Posts Tagged ‘historical development’
Debt and War
Adam Smith explained in Wealth of Nations that public debt finances wars. The following is a graph of the yearly percentage change of the UK public debt from 1701 to 2011:
UK public debt year on year change 1701-2011
(source UK Public Spending, Graph made with LibreOffice. Image created with GIMP)
A
The first war in our story finished before the start of this graph: The Nine Years’ War (1688–97). In 1688 James II was deposed and William III of the Netherlands was installed as joint-king (with his wife, James II’s daughter) of England, Scotland and Ireland; sovereign power was shared with the parliament . The new regime needed to rebuild the navy and strengthen its hold on the country; the Bank of England was chartered in 1694 and a new era started. In 1697 Louis XIV recognised William as king. Challenge to the legitimacy of the new regime would last another fifty years.
The first peak in the graph marks the War of the Spanish Succession (1701–1714), the UK (united under Queen Ann in 1707) fought with Germany to prevent France from installing a Bourbon king in Spain. The king was installed but had to renounce his French succession rights, preventing a dynastic union between France and Spain.
The UK had two material gains from this war: Spain gave it the right to sell slaves in its colonies (called the Asiento), thus starting the lucrative slave trade; the gains from the slave trade and slave labour provided the capital to start the industrial revolution. Gibraltar was ceded to Britain in perpetuity, providing a stranglehold on the Mediterranean (Minorca was also ceded but later regained).
B
After the death of Anne in 1714 (both she and her sister died childless) the crown did not revert to the Stewarts, instead going to George Duke of Brunswick-Lüneburg a great-grandson of James I. The Stewarts tried to regain the crown, the Jacobite rising of 1715 was lead by the oldest son of James II (by his second Catholic wife) out of Scotland, the Stewarts homeland. The rebellion was over by November and the pretender left Britain never to return.
The War of the Quadruple Alliance (1718–1720) saw the UK allied with France and Germany against Spain. The British used their Mediterranean base to force Spain into relinquishing its various claims in Europe. Spain tried to exploit the Jacobite claim, sending troops (about 200) and arms. The British routed the rebels and three months later captured Vigo (in Galicia) in retaliation.
To finance its debts the UK chartered the South Sea Company and granted it trading monopoly, including the right to sell slaves in Spain’s territories. The bubble in the company’s shares collapsed in 1720.
C
The War of the Austrian Succession (1740–48) saw the UK allied with Austria and Russia against France, Spain and Prussia. This was the first of a series of wars between the UK and France on a global theatre to determine the ultimate ruler of Europe and the World.
Parts of the war was fought in North America and India, between the British and the French, and the Caribbean, between the British and Spain. The most serious threat came from the Jacobite rising of 1745 lead by James II’s 25-years-old grandson: Charles Edward Stewart. The Jacobites were successful at first, but ultimately were routed by the British forces, led by George II’s 24-years-old son, and the Scottish clans that supported it were brutally suppressed.
There was little gain for either side at the end of the war, except for a French recognition of the Hanoverian succession; never again would there be a Jacobite threat. The best weapon against the Jacobites was the public debt itself, many feared a repudiation if the Stewarts ever came back.
D
The struggle between France and the UK erupted in the Seven Years’ War (1756-1763), with Prussia and Portugal on the British side and Austria, Russia, Spain and the Mughals of India on the French side. The war was fought all over the world, basically a replay of the last war except this time the results were quite different.
In North America General James Wolfe delivered New France (Canada). In India, except for trading posts that remained under French control (promptly occupied by the British in times of war), they were effectively driven out. Louisiana was transferred to Spain. Most of the French Caribbean possessions went to the UK.
The French were a land power and had failed in defending their overseas empire. Absent a Jacobite threat the French considered invading the British isles with 100,000 soldiers. The logic of invasion had always been faulty, to invade Britain successfully one needed a strong dominant navy, but having such a navy would negate the need for an invasion. The gains could have been larger for the UK, but they wisely took the path of appeasement to ensure a lasting peace. A wise course they neglected to follow after the Great War.
The two wars in 23 years had increased the debt by 80%. Time was needed to digest the gains in North America and India and derive profit from them, there was little to fear from France as their navy was crippled by the war. Deriving profit from India turned out to be extremely easy, the British had only to replace the current lords in oppressing the people. Deriving profit from North America meant taxing the proud English colonials, that would prove far from easy.
E
The policy of appeasement was carried over to North America, where the Royal Proclamation of 1763 and the Quebec Act tried to appease native Americans and French settlers. From the king’s point of view it was the right thing to do, appeasement would secure his possessions (colonies were the sovereign’s personal possession), from the colonist point of view they were being denied their right in the spoils.
A policy of exploitation and tax was implemented in the colonies. Wealth would flow back to the UK, just like wealth from India. This not only exploited the colonists economically but practically disenfranchised them, treating them as second-class citizens and not full Englishmen. With no threat from any other European Power the colonists revolted and in 1776 declared independence. The American Revolutionary War (1775–1783) was a major military setback for the UK.
France was delighted by these development and once the rebels proved themselves militarily in Saratoga, France formed an alliance with them. France’s contributions put a huge financial burden on the French economy. If public debt was the cause of British Greatness, as some argue, then France by that measure should have been even greater, but it was not.
After the war ended France did not win the American trade from the UK and the alliance was not honoured by the Americans in due course. Spending their money to build a republic in North America caused the Bourbons to lose their crown in France.
F
During the initial phase of the French revolution, when France was destroying itself, the UK was happy to sit back and watch. Only the Holy Roman Empire, led by Marie Antoinette’s brother saw the need for intervention. When the republic was declared after the decisive victory at Valmy, the whole of Europe united against France.
The French Revolutionary Wars (1792-1802) would change the world for ever. The French had only themselves, the US declaring itself neutral, but the revolution had unleashed national energy that none of its contemporary had. The British landed in Toulon to support the royalists, but were driven out, they sunk the French fleet in harbour as they left; this would not be the last time that the British sink French ships in their harbour.
By 1802 the whole of Europe was exhausted and the Republic was on death’s door. The UK signed a peace treaty recognising the French Republic on 25 March 1802, the treaty gave the British more colonies. Showing their belief in the treaty the British maintained an army of 180,000 and refused to remove troops from Egypt or Malta.
G
Britain declared war on France on 18 May 1803—peace had lasted only 14 months. The Napoleonic Wars (1803-1815) would be a resumption of the struggle between France and the UK over the world.
The British destroyed any colonial hopes the French had in Egypt. Napoleon sold Louisianan to the US in 1803—the same territory ceded to Spain forty year before—and in 1805 the French navy was destroyed at the battle of Trafalgar. France had become a continent-bound power, but what a power it was.
The British suffered setbacks everywhere they tried to fight the French on land, in Portugal they were almost driven to the sea. In Italy they retreated to Sicily, guarded by the navy. The French overwhelming advantage on land defeated the Austrians and the combined armies of Prussia and Russia.
All these victories did not add a single oversea colony to the French Empire forcing it to exploit its European subjects and clients. Trying to exploit Europeans in the same manner they exploited other people was the mistake of the UK in North America and France would now learn this lesson at its cost.
After signing the Treaty of Tilsit with Russia the only country left against France was the UK and Sweden. Shortly afterwards Sweden lost the whole of Finland to France’s ally, Russia, and declared war on the UK. The UK realised the need to carry on the war on land. They gave command to a land-general who had proven his ability with the British East India Company, his name was Sir Arthur Wellesley, better known today as the Duke of Wellington.
The Peninsular War (1808-1814) was a slow methodical struggle conquering the peninsula one city at a time; this differed markedly from all other campaigns of the Napoleonic Wars. Wellington leading the forces of the UK, Portugal and Spain methodically and carefully drove the French out.
The Emperor was kept busy in other parts of Europe. Austria rejoined the fight, only to promptly exist and give its daughter (Archduchess Marie Louise) to the Emperor. By the summer of 1812 the peace with Russia broke down, Napoleon reaction caused the downfall of the Empire (see my post Conquering Russia for a summary of that campaign). Afterwards everyone turned on the French and by the end everyone turned on Napoleon himself. Wellington himself delivered the coup de grâce in 1815.
From 1792 to 1816 the UK public debt increased by 222%. It was money well spent as the UK emerged as the pre-eminent power in the world, a position it would hold for a century.
Pax Britannica
If I would summarise all the wars between 1815 and 1914 this article would be twice as long. Latin—a language used whenever shame is present—gives us the term ‘Pax’ meaning ‘Peace’ to denote this century of war and death. Winston Churchill provided a good description of these distant wars that were usually fought and funded by others in his first two books.
One memorable episode was the Crimean War (1853–1856), a pointless war with no lasting effects. Despite 250,000 British soldiers fighting in the War it is today chiefly remembered for three things: Florence Nightingale’s statistical and medical work, Lord Tennyson’s poem and the cardigan sweater. As the UK wasted time in cavalry charges the world was moving ahead; Prussia’s quick victory against France in 1870 ensured that the UK could not intervene against the unification of Germany. Finally united after three-hundred years of disunity the Germans would slowly and methodically build up their powers.
The public debt was not reduced, only serviced. As the economy grew the debt weight on the government fell.
H
The first sign that the century of ‘peace’ was coming to an end was the the Second Boer War (1899-1902). This was another war against ex-Europeans, only these were far (in time) removed from Europe living in an inhospitable landscape reminiscent of the Arabian peninsula. The Boer actually were very similar in culture and tactics to the Arabs—their guerilla tactics were identical to those employed by the Arabs against the Ottomans in the Great War.
Contrary to popular belief the war was a model of imperial warfare, the Boer’s attacked and besieged forward bases rebuffing counter-attacks from the locally stationed troops. The Empire mobilised, shipped troops to south Africa from all sides, attacked the Boer from all axes and were in Pretoria by June 1900, ten months after the start of hostilities; public debt decreased in 1900.
Mission accomplished, or so thought the British, the Boer had another idea. They started a guerilla campaign to resist what they viewed as foreign occupation. Here the problems started for the British. Resistance would continue for another two years, public debt rising by 10% and 8%. Finally the Boer were subdued with the help of a new instrument added to humanity’s toolbox of brutality and repression: the concentration camp.
The biggest damage to the British was from the idea that soldiers with fixed bayonets could successfully charge a line. This idea persisted well into the Great War despite repeated arguments against it from German machine-gunners .
I
The UK was the most powerful country in the world, but it faced challenges everywhere it looked. The Russian had warm-water ports in the Black Sea. The Germans were building a strong navy and colonial positions in Africa and Asia. Japan had a navy and army capable of defeating the Russians. The United States was bigger and more dangerous than all those countries put together.
With everything to lose and nothing to gain one would think that the UK would look for peace, but it did not and the Great War (1914-1918) exploded. The public debt in 1919 was almost eleven times that of 1914. Such extreme rate of debt growth was greatly facilitated by the Bank of England, which had been, in a series of parliament acts, transformed into a de facto central bank. The conversion of the pound into gold was suspended and government bonds were readily discounted by the bank—this practice was done by all parties especially the Central Powers (see The Reichsbank 1914).
The high cost of the war was not only because of the huge scale of the war, but also a reflection of the expensive nature of modern warfare. They had borrowed more money in defence of the empire than all the money borrowed since 1688. That did not stop the British from more imperial adventures, occupying Iraq and Palestine at the end of the war, intervening in the Russian civil war and forcing a humiliating peace on the most warlike nation in Europe.
J
After the Great War the UK tried and failed to return (at the pre-war rate) to the gold standard. Finally in 1931 the pound was allowed to float, this allowed the central bank to lower interest rates and there was a modest debt growth in 1932-1934. The empire was in decline with Canada, Australia and South Africa drifting away. Germany resurgent after a humiliating peace. Japan dominant in the far east. The Soviet Union seemingly triumphant. New York taking over the financial role of London. Even their credit was suspect after defaulting on the War loan (see Jeremy Warner and the War Loan)
Any sane person would have disbanded the empire and declared themselves neutral in international affairs, but not the British they decided to double-down and gamble on the Second World War (1939-1945). That war delivered two psychological blows: the first was to the common man in England, who experienced war closely for the first time in centuries. The second was to the colonial subjects of the British Empire who had accepted its rule based on the argument of safety and security; that argument was swept away by the Japanese when they swiftly occupied Honk-Kong, Singapore and Burma.
When the war ended the government had to build a welfare system to placate the common man and give freedom to its colonial subjects. Any illusions of financial powers were also gone, the government was forced to ask the US for a loan and join the Bretton Woods system, pegging the pound to the dollar.
K
Under Bretton Woods the UK could only print pounds in proportion to the dollars they had and the US could only print dollars in proportion to the gold they had and they had a lot of gold. They also had a lot of faraway places that they had to defend at all costs, so they printed a lot of dollars. The system seemed to work fantastically at first: high growth, high wages, high standard of living, welfare, education. It seemed that the West could have both capitalistic growth and socialistic welfare.
Between 1947 and 1968 the UK public debt grew only 33%, with only minor post-colonial actions in Egypt, Kenya and Malaysia. The faux good times had to end eventually. The pound was devalued by 14.3% in 1967 and public debt surged by 6.9% in 1968 compared to the year before. They attempted to restore the ailing Bretton Woods system through the London Gold Pool, to defend a gold price of US$35 per troy ounce. The London Gold Pool collapsed in 1968, leaving the gold window at the Federal Reserve as the last measure to maintain the dollar-gold peg.
In 1971 President Nixon, in response to French demands for gold in place of dollars, closed the gold window. Currencies of the Western world committed group suicide and jumped off a cliff; from that day onwards they floated without golden wings. This action had a huge impact on the UK, from 1971 until 1988 the public debt grew by 400%, reaching above 20% during the 1976 sterling crisis.
The traditional link between debt and war was cut as soon as the link between debt and gold was cut. From that point onwards money was borrowed to spend on the civil service and the welfare system and not to defend the nation. Although the UK fought a war with Argentina over the Falklands, public debt grew less in 1982 than in 1981.
L
Crisis had come from the US and the solution also came from there, once the petrodollar system was implemented and the US started to recover economically the UK experienced a recovery and public debt growth started to decline. In 1988 the UK decided to peg the pound to the German mark and for the first time since 1970 public debt declined, the next year it declined by 8%. In 1990-91 despite participating in the first Gulf War the public debt also declined.
The problem with the peg was the same one they experienced in the twenties: the pound was overvalued. Since the Great War the UK had refused to acknowledge the true value of their currency, holding a peg at an overvalued rate only to finally relent and devalue. The pound was devalued after spending £27 billion in its defence, monetary warfare was more expensive than actual warfare.
Public debt shot up afterwards, growing by 133% in the subsequent seven years. The rate of growth was above the 20% line for two consecutive years, a higher growth rate than during the wars of the eighteenth century.
M
1997 brought in a new government and public debt started to decline as the economy improved. This state of affairs had more to do with international conditions than any special policy of the new government. By 2003 the US was planning an attack on Iraq and the UK with 45,000 soldiers joined the 2003 invasion of Iraq. The public debt grew by 10% that year and the following two years. As the price of oil and other commodities rose the government spending in the UK increased to placate the populous, who mostly objected to its policy, and finance the costly occupation of Iraq—just like the Boer a hundred years before the Arabs refused to surrender and accept their new masters.
By 2007 the UK’s public debt was a cool £500 billion. The real value compared to the gold pound was of course greatly reduced, the pound losing about 98% of its value against gold by that time. Measured in pre-WWI gold pounds the real value of the debt was about £10 billion. This steep hair cut was nothing compared to what would come next.
N
If we would present the accounts of the UK government from 2008 onward to the ghost of Adam Smith, he would conclude that the country is under attack and probably threatened by an invasion force off the cost. The reality is that all attacks on the country had been monetary in nature, doubling the public debt without firing a single shot.
The public debt has finally surpassed the one trillion pound mark, but gold has also surpassed the one thousand pound per troy once mark; the resulting haircut reduces the debt to £4 billion in pre-WWI gold pounds, sixty-percent less than 2007 despite the doubling of the debt. At least Smith was right about countries not paying their debts.
The Bank of England, not content with reducing the real value of savers’ assets, lowered the interest rate to its lowest since the incorporation of the bank itself back in 1694. Pensioners and savers living on fixed income and the interest from savings are sacrificed in this monetary war to valiantly save the over-leveraged banks.
See also:
- Of Public Debts, by Adam Smith.
- Old Britannia Fades Away, will the UK have enough credit to fight the second Falkland war?
- Non-linear Historical Development, the rise and fall of the British Empire.
- The Story of Europe, condensed history.
HSBC’s World Expert Predicts a Rosy Future for The World
In HSBC’s China Expert Predicts a Rosy Future for China I slammed HSBC’s predictions for China over the coming ten years, little did I know they were going to make even more “rosy” predictions for China over the coming forty years!
Crunching everything from fertility rates to schooling levels and the rule of law, HSBC predicts that the world’s economic output will triple again by 2050, provided the major states can avoid conflict – trade wars, or worse – and defeat the Malthusian threat of food and water limits. Growth will rise to 3pc on average, up from 2pc over the last decade.
In a sweeping report entitled “The World in 2050″, the bank said China would snatch the top slot as expected, but only narrowly. China at $24.6 trillion (constant 2000 dollars) and the US at $22.3 trillion will together tower over the global economy in bipolar condominium – or simply the G2 – with India at $8.2 trillion far behind in third slot, and parts of Europe slithering into oblivion.
—HSBC sees China and America leading global mega-boom, The Daily Telegraph
To forecast the future one has to study the past, economists who crunch time series can not predict anything, because all this data has no context. Yet this economist seems able to predict China’s GDP forty years from now to the tenth of a trillion! He should have shown humility and just declared that both China and the US will have about a little less than a fifth of the World’s GDP, while India will lag behind with less than a tenth. Even such a reasonable wording would have been utterly ridicules.
China has been in a transition for the last thirty years, most economic numbers either were not collected or had a totally different meaning. Numbers for the last twenty years can not be used to forecast the future, it would be like using a teenager’s growth rate to forecast how tall he would be at the age of 40. Anyway the statistics published in China are hugely misstated for internal (local government fooling central government) or external (central government fooling the world) reasons.
From the article I can see two important problems with this report’s method. First it assumes that the inevitable will not happen. Current conditions will cause trade wars and food shortages. Assuming this will not happen is like assuming that San Francesco will be fine as long as tectonic plates stop moving. The growth of China in the last thirty years is itself predicated on conditions that will generate conflict with the US. The current situation might last another ten years, but the longer it goes the worst the conflicts will be be.
Second the report considers fertility rates, which I believe to be one of the most important indicators, unfortunately the report, according to the Telegraph’s article, has no understanding of fertility rates or population dynamics:
The surprise is how well the Anglo-Saxon states hold up under HSBC’s model, which is based on the theoretical work of Harvard professor Robert Barro. America’s high fertility rate (2.1) will allow it too keep adding manpower long after China’s workforce has begun to contract in 2020s and as even India starts to age in the 2040s.
…
Britain at $3.6 trillion also fares well, slipping one rank to sixth place but pulling far ahead of Italy and France, and almost displacing Germany as Europe’s biggest economy. This is chiefly due to the UK’s healthy fertility rate (1.9), although sceptics might question whether a birthrate inflated by the EU’s highest share of unmarried teenager mothers is a good foundation for prosperity.
The low fertility of Korea (1.1), Singapore (1.2) Germany (1.3), Poland (1.3), Italy (1.4), Spain (1.4) and Russia (1.4), more or less dooms these countries to aging crises and population decline unless they open the floodgates to immigration.
—HSBC sees China and America leading global mega-boom, The Daily Telegraph [my emphasis]
Highest fertility rate in the world (from Wikipedia)
2.1 fertility rate is high?! Only a Harvard professor would think so. That is exactly the fertility needed to keep the population at a constant. Without access to the report I do not know if it calls 2.1 high and 1.9 healthy or they are the words of the journalist. What is clear is that these are very low levels which will result in problems over 40 years. The problem is actually bigger because the majority white population of the US have had a sub-replacement fertility rate for some time, as the new census will show that their share of the population has declined below 75%.
The UK is even in a worse situation; I believe that at least Scotland will succeed before 2050. Their agricultural sector is smaller than Germany & France, which is why they get a rebate from the EU, and their economy has ran on North Sea oil, which already peaked, and financial bubbles. Their prospect is similar to that of the USSR in the eighties: breakup and economic crash.
Fertility rates below 1.5 are not low they are catastrophic. Such low rates in peacetime and during economic well being (no one is dying from hunger in Japan or Italy) is a sign of shame on the governments of those countries. They are killing their own citizens to appease the apatite of a hungry imperialist monster in the guise of economic globalisation. These countries are no different than India and Ireland in the nineteenth century where people died from hunger, while agricultural crops that could have fed them twice over where shipped to Britain.
Russia’s demographics are even worse than the absolute decline in population would suggest, because the ethnic Russians are declining while regional minorities are growing. The Russian model of colonialism (flood the conquered countries with poor Russian peasants) is now in reverse. This trend has sometime to run, but eventually it will result in area’s with majority non-Russians seceding.
What the HSBC report is doing is confirming the path their board has already chosen:
After two decades spent expanding in Britain, the United States and other developed economies, the world’s third biggest bank is shifting its focus back to its Asian roots, and especially China. HSBC wants to become the financier and international bank of choice for China’s growing band of entrepreneurs, just as it bankrolled Hong Kong’s tycoons in the second half of the 20th century.
—Special Report: After U.S. failure, HSBC pushes into China, Reuters
Based in Britain and expanding in China, HSBC is committed to this path for the coming forty years. This report in my opinion is just an intellectual cover. In the end I can say nothing better than what HSBC already admits:
HSBC admits that it economic projections are based on a “rather rosy scenario”.
—HSBC sees China and America leading global mega-boom, The Daily Telegraph
See also:
HSBC’s China Expert Predicts a Rosy Future for China
He really does predict a rosy future for China (source A Guide to China’s Regions, Provinces and Cities):
The guide is half survey and half forecast, the latter seems to be a simple extrapolation of past data. Of course my own prediction, which is anything but rosy, is in The Future History of China Today.
Philosophy lets you ignore mortal facts in your search for the immortal truth. HSBC’s China expert (see his biography at the end of the report) has very little philosophy in him; he is a graduate of China and the US.
China got stuck in Confucianism for 2000 years only to leave it for extreme Stalinism; afterwards it jumped from that frying pan to the fire of Consumerism; when it finally figured out its lack of philosophy it imported an English expert on Confucianism to lecture in its university!
US universities teach economy without any history or historical context:
The history of economic thought was taught as a core course when I attended graduate school in the early 1960’s. It has been replaced by mathematical economics, trivialized by being based on conceptually questionable, ideologically based statistical categories. My most imaginative students at the New School where I taught in New York City dropped out of the discipline and went into sociology or something else. They wanted to study economics to discover how the world operated, but were disappointed to find that this is no longer what the discipline is about.
The situation is worse for those students who stayed in the field and sought academic positions. Promotion is conditional upon publication in “vetted” journals. The key publications are controlled censorially by an intellectual inquisition that blocks any critique of pro-financial free market ideology.
—NeoLiberalism and the Counter-Enlightenment by Michael Hudson [my emphasis]
HSBC’s China expert was a professor of finance at The David Eccles School of Business at the University of Utah.
see also:
The Future History of China Today
[This is not a speculation on what might happen, rather a general description of what will happen. The future is unknown by definition, but like the next line in a poem it follows the rhythm of the whole and rhymes with what comes before it.]
1919— 1948
“In fact, the protracted history of the Chinese socialist revolution started 90 years ago in 1919 on May 4, when 5000 students from Beijing University and twelve other schools held a political demonstration in front of Tiananmen, the focal point of what is today known as Tiananmen Square. The demonstration sparked what came to be known in history as the May Fourth Movement of 1919-21, an anti-imperialism movement rising out of patriotic reactions to China’s then war lord government’s dishonorable foreign relations that led to unjust treatment by Western powers at the Versailles Peace Conference. May Fourth was a political landmark that turned China towards the path of modern socialism through Marxist-Leninism.”
—The Socialist Revolution Started 90 Years Ago in China (Part 1) by Henry C. K. Liu
The seed for a new empire was planted, a new kind of empire. This one was not based on peasant armies or a foreign clan, this was based on an idea; the idea was simple: the only way for China to regain its world position was to apply the latest ideas from the West, whether they were tested or not. In 1919 the latest idea from the West was communism.
1949—1978
“The Mao era lasted from the founding of the People’s Republic on October 1, 1949 to Deng Xiaoping’s grip onto power and policy reversal at the Third Plenum of the 11th Party Congress on December 22, 1978.”
In 1949 the People Liberation’s Army took over the government, their first act was to split the population into two parts: city and country. The PLO spread out its rule: East Turkistan in 1949, Tibet in 1950. The Americans sucked the Chinese into the Korean war and helped drain their energy out.
Ten years later the ruling elite were quite ready to jettison communism, but Mao had other ideas and exploited the city/country divide to delay the transition for another ten years.
1979—2008
“The power transition from Hua to Deng was confirmed in December 1978, at the Third Plenum of the Central Committee of the Eleventh National Party Congress, a turning point in China’s history. The course was laid for the party to move the world’s most populous nation toward the ambitious targets of the Four Modernizations.”
Communism, which was ultra-modern in 1919, had become a stale idea in 1979. The empire returned to its raison d’etre: apply the most modern Western ideas whether they are tested or not. The fashion in 1979 was: free market, deregulation, tax cut, et cetera.
“Chinese economic reform has been undertaken through a series of phased reforms. Generally, these reforms were not the results of a grand strategy, but as immediate responses to pressing problems. In some cases, such as the closing of state enterprises, the government has been forced by events and economic circumstances to do things that it did not want to do. As of 2005, 70% of China’s GDP is in the private sector. The relatively small public sector is dominated by about 200 large state enterprises concentrating mostly in utilities, heavy industries, and energy resources.”
—Economic reform in the People’s Republic of China [my emphasis]
Adopting ideas without a sound philosophical foundation is not really a good strategy even if the idea is an old test one, let alone adopting crazy ideas coming from either intellectuals or think tanks.
“China’s growth has been so rapid that virtually every household has benefited significantly, fueling the steep drop in poverty. However, different people have benefited to very different extents, so that inequality has risen during the reform period. This is true for inequality in household income or consumption, as well as for inequality in important social outcomes such as health status or educational attainment. Concerning household consumption, the Gini measure of inequality increased from 0.31 at the beginning of reform to 0.45 in 2004. To some extent this rise in inequality is the natural result of the market forces that have generated the strong growth; but to some extent it is “artificial” in the sense that various government policies exacerbate the tendencies toward higher inequality, rather than mitigate them. Changes to some policies could halt or even reverse the increasing inequality.”
—Poverty in China [my emphasis]
And so China started to open up, granting economic and social freedoms but holding back political power.
2009—2038
“To say that China’s one-child family policy has been a disaster is an understatement. A report released earlier this month by the nation’s top think tank – the Communist Government’s Chinese Academy of Social Sciences (CASS) – says that the policy has created a huge gender imbalance with significant implications for future social stability.”
—China’s Cassandra prophecy [my emphasis]
The single worst idea adopted in 1979 was population control. The pyramids of Giza might appear mighty but all three rest on the plateau of Giza and their combined weight, millions of tonnes, hardly moved it an inch. The Chinese government might appear mighty but it rests no the Chinese people.
“The sex ratio at birth (between male and female births) in mainland China reached 117:100 in the year 2000, substantially higher than the natural baseline, which ranges between 103:100 and 107:100. It had risen from 108:100 in 1981—at the boundary of the natural baseline—to 111:100 in 1990. According to a report by the State Population and Family Planning Commission, there will be 30 million more men than women in 2020, potentially leading to social instability. The correlation between the increase of sex ratio disparity on birth and the deployment of one child policy would appear to have been caused by the one-child policy.”
—One-child policy [my emphasis]
2039 will be the last year of this central government, the empire lasted exactly 120 years divided into four generations of thirty years each: germination, growth, glory and decline.
See also:
- The 3 by 3 Rule — Part One
- Non-linear Historical Development
- The Story of Europe
- Dynasties in Chinese history from Wikipedia
The 3 by 3 Rule — Part One
Content:
Part One — Formal Scheme
Part Two — Historical Examples
Part Three — Where are we now?
Part One — Formal Scheme
Growth:
First G(eneration) – The Warrior – Liberator
Second G. – The Lawgiver – Justice
Third G. – The Builder – Infrastracture
Glory:
Fourth G. – The Warrior – Enslaver
Fifth G. – The Lawgiver – Injustice
Sixth G. – The Builder – Luxary
Decline:
Seventh G. – The Warrior – Defeats
Eighth G. – The Lawgiver – Nonsense
Ninth G. – The Destroyer – Last
The above scheme is for empires that are built up by a people, for those built up by nomads the following 2 by 2 scheme holds true:
Builder
First G. – The Warrior – Uniter & Enslaver
Second G. – The Lawgiver – Injustice & Nonsense
Destroyer
Third G. – The Warrior – Defeats
Fourth G. – The Destroyer – Last
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Non-linear Historical Development
We can extract linear trends, of growth and decline, in history (see The Story of Europe) but at a closer look it seems that history moves in a non-linear line. This expression is used, these days, very widely; people say that things do not go in a straight line, but what does that mean exactly?
In this post we will be looking at a graph that represents non-linear development. This graph is not the representation of a quantity but rather a quality, this is very important to understand and some might find it difficult to comprehend but in reality we experience this duality of quantity and quality on daily basis without noticing. Let us now examine a graph of non-linear historical development:
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