Economics and Politics
The bloggers at China Law Blog describe what most comparative politics students should recognize as a given. It's still worth emphasizing for the young people who are just beginning the course.Structural adjustment has political ramifications and politics affects the process of economic restructuring, but politics is politics. Economic considerations may be part of the political calculus when policies are made, but there aren't any places where Adam Smith's Wealth of Nations is the dominant concern. (What else would you expect from political scientists?)
In any case, here is the reminder from the lawyers at China Law Blog:
China Business: Power Trumps Economics
"[My] co-blogger... and I recently engaged in a long e-mail discussion with a company that contacted us wanting to start a business in China that is forbidden to foreign companies...
"[We] would explain that what the company was proposing is prohibited in China. The company would respond by noting how good its business would be for China's economy... [and] would then talk about how difficult it would be for the government to shut down a business that was doing so much to help so many Chinese businesses...
"China's Communist Party does want to see China's economy expand, but... [f]aced with a choice between allowing a foreign company to conduct business in China that will expand the economy, while at the same time presenting a real challenge to the supremacy of the Party, China will forsake the economy every time. Power will trump the economy every time.
"And this should not be a surprise, because this is pretty much true (to varying degrees) of every government in the world... it is certainly true of present day Russia, where the government seems much more interested in controlling its oil production, than in maximizing it...
"China is very interested in expanding its economic pie, but not so interested that one can analyze its actions strictly by using an economic model. Applying a strict economic model to Chinese government decisions regarding something as fundamentally economic as foreign business could prove mistaken. Using such a model as the basis for believing an illegal foreign business will eventually be allowed in China could prove disastrous. Not saying it could never happen... but I am saying the odds are heavily stacked against it."
[For more on Russia and the kind of argument based on economic and not political logic see Russia Kills the Oily Goose and the article from the American Enterprise Institute on which it's based, Russia’s Oil Woes, "Moscow’s attachment to statist economic policy is undermining its bid for global energy dominance... By re-nationalizing its energy sector, Putin’s regime is slaying its largest golden goose."]
posted by Ken Wedding @ 8:09 AM
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