Tuesday, May 1, 2018

China's Great Economic Reform

Some think that China is still a Communist dictatorship and thus that it must be bad. And yet, economic modernization has turned China from a third world nation where nearly everyone lived in extreme poverty to a modern,  industrialized nation where nearly no one lives in extreme poverty.

For the record, extreme poverty means living on less than $1.85 a day.

The American Enterprise Institute  (via Maggie's Farm) has the chart and the numbers. The chart, you can see, comes to us from the World Bank. 

1. Chart of the Day (above) via Max Roser showing the share of China’s population living in extreme poverty:

1981: Almost everybody (88%).
2013: Almost no one (2%).

That has to probably be the most significant reduction in poverty that has ever taken place in world history for such a large population in such a short period of time (32 years, or about one generation).

You are not going to like it, but Deng Xiaoping must be recognized as the greatest economic reformer in human history. He did it by privatizing agriculture and promoting free market capitalism. He did not, of course, promote liberal democracy and political freedom. The Chinese people have never known liberal democracy and apparently do not miss what they never had.

China clings to Mao because it values national unity and social harmony. And yet, it has repudiated the Maoist legacy and has gone from extremely impoverished to relatively prosperous in three decades. Score one for capitalism.

1 comment:

David Foster said...

It is a remarkable achievement.

It was greatly facilitated/accelerated by the emergence of technologies that enabled expanded trade: container freight, cheap jet travel, and low-cost communications, including the Internet....but probably would have happened anyhow, albeit at a slower pace, absent these factors and with a more internal/consumer-driven economic development.