Here is a pretty interesting op-ed piece from the New York Times:
Going Long Liberty in China
Going Long Liberty in China
There has been a lot of buzz lately about investors “shorting” China’s overheated real estate market, basically betting that it will go down. I say that’s peanuts. There is a much more interesting shorting opportunity in China today. It is truly “The Big Short,” and that is betting that China can’t continue to grow at this pace indefinitely by only permitting its people to have economic liberty without political liberty. I’m sure Goldman Sachs would write you a credit default swap on that, and the Chinese Communist Party would take the other side. Are you game? It seems that the Nobel Prize Committee is. I’d be, too.
The Norwegian committee just awarded its 2010 Nobel Peace Prize to Liu Xiaobo, the jailed Chinese pro-democracy activist. The message to Beijing, I’d argue, was simple: Liberty is a value in and of itself, because without it human beings can never develop their full potential. And, therefore, liberty is also an essential ingredient for any society that wants to thrive in the 21st century. Otherwise, it can’t develop its full potential. China has thrived since Deng Xiaoping by offering its people economic freedom without political freedom. And surely one of the most intriguing political science questions in the world today is: Can China continue to prosper, while censoring the Internet, controlling its news media and insisting on a monopoly of political power by the Chinese Communist Party?
I don’t think so. To be sure, China has thrived up to now — impressively — by permitting its people only economic liberty. This may have been the sole way to quickly take a vast country of 1.3 billion people from massive poverty to much-improved standards of living, basic education for all, modernized infrastructure and even riches for some urbanites.
But the Nobel committee did China a favor in sending the tacit message with its peace prize: Don’t get too cocky and think that you have rewritten the laws of gravity. The “Beijing Consensus,” of economic liberty without political liberty, may have been a great strategy for takeoff, but it won’t get you to the next level. So this might actually be a good time for Beijing to engage peaceful democracy advocates like Liu, who is now serving an 11-year sentence, or the 23 retired Chinese Communist Party officials who last week published an open letter challenging the government to improve speech and press freedoms. (Bloomberg News said that an Internet link to the Chinese-language version of the letter could not be opened in China. Screens showed “network error.”)
My reason for believing China will have to open up sooner than its leadership thinks has to do with its basic challenge: It has to get rich before it gets old.
Because of its one-child population-control policy China, over the next few decades, will go from a country where two sets of grandparents and one set of parents are all saving for the computer for one kid, to a country where one kid will be supporting the retirement of two parents and maybe one grandparent — with little government help. Moreover, because of the practice in some families of aborting female fetuses, there could be 20 million to 40 million more men than women in China in the next few decades, and that will force some men to go abroad to find brides.
The only stable way to handle that is to raise incomes by moving more Chinese from low-wage manufacturing jobs to more knowledge- and services-based jobs, as Hong Kong did. But, and here’s the rub, today’s knowledge industries are all being built on social networks that enable open collaboration, the free sharing of ideas and the formation of productive relationships — both within companies and around the globe. The logic is that all of us are smarter than one of us, and the unique feature of today’s flat world is that you can actually tap the brains and skills of all of us, or at least more people in more places. Companies and countries that enable that will thrive more than those that don’t.
Curtis Carlson, the C.E.O. of SRI International, the innovation hub in Silicon Valley, has a tongue-in-cheek way of putting it: “In a world where so many people now have access to education and cheap tools of innovation, innovation that happens from the bottom up tends to be chaotic but smart. Innovation that happens from the top down tends to be orderly but dumb.” As a result, says Carlson, “On balance, the sweet spot for innovation today is moving down, not up.”
As such, government’s job today is to inspire, liberate, empower and enable all that stuff coming up from below, while learning to live with and manage the chaos. But what would happen if China had 600 million villagers on Twitter? In a country that already has thousands of protests every week over land seizures and corruption, its system probably could not handle that much unrestricted bottom-up energy. It is a real problem for Beijing. China can’t afford chaos, and China can’t afford not to gradually unleash more bottom-up and less top-down energies. I don’t know how China’s leaders are going to balance these imperatives.
Maybe they should ask Liu Xiaobo.