Perhaps the key take-away is his insight that much of what guides Chinese thinking is driven by a fear of the nation’s disaggregation, which has happened repeatedly over its multi-thousand year history. When it has occurred, chaos has brought the deaths of millions in war and famine, making it something to be avoided at all costs.
China’s Communist Party government is a merciless meritocracy, which is one reason the Chinese have difficulty understanding American politics. If you’re in the Chinese leadership, you made it there by scoring high on a long series of exams, starting at age twelve—which means you haven’t met a stupid person since you were in junior high school. (snip) So while the Chinese Communist Party is not a particularly efficient organization, and is certainly not a moral one, it has a lot of incredibly smart people in it.We’ve wondered if the Chinese economy would go the same way as the Japanese, being dragged down by cronyism. Goldman’s response:
China’s economy is nothing like Japan’s, because Japan wanted to maintain its social structure. The Japanese protected agriculture, small retail, and small business. So in Japan we see a few great companies with global capacity sitting on top of a protected, inefficient economy. In China, which moved the mass of people from the villages to the cities, their equivalent of Amazon—Alibaba—will manage labor back in the villages. The Chinese have broadband everywhere, so as entrepreneurs figure out what villages can make, the villages will work for them.If I have a criticism of Goldman’s appreciation of China, it is his failure to mention the birthrate crash that goes on apace. Imagine trying to send the People’s Liberation Army to war when it is made up almost entirely of only sons, only children. Every soldier’s death brings a family line to a crashing halt, this in a culture where family is many times more central than here.
