Tuesday, April 9, 2013

The Greatest Economic Reformer

As the world mourns the death of Margaret Thatcher and reflects on her ferocious defense of free market principles, Martin Wolf reminds us of the world leader who did the most to bring about free market reform.

Writing in the Financial Times, Wolf notes:

If one asks today which political leader did most to transform the world through a shift towards markets the answer would be Deng Xiaoping, not Reagan or Thatcher. 

Of course, Deng Xiaoping was not a champion of political freedom. Thus, we are likely to ignore his achievements.  But, if you ask whose policies led more people out of poverty and desolation in the shortest period of time, his name would be at the top of the list.


Anonymous said...

One must consider the question carefully: who did the most to bring about free market reform?

It is clearly Margaret Thatcher. She showed that markets could work, following decades of socialist machinations, subsidies and indoctrination to demonstrate its supposed efficacy and morality. She began this economic transformation in the 1979 stagflation environment. Now, her reforms (like Reagan's) may have taken a few years to clear the market of distortions, but the change did come. It was an inspiration to economic progress across the globe.

I have nothing but contempt for the suggestion that it was Deng Xioaping. Deng came to office in 1981. He had a country with a standard of living that was so low, after decades of Maoism, that any kind of bump in economic productivity would've made a significant difference. And that's what he did. He boosted economic progress by being an apostate against centralized planning, allowing certain markets to function and bring goods to people. This allowed the standard of living to rise efficiently.

Now what our friend Mr. Wolf seems to forget is that Deng was in power when the Tiananmen Square protests were brutally crushed in 1989. So he allowed enough freedom to foster a more productive economy, but slammed the door shut when people wanted (gasp!) human rights. That repressive action solidified the Communist Party's grip on power and the brand of authoritarian socialism that's propelled their economic expansion to date. Today's China operates more like an organized crime empire on a global economic scale. Aside from the economic bubble they are in (especially in real estate), they've scaled the industrial economy very quickly. They are on the verge of having economic growth stall if they don't allow further free market reforms and curtail the rampant corruption. So Deng may have brought them to a certain point, but they've been living off those reform parameters for over 30 years. Eventually, they'll run out of incentives to propel economic growth further. They'll either have to liberalize the economy and economically stagnate.

So, if we're talking about who did the most to bring about free market reform, it's clearly Margaret Thatcher... and her reform was genuine and widespread. If we're talking about which reformer impacted the greatest number of people, then Deng Xiaoping wins hands down.

But there are two questions I would have for Mr. Wolf about his choice in Deng:
(1) Would the Deng reforms have occurred without Thatcher's economic reforms? Did Deng have a model, or was he so brilliant in the days before Soviet glasnost that he figured this all out himself? I suspect he followed an economic model of some kind, and it wasn't Mao's.
(2) What would you say to the Chinese man who yearns for liberty and has been rotting in a Chinese gulag since 1989? No doubt there are many. How many are there in Great Britain? Zero. How many were there ever in Great Britain? Again, zero.

Case closed. Deng's reforms were not for political or human freedom, they were a way to get his country out of a morass of economic destitution and stagnation brought on by his predecessor's zealotry and lunacy. Deng's actions were borne of necessity. Otherwise, the Chinese would've starved. And famines continue in China to this day. The last British famine was... when? Half the Chinese population still endures "poverty and desolation," particularly in those territories/regions that do not acquiesce to the regime's demands.

Reagan was great for America, but Thatcher was the true trailblazer. No disrespect, just reality.


Stuart Schneiderman said...

Deng took over in China in 1978. Quite clearly, he believed in economic liberty but not political liberty.

He had tried to initiate free market reforms in the early 1960s after the great famine that followed Mao's Great Leap Forward. In fact, his reforms started working well for China... to the point that Mao was threatened and launched the Great Proletarian Cultural Revolution.

Keep in mind Mao had already allowed 40,000,000 people to starve to death already... so Deng did not have to do what he did.

Admittedly, Tienanmen was bad... but, compared with what China has accomplished in terms of economic prosperity and compared with the body count of Maoism... it was not in the same league.

Anyway, keep in mind that we do not know what the pro-democracy demonstrators in Tienanmen Square would have done had they prevailed. The demonstrators in Tahrir Square wanted human rights and liberty too. They won and look what they got.

Clearly, Deng made a mess of the situation. On the other hand, for him and his colleagues, a mass student protest in Tienanmen Square had to recall the Red Guards of the Cultural Revolution and had to sow some level of distrust for youthful idealism.

Anonymous said...

Fair enough. Thanks for clarifying.

Regarding Tiananmen vs. Tahrir Squares, it's wise to acknowledge that most revolutions and civil wars end badly in the human sense. I saw the Tahrir going bad from the beginning because the Islamists would never pass up their chance at power... they'd been out since Sadat did the Israeli agreement.

And I detest communism, and communists, in all forms. Socialists are fine, as they're misguided do-gooders. Communists are dangerous, subversive idealists who choose to abandon their humanity out of necessity. The only way for them to institute their proletarian paradise on Earth is through death. Except they never run out of the need for still more death, because they are pursue ideological purity, punctuated by episodes of reform. It makes me sick when people say "Communism is a good idea that's implemented by bad people." No... it's inhumane all around.