Chapter 15 1. Thoughts brought about by the crisis

Behind China's rise is its own unique development model.From the perspective of "civilized countries", we can say that East Asian countries and regions have been radiated by Chinese civilization, especially Confucian civilization (we can even use "Confucian civilization circle" or "chopstick cultural circle" to describe East Asia. these countries and regions).China's development model is naturally in line with the "East Asian model" in many aspects, and it can also be said to be a unique extension of the "East Asian model".The so-called "East Asian model" mainly refers to the fact that the "Four Tigers" in Asia have adopted modernization-oriented government intervention and implemented a catch-up strategy under similar historical and cultural backgrounds. Although there are still many problems, these societies have generally achieved economic and social modernization. The 2008 financial tsunami that originated in the United States gave us another opportunity to re-examine the "East Asian model", the "China model" and some related issues.Compared with the "Four Little Dragons", China has also realized the take-off of the cause of modernization, and at the same time completed a profound transformation from a planned economy to a socialist market economy.China is a major world country with a population of 1.3 billion, so the model of China's rise naturally has a scale effect that cannot be compared with the "Four Tigers", and its impact on the entire world will be more profound and long-lasting.

The "East Asian model" was once controversial due to the outbreak of the Asian financial crisis in 1997. This controversy also included criticism of the "China model" because the crisis hit Thailand, South Korea, Indonesia, Malaysia and other countries hard.When analyzing the causes of the Asian financial crisis, many people focus on "crony capitalism", that is, the government's excessive dominance of the economy has led to collusion between interest groups and politicians, resulting in credit inflation, money and power transactions, and bubble economies.But I think it is necessary to make a distinction: Among the above-mentioned countries, except South Korea, other countries do not belong to the "East Asian model" in the strict sense.They tried to learn from the "East Asian model", but failed to achieve a qualitative leap. The forward-looking, coherent and scientific nature of their government intervention was far inferior to that of the "Four Tigers". Factors such as the rich and powerful economy made these countries suffer from the crisis in the end.But at that time, many scholars in East Asia also pointed out that the main cause of the Asian financial crisis was not "crown capitalism" but "casino capitalism" (casino capitalism), that is, the lack of supervision in the international financial market allowed financial speculators in the United States and the West to stir up trouble , make a fortune.Looking back now, if the U.S. financial regulators could have heeded these advices at that time, the financial tsunami in the U.S. today might have been avoided.

Among the "Four Tigers", South Korea was the most affected by the 1997 crisis.South Korea’s government-intervention development model can be traced back to the 1960s. At that time, South Korean banks became the shadow of the government’s economic policies, and financial institutions lent money to large companies with close ties to the government according to the “express” or “implicit” instructions of government officials. However, South Korea The indiscriminate release of bank funds seems to be directly proportional to the democratization that began in 1987. With the democratization of South Korea came the rapid rise of economic nationalism. The government blindly expanded investment in South Korean enterprises. In the early 1990s, the capital market was liberalized. Politicians are busy with partisanship and economic regulation is seriously out of control, making South Korea the epicenter of the crisis.

But even so, South Korea had achieved a qualitative leap in its economy through the "East Asian Model" before the 1997 crisis, as evidenced by the development trajectories of South Korea and Tanzania: Fifty years ago, Tanzania's per capita income was slightly higher than that of South Korea , but now the two countries are worlds apart.South Korea can be regarded as a moderately developed country, while Tanzania is still a typical developing country.In other words, although the "East Asian Model" has its weaknesses and has encountered challenges and crises, in terms of improving people's living standards and realizing economic and social modernization, other post-war development models cannot compare with it. The history of the "East Asian Model" The status is thus established.

After the outbreak of the Asian financial crisis in 1997, some mainstream scholars in the United States and the West tried to completely negate the "East Asian model" and then the "China model".The mainstream opinion of the United States prescribed two prescriptions for Asian countries at that time.One is to promote comprehensive marketization and oppose government intervention to save the economy (diametrically opposite to what the United States is doing now); the other is to promote comprehensive democratization to solve the problem of "crony capitalism". Nobel laureate in economics Amartya Sen (Amartya Sen) even said: This crisis "is a series of punishments for non-democratic countries".

Ironically, today's financial tsunami, which is countless times worse than the Asian financial crisis, originated in the United States, a "model democracy" country, and the "superior" democratic system of the United States was unaware of the outbreak of the crisis, and had no clue about how to deal with it. Improperness abounds, and I don't know how Mr. Amartya Sen can explain it all now.In my opinion, the excessive influence of capital power in the American democratic system is one of the main reasons for this crisis.I can even paraphrase Amartya Sen: this crisis is a series of punishments for market fundamentalists and democratic fundamentalists.In fact, both the market and democracy are products of human civilization, and all countries can adopt them according to their own national conditions. Fundamentalism is no different. Its believers will lose their rationality, and the outcome will naturally be bad.Many problems in the world today, from the financial crisis in the United States to the disastrous failure of George W. Bush's "Great Middle East Democracy Project", are all rooted in this.

Interestingly, South Korea and Taiwan, among the "Four Tigers" in Asia, adopted the "East Asian Model" to achieve economic take-off, and then switched to the American-style democratic model, but the results were surprising. In 2009, the Asia Political and Economic Risk Consulting Company reported that the degree of corruption in Taiwan was higher than that in mainland China. Although some people in Taiwan objected to this ranking, after the “democratization” of Taiwan, gangsters and money intervened in politics on a large scale, and the democratic system quickly entered the market. transformation is an indisputable fact.Ma Ying-jeou is now trying to reverse the economic downturn in the Taiwan region through economic and trade cooperation with the mainland. This is a correct choice, otherwise the economy of the Taiwan region will have nowhere to go.Many problems after South Korea's "democratization" are similar to those of Taiwan, and unfortunately it became the hardest hit area of ​​the financial crisis in 1997 and 2008.Today, South Korea is mainly driven by the Chinese economy to get out of the crisis.

The problem of "power economy" cannot be ignored, and we need to solve it seriously, especially from the perspective of the system.But this financial crisis has also made us see the harm caused by American-style financial corruption to the United States itself and the whole world.American-style financial corruption can be regarded as a typical example of "second-generation corruption".If the first generation of corruption refers to the kind of "uncivilized" corruption such as "kickbacks", "smuggling" and "red envelopes", then the second generation of corruption is more hidden, more "civilized", and more sanctimonious.Its relationship with the first generation of corruption is a bit like the relationship between modern weapons and traditional weapons: "uncivilized" corruption, like traditional weapons, slashes people with a machete, bloody, and feels very barbaric, while "civilized" corruption, It is very similar to modern weapons used in high-tech warfare. What is displayed on the TV screen is just a coordinate and a few flashing bright spots. It is very civilized and precise strikes, so that people who are not on the battlefield will forget the destruction of life by modern weapons under these bright spots. In fact, the power exceeds that of traditional weapons.

"Second generation corruption" has several characteristics.One is highly fraudulent.Wall Street investment banks try their best to manipulate financial leverage to package various derivative financial products, and launch various "financial magic" products with "innovative combinations", as long as the products can be listed and can cheat excess dividends.The second is American-style political and business collusion, money and power transactions.The most typical example is that a large company like Fanfang and Fangfang can spend a lot of money to "lobby" members of the US Congress to obtain benefits in terms of "rules of the game", and members of Congress can gain benefits under the banner of promoting "home ownership". More votes and other benefits.The third is large-scale regulatory arbitrage.Both the regulatory system and the credit evaluation system have become places where financial wealth can be made. The fraudulent behavior of many financial institutions has been "selectively ignored". Harm the world.The fourth is to take advantage of all loopholes in the law and use all legal gray areas that can be used to make huge profits and harm the interests of the public.Those deceitful marketing methods that evade legal responsibility alone have caused many victims to lose their fortunes, but they want to cry without tears, because they have signed "financial magic" contracts that they can't understand (this also shows that we never Never underestimate the harm legalism can do).The fifth is the greedy concept of "profits belong to oneself and prices belong to society" that supports all of this.

Daniel Kaufmann, a scholar at the Brookings Institute in the United States, conducted research on this type of corruption. When he included factors such as political donations and money lobbying, he re-ranked the corruption situation in 102 countries around the world. , it turns out that the United States is not a "low corruption" country, but a relatively serious corrupt country ranked 53rd.If we look at financial corruption itself and its catastrophic consequences to the world, the financial corruption of the United States can secure the "gold medal".As a result, the median net worth of American households has shrunk by 25%, falling to the level of 93,000 US dollars in 2004, which is already lower than the net worth of most families in China's developed sectors.It is this system with many flaws that has caused the American public to have a crisis of confidence in the American system.According to the latest "General Social Survey" by the University of Chicago, the number of Americans who have "very confident" in the system used to be low, but now it is falling all the way:

(Source: The Economist, March 28, 2009) American Nobel laureate Paul R. Krugman (Paul R. Krugman) also wrote in the "New York Times" on December 28, 2009, and pointed out: "In 1999, almost all American decision-makers believed that the United States had honesty. corporate accounting, which allows investors to make good decisions and compels managers to behave responsibly, resulting in a stable, well-functioning financial system. How much of all this is true? How much of it is true? What about the percentage? The result is zero.” Krugman lamented that this kind of self-deception and blind self-confidence have caused the United States to have “zero employment growth, zero income growth, and zero stock market growth” in the past ten years. Some domestic scholars like to talk about the "transition" of economy and politics, and the reference frame of "transition" in some of them is the economic and political system of the United States.However, the financial tsunami in the United States and the American public's confidence crisis in their own system show that the reform of the US system itself has a long way to go.Some people exaggerate the American system and want China to emulate such a system with such low public trust. How can this be convincing?The Chinese system has its own shortcomings, but has been reforming.Because of this, even if you search the land of 9.6 million square kilometers in the People's Republic of China, you can't find a place where the growth of employment, the growth of people's income, and the growth of the stock market are all zero within ten years.But some so-called elites have fallen into that evil, and they can't be confident at all. They only see the American model in their eyes.There is an old saying in China that "take the law from the top and get it from it." If your standard is the political and economic system of the United States, which has many flaws, then you may not get even half of his advantages in the end, and you will give up all your advantages. lose light.From this perspective, the task of China's economic and political system reform is to learn from the strengths of a hundred schools of thought, surpass the American model, give full play to its own advantages, and continuously promote institutional innovations that are in line with China's national conditions.