Quote of the Day: David Friedman on China’s Economic Growth

If you look at the world as a whole, the situation has gotten quite a lot better; That something like, what a billion and a half people or maybe more than that at this point in China, went from living under an extraordinarily oppressive system to living in a society that is not radically less free or free market than ours I think; probably depends on where you are in China. It's certainly not a democracy, but then democracy and freedom are not the same things.

But my impression, I've visited Shanghai now twice and enjoyed it, and my impression at least of Shanghai was that it was a little less capitalist than the US in theory and probably a little more capitalist in practice. Now Shanghai is one of the better parts of china at the moment, so that may overstate things.

But nonetheless you consider what it was like; the figure I've seen not for freedom, but for welfare, is that from mao's death to 2010, per capita real income in china went up 20 fold, that's just an enormous increase in human welfare which happened as a result of the fact that the communists around mao were not evil people; they were not people who wanted their country to be miserable. they were people who had an incorrect theory; had enough sense to realize that facts trump theory, and were therefore willing to try experiments and follow the ones that worked, and the result was that they gradually moved farther and farther from the system that they had had when Mao died." - David Friedman

David Friedman was on Jeff Berwick's show, Anarchast, recently.  The quote above was from that recording.  He made several great points in that passage, and we'll go over a few of them below. You can find the entire show here: David Friedman on Anarchast

First, using China as an example, he makes the point that things are getting better for most people, and better in China specifically because of less government and more freedom. We have very clear real-world examples of a sort of sliding scale of freedom where you get varying degrees of prosperity.  China, for much of the 20th century, was controlled by a totalitarian state. As soon as that started to change, we've seen relative increases in freedom and prosperity ever since.  After communism in Russia, that country has also seen relative increases in the standard of living.  It's not to say the current versions of those governments or any other system of statism is ideal; far from it. In fact, no government is ideal. But, it does show a general principle that with more control and regulation of a society, you get more poverty, and with more freedom to let individuals work things out for themselves, you get more prosperity.  Today, we see the opposite in many western countries. Governments, like the United States, started off very small and meddled very little in society.  In an environment like that, you see great prosperity.  But, ever since then, especially after 1913 with the income tax, the Federal Reserve, and the start of the modern war machine, we have had a steady increase in government, a steady decline of freedoms, and as a result, dwindling prosperity.

To illustrate this a little bit, here are some numbers from the Freetheworld.com "Economic Freedom of the World" index.  In 1980, China had a summary score of 3.64.  In 2013, it was 6.44.  In 1980, Russia wasn't ranked.  In 2000, they had a 5.15, and in 2013 it was 6.69.  In 1980, the United States had an 8.07 score (as high as 8.65 in 2000), and by 2013 it was down to 7.73. So that gives us an idea of the trends, according to this study at least. Friedman also reminds us that "democracy and freedom are not the same things." It has been drilled into our heads in America that democracy is great, we are a democracy, and that we need to "make the world safe for democracy." Friedman is reminding us democracy is not what we are told it is, and it does not automatically equal freedom and is not necessarily the best way to achieve freedom or prosperity.  In China, they are not a democracy and they have been seeing improvements in freedom and wealth.  In America, even though we are told we are a democracy; on paper, we are supposed to be a constitutional republic, though it is moving ever more in the direction of democratic dictatorship, complete with mob rule and political theater.  For more on democracy, find Hans-Hermann Hoppe's book Democracy: The God That Failed.

I like the point Friedman makes that "Shanghai was...a little less capitalist than the US in theory and probably a little more capitalist in practice." So even though on paper, China is supposed to be less free than many countries, somehow they end up with relatively more freedom and wealth in certain cities.  Maybe those in government there have realized that if they practice governing a little more hands off, the country will see better results (and they will see more tax revenue).

The third interesting point he makes is to remind us that people can be wrong and they can learn from their mistakes.  Mao was a dictator, driven by ideology.  He was going to govern how he governed.  But after he was gone, it left Chinese officials with the task of doing what they thought was best.  They were free to try something different.  China had tried complete collectivism, and it didn't have good results.  So, they tried something else, and they have seen relative increases in freedom and prosperity since. The Chinese officials had seen the results of moving in the wrong direction. Their country had been through hell, suffered economically, and the government had killed millions of people within its territorial monopoly.

Hopefully, people in the west can learn lessons from some of this, but it doesn't look like they are. Without the firsthand knowledge of going through the complete collectivism of Russia or China, Americans and Europeans are ever eager for more government in their eternal lust for state granted (imaginary) "equality" and "rights."

Sure, we can claim we're "free" right now.  We can say we're "freer" than many other places.  But, nonetheless, right now is just a snapshot in time.  We're somewhere on that sliding scale, and slowly moving in the wrong direction, in the direction of tyranny.  I'd prefer a free society, with no buts or exceptions.  But at a bare minimum, I wish I could say our governments are moving in that direction.  Sadly, they are not.  The United States government and many other western states are repeating history, as they continue to ignore the past and the reality of statism, always striving for a more government-centric world.

For more on David Friedman you can find he website here...DavidFriedman.com. On his site, he has much of his work available for free, including the 2nd edition of his well-known book, The Machinery of Freedom. Also, below you'll find a fantastic illustrated summary of that book.

[Image Credit]

  • davidfriedman

    My comments on China were based in part on visiting it, but also in large part on the book by Coase and Wang on how China went capitalist. It’s a fascinating story.

    • GRL Admin

      Mr. Friedman – Thanks for stopping by! Fascinating stuff for sure. Will check out the book. Thanks for the input. – BA

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