Dan Wang: belief

Transcript context

…Just that there’s more income, people want it. There’s even weirder cases. Malaysia, Thailand, Indonesia, much weirder, more imperfect democracies, but they’re democracies of some sort, and it’s even happened in those places. Indonesia is a pretty big country. It’s not that well-organized, spread out over so many islands. There’s plenty of other places you can look at. India has stayed a democracy. China does seem like a big outlier. It seems weird to think all of those instances are just accidents. I would first point out that China is ruled by the Communist Party that has studied extensively the Soviet Union. In my view, China has studied three institutions in depth. The first institution is the Catholic Church. How do you organize doctrine, claim to be thousands of years old, and have a figurehead that everyone is expected to worship? China is not simply the Communist Party. The Communist Party is not simply the Catholic Church with a major figurehead. It is inflected with something like the Sicilian mafia, which enforces its omerta throughout the entire organization. The second organization that China has pretty extensively studied is Japan and how to avoid the economic malaise that plagued it after the 1980s. It doesn’t mean that it can avoid these problems, but it has extensively studied the experience of Japan. Third and most importantly, China has studied the example of the Soviet Union. They think that Deng Xiaoping famously called Gorbachev an idiot. Gorbachev, until he realized what he was doing, it became too late for him to really rescue the Communist Party. They really want to avoid the fate of Gorbachev. Now, if Gorbachev didn’t exist, maybe they would have Gorbachev’d themselves. They have this example of knowing what not to do. Every day in Beijing, I feel like the Politburo and the rest of the Central Committee, and Xi Jinping in particular, feel like it is a life-and-death struggle to avoid the fate of political dissolution. They are really, really thinking in terms of apocalypse, much as Silicon Valley does today, to avoid being dissolved. I think having that very intense Leninist focus on not being dissolved, like the historical predecessor, is going to be a pretty important fact of not liberalizing and not democratizing. Now, there’s a chart, I think from Andrew Batson, and you know this guy, measuring China’s capital productivity. It shows that capital productivity to be in steady decline. I know these things are hard to measure, but do you agree with that? If so, why is that happening, if China is so successful with all these manufacturing ventures?…

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