far more of the planet’s
grain and livestock than we are already (the Economist
likes to remind us that, with our population at its current size, we eat half
the world’s pigs).”
He also provides
an anecdote to force us to consider what a world with a couple of billion
hungry Chinese might be like.
“After high levels of melamine
were discovered in powdered milk in 2008, mainland mothers descended on Hong
Kong and emptied the shelves, leaving Hong Kong mothers with nothing: it was a
small illustration of what two or three billion Chinese could do to the Earth’s
resources.”
Each country has an interesting story to tell. Each country took different paths to the
present, and each will take different paths to the future.
It was necessary for China to limit its population in
order to maximize the common good—for both the Chinese and the world in
general. Economists who continue to
argue for ever greater populations to ensure economic growth are foolish. The notion that wealthy societies can
increase their populations indefinitely by immigration to maintain growth is
only sustainable if we assume that poor countries with high birthrates will be
nurtured as sources of cheap labor forever.
That is not the kind of world anyone would wish to live in.
Yes, China will have a problem to face as its population
ages. All countries face the same
problem, and they will have to deal with it.
Each country will likely come up with its own scheme, and the basic
issue will be how to pay for it.
Fortunately, the globalized economy has produced and concentrated enormous amounts of wealth. All we have to do is come up with a better
way of distributing it.
The interested reader might find these articles
informative:
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