China's Economic Dominance (2) - Wall Street Journal

China real Time Report, Wall Street Journal, AUGUST 25, 2011, 8:05 PM HKT

Eight Questions: Living in China’s Shadow

In his new book, “Eclipse: Living in the Shadow of China’s Economic Dominance,” scheduled to be published in September, Peterson Institute for International Economics scholar Arvind Subramanian starts with a nightmare scenario: It’s 2021 and the U.S. president heads across own to the International Monetary Fund to sign a rescue loan package negotiated by the IMF’s Chinese managing director. “The handover of world dominance is complete,” Mr. Subramanian, a former IMF researcher, writes. China is now the world’s leading economic power.

Parts of “Eclipse” read like a wonky version of “Rising Sun,” Michael Crichton’s 1992 novel of Japanese dominance over the U.S. when Tokyo was seen as speeding toward number one. But Mr. Subramanian is a first-class economist who uses his book to discuss provocatively U.S.-Chinese relations and the nature of economic power. He was interviewed in Washington DC by the Wall Street Journal’s Bob Davis. Below is an edited transcript

Do you really think the U.S. eventually will have to turn, hat-in-hand to the IMF for aid?

I wrote it that way partly to shock and make people pay attention. But there is a real possibility of the U.S. being in such a dire economic situation that it might have to turn to the IMF.

How could it happen? The combination of a credible rising power in China, with which we have to cooperate and also be wary of. And broad economic weakness in the U.S., including slow growth, fiscal weakness, political paralysis and a middle class with diminishing prospects.

The probability of U.S. needing an IMF loan isn’t 80% but it’s not 2% or 5% either. It’s a 10% or 20% possibility.

By some of the measures you use, China already is a larger economy than the U.S. But haven’t you picked economic statistics that play to China’s advantage? For example relying on purchasing power parity to measure GDP. (Purchasing power parity, or PPP, is a statistical device that tries to take account of the different prices of goods and services in different countries.)

PPP is an important concept, but it has a small weight in my overall formula of economic power.

I believe that the resources a country brings to the power table includes resources that are internationally traded and resources that involve people. If the U.S. were to fight against China and 100 Chinese soldiers faced 100 US soldiers, would you say that because the 100 Chinese soldiers earn/20th of what an American soldier earns that the value of a Chinese soldier is 1/20th the value of American? I don’t think so. (PPP tries to account for such anomalies.)

You also say that China will be a far larger economic power than the U.S. by 2020 or certainly 2030, even if China’s growth rate falls significantly or the U.S’s rises significantly. Why is that?

The way economic convergence between the U.S. and China is evolving, the fact that China will catch up is inevitable. At end of 20 years, China will have a GDP per capita of only 40-50% of the U.S. But China has four times the population of the U.S., so the Chinese economy will be much larger overall. The arithmetic is undeniable.

China will have an economic crisis over the next 20 years, no doubt. But it will recover and return to some decent level of growth.

If China has a big economic shock, it has the policy space [including the ability to broadly stimulate the economy] to prevent one or two years of negative growth from translating into many years of slow growth.

What’s the significance of China as number one?

Potentially, China has the ability to exercise its power in slightly unbenign ways. Look at what’s happening today on exchange rate. [By keeping its currency undervalued] China is pursuing a beggar–they- neighbor policy and nobody can stop them. That’s sign of dominance.

The U.S. is totally powerless to stop China because U.S. companies have so much at stake in China that China can call the shots. Asia won’t do it because Asian economies are part of a value-added chain with China. Africa won’t do it because China has made so much investment there..

Imagine what happens when the numbers [denoting the size of the economy] diverge even more between China and the U.S.

Still, China would be a relatively poor country compared to the U.S. How can a poor country exercise power internationally?

Very poor countries can’t dominate. There’s now no way to project power abroad because the problems at home are so deep. But so-called middle income countries like China may be different.

There are different kinds of dominance. There is dominance of the U.S. – a leader that’s democratic and pursues international values and which inspires followship. Maybe China won’t have that. But it could exercise a negative form of dominance, either through its exchange rate policy or by buying up commodities [to corner markets].

WSJ: What’s the biggest threat to China’s rise to economic dominance?

A political shock to system. Then all bets are off.

A political transition [to a more democratic system] hasn’t occurred. It’s a cloud that hangs over everything. There’s class divide, geographic divide, lack of political freedom. If they wind up in conflagration, things could go really bad.

In your book, you talk about the importance of tethering China to a multilateral system. Why should China be interested if it’s inevitably number one?

We need to bind China today to the multilateral system so a kind of habit and incentive builds up. Then repudiation of the system would be more difficult. We need to do this before China becomes a hegemon

Everyone has to come together to do this well. If every country tries to make its own deal with China, no one will have any leverage.

Think about exchange rates. If the world came together now and said let’s do a deal on exchange rates, China would be more likely to participate. It doesn’t want to be seen as deviant from international system. The opprobrium of the world is the biggest carrot and stick to use with China.

One of your main policy recommendations is to start a China round of trade negotiations. What could that accomplish?

When China joined World Trade Organization in 2001, people said we tied China to the global economic system (because of the commitments it made to open its markets and follow international rules). But through its exchange rate policy, China has unraveled parts of its commitments. What that signifies is that Chinese leaders at the time were overreaching in terms of domestic political support. Evidently, WTO accession wasn’t politically sustainable internally.

Over time, China will move away from mercantilism. They would then have an incentive to make a deal. A deal could involve government procurement – other countries opening their bidding for China—as well as commitments by China involving control of natural resources and the exchange rate.

http://blogs.wsj.com/chinarealtime/2011/08/25/eight-questions-living-in-chinas-shadow/

China's Economic Dominance (1) - The Economist

Charts, maps and infographics

Daily chart

Global economic dominance

Spheres of influence

Sep 9th 2011, 15:14 by The Economist online

By 2030 China's economy could loom as large as America's in the 1970s

A NEW book, discussed in this week's Economics focus, by Arvind Subramanian of the Peterson Institute for International Economics argues that China’s economic might will overshadow America’s sooner than people think. Mr Subramanian combines each country’s share of world GDP, trade and foreign investment into an index of economic “dominance”. By 2030 China’s share of global economic power will match America’s in the 1970s and Britain’s a century before. Three forces will dictate China’s rise, Mr Subramanian argues: demography, convergence and “gravity”. Since China has over four times America’s population, it only has to produce a quarter of America’s output per head to exceed America’s total output. Indeed, Mr Subramanian thinks China is already the world’s biggest economy, when due account is taken of the low prices charged for many local Chinese goods and services outside its cities. China will be equally dominant in trade, accounting for twice America’s share of imports and exports. That projection relies on the “gravity” model of trade, which assumes that commerce between countries depends on their economic weight and the distance between them.

Economics focus

The celestial economy

By 2030 China’s economy could loom as large as Britain’s in the 1870s or America’s in the 1970s

Sep 10th 2011 | from the print edition

Economic Dominance: Top Three countries by economic dominance % share of global economic power (weighted by world GDG, trade and net capitals)
1870	1973	2010	2030
UK: 16,4	USA: 18,6	USA: 13,3	China: 18,0
Germany: 9,3	Japan: 8,0	China: 12,3	USA: 10,1
France: 8,3	Germany: 8,0	Japan: 6,9	India: 6,3
Source: Arvind Subramanian, Eclipse: Living in the Shadow of China’s Economic Dominance, Peterson Institute for International Economics

IT IS perhaps a measure of America’s resilience as an economic power that its demise is so often foretold. In 1956 the Russians politely informed Westerners that “history is on our side. We will bury you.” In the 1980s history seemed to side instead with Japan. Now it appears to be taking China’s part

These prophesies are “self-denying”, according to Larry Summers, a former economic adviser to President Barack Obama. They fail to come to pass partly because America buys into them, then rouses itself to defy them. “As long as we’re worried about the future, the future will be better,” he said, shortly before leaving the White House. His speech is quoted in “Eclipse”, a new book by Arvind Subramanian of the Peterson Institute for International Economics. Mr Subramanian argues that China’s economic might will overshadow America’s sooner than people think. He denies that his prophecy is self-denying. Even if America heeds its warning, there is precious little it can do about it.

Three forces will dictate China’s rise, Mr Subramanian argues: demography, convergence and “gravity”. Since China has over four times America’s population, it only has to produce a quarter of America’s output per head to exceed America’s total output. Indeed, Mr Subramanian thinks China is already the world’s biggest economy, when due account is taken of the low prices charged for many local Chinese goods and services outside its cities. Big though it is, China’s economy is also somewhat “backward”. That gives it plenty of scope to enjoy catch-up growth, unlike Japan’s economy, which was still far smaller than America’s when it reached the technological frontier.

Buoyed by these two forces, China will account for over 23% of world GDP by 2030, measured at PPP, Mr Subramanian calculates. America will account for less than 12%. China will be equally dominant in trade, accounting for twice America’s share of imports and exports. That projection relies on the “gravity” model of trade, which assumes that commerce between countries depends on their economic weight and the distance between them. China’s trade will outpace America’s both because its own economy will expand faster and also because its neighbours will grow faster than those in America’s backyard.

Mr Subramanian combines each country’s share of world GDP, trade and foreign investment into an index of economic “dominance”. By 2030 China’s share of global economic power will match America’s in the 1970s and Britain’s a century before (see chart). Those prudent American strategists preparing their countrymen for a “multipolar” world are wrong. The global economy will remain unipolar, dominated by a “G1”, Mr Subramanian argues. It’s just that the one will be China not America.

Mr Subramanian’s conclusion is controversial. The assumptions, however, are conservative. He does not rule out a “major financial crisis”. He projects that China’s per-person income will grow by 5.5% a year over the next two decades, 3.3 percentage points slower than it grew over the past two decades or so. You might almost say that Mr Subramanian is a “China bear”. He lists several countries (Japan, Hong Kong, Germany, Spain, Taiwan, Greece, South Korea) that reached a comparable stage of development—a living standard equivalent to 25% of America’s at the time—and then grew faster than 5.5% per head over the subsequent 20 years. He could find only one, Nicolae Ceausescu’s Romania, which reached that threshold and then suffered a worse slowdown than the one he envisages for China.

He is overly sanguine only on the problems posed by China’s ageing population. In the next few years, the ratio of Chinese workers to dependants will stop rising and start falling. He dismisses this demographic turnaround in a footnote, arguing that it will not weigh heavily on China’s growth until after 2030.

Both China and America could surprise people, of course. If China’s political regime implodes, “all bets will be off”, Mr Subramanian admits. Indonesia’s economy, by way of comparison, took over four years to right itself after the financial crisis that ended President Suharto’s 32-year reign. But even that upheaval only interrupted Indonesia’s progress without halting it. America might also rediscover the vim of the 1990s boom, growing by 2.7% per head, rather than the 1.7% Mr Subramanian otherwise assumes. But even that stirring comeback would not stop it falling behind a Chinese economy growing at twice that pace. So Americans are wrong to think their “pre-eminence is America’s to lose”.

Bratty or benign?

If China does usurp America, what kind of hegemon will it be? Some argue that it will be a “premature” superpower. Because it will be big before it is rich, it will dwell on its domestic needs to the neglect of its global duties. If so, the world may resemble the headless global economy of the inter-war years, when Britain was unable, and America unwilling, to lead. But Mr Subramanian prefers to describe China as a precocious superpower. It will not be among the richest economies, but it will not be poor either. Its standard of living will be about half America’s in 2030, and a little higher than the European Union’s today.

With luck China will combine its precocity in economic development with a plodding conservatism in economic diplomacy. It should remain committed to preserving an open world economy. Indeed, its commitment may run deeper than America’s, because its ratio of trade to GDP is far higher.

China’s dominance will also have limits, as Mr Subramanian points out. Unlike America in the 1940s, it will not inherit a blank institutional slate, wiped clean by war. The economic order will not yield easily to bold new designs, and China is unlikely to offer any. Why use its dominant position to undermine the very system that helped secure that position in the first place? In a white paper published this week, China’s State Council insisted that “China does not seek regional hegemony or a sphere of influence.” Whether it is precocious or premature, China is still a tentative superpower. As long as it remains worried about the future, its rivals need not worry too much.

from the print edition | Finance and economics

Why is China afraid of the Dalai Lama? - Fred Hiatt (WP)

Why is China afraid of the Dalai Lama?
By Fred Hiatt
The Washington Post, Thursday, July 14, 9:14 PM

“If China overnight adopted a democratic system, I might have some reservations.. . . If central authority collapsed, there could be a chaotic situation, and that’s in no one’s interest.”

The words of caution might have come from a Communist Party leader, once again lecturing the West not to push too hard on human rights. But, no; this was the party’s nemesis, the Dalai Lama, the exiled leader of Tibet, explaining in an interview Thursday why he favors “gradual change.”

Listening to his moderate, sensible advocacy of step-by-step democratization, it was impossible not to marvel at the fear that leads Beijing to view this 76-year-old Buddhist leader as such a mortal threat — not to mention the confusion he seems to cause within the Obama administration, which once again was declining to answer the seemingly simple question of whether the president and the Dalai Lama would meet during the Dalai Lama’s 10-day visit to Washington.

We talked in a room in the bowels of Verizon Center. Above us, thousands of Buddhists from around the world were making their way into the stands for a religious teaching. But before the day’s lesson would begin, their spiritual leader, alternately serious and jolly, had some political thoughts to impart.

He chortled as he pointed to Lobsang Sangay, 43, the former Harvard Law School researcher who was recently elected prime minister by Tibetans in exile. “This young man,” the Dalai Lama said gleefully, “he took my power.”

Unlike the Dalai Lama in his monk’s robes, the prime minister-elect was dressed in a politician’s sober dark suit, a symbol of the serious point beneath the Dalai Lama’s ribbing: After four centuries, Tibet has separated spiritual from political authority. The Tibetan government is democratizing. The Chinese Communist Party, the Dalai Lama is too polite to say explicitly, might do well to follow suit.

Born in 1935, and having fled Communist China in 1959, the Dalai Lama takes a long view. Initially, he said, he believed that the Communists, who took power in 1949, had principles — that they were “dedicated to the people.” But Mao Zedong’s emphasis on ideology proved “unrealistic” — a tactful understatement of policies that led to the starvation of tens of millions — and Mao’s successor, Deng Xiaoping, realized that China had to embrace capitalism and allow people to improve their living standards.

So today’s China, he continued, is entirely different from Mao’s. The economy is thriving and connected with the world. Thousands of Chinese have studied abroad.

But capitalism without an independent judiciary or a free press, the Dalai Lama said, brings a “very bad side effect: corruption.” And rising power without transparency breeds fear and suspicion among China’s neighbors.

“They always say, ‘We have no intention to expand,’ ” he said. “I tell my Chinese friends, if everything is transparent and policy is open, there is no need to keep saying that. And if everything is a state secret, then you can 1,000 times deny such intentions, and still no one will believe you.”

The upshot: The United States and other free countries were right to open trade with China and help bring it into the mainstream of global commerce. “Now the free world has a responsibility to bring China into the mainstream of world democracy.”

But, he said, it makes sense to start by urging gradual progress: legal reform, and an end to internal censorship.

You might think President Obama would be interested in discussing these matters with his fellow Nobel peace laureate (the Dalai Lama was awarded his in 1989), but it’s not so simple. Obama declined to meet with him in October 2009, then welcomed him to the White House four months later; this week, administration officials have declined to say whether another meeting will take place. The absence of clarity only encourages Beijing’s bullying and discourages other world leaders from engaging with the Tibetan leader.

Meanwhile, a half-century of exile has not tempered his optimism. Noting that even Chinese Premier Wen Jiabao has talked about the need for political reform, the Dalai Lama said that intellectuals and party members understand the contradictions in the current state of affairs. “Things will change,” he said.

fredhiatt@washpost.com

Dissident Chinese Writer Flees to Germany - Liao Yiwu (NYT)

Dissident Chinese Writer Flees to Germany
By ANDREW JACOBS
The New York Times, July 12, 2011

BEIJING — After being denied an exit visa 17 times, yanked off planes and trains by the police and threatened with yet more prison time, one of China’s most persecuted writers, Liao Yiwu, slipped across the border into Vietnam last week and then made his way, via Poland, to Germany, where he promptly declared himself an exile.

“I’m ecstatic, I’m finally free,” he said in a telephone interview from Berlin on Monday morning before plunging into a day of interviews and photo shoots. “I feel like I’m walking through a dream.”

Of course, his escape — arranged by friends whom he declined to name — has not brought unadulterated joy. By fleeing his homeland, Mr. Liao, 52, made the difficult decision to abandon the wellspring of his work, much of it journalistic explorations of China’s downtrodden: the political outcasts, impoverished farmers, death row inmates and others who have been traumatized by famine and Communist-inspired zealotry, then cast aside during the nation’s manic embrace of material wealth and collective amnesia.

He also leaves behind his family in southwestern Sichuan Province, including his mother, his son, two siblings and a girlfriend. “I’m trying to convince myself that I won’t be away from China very long, that things will change sooner than later,” he said.

In the West, Mr. Liao is best known for “The Corpse Walker: Real-Life Stories, China from the Bottom Up,” which was banned in China soon after it was published in Taiwan in 2001. The book, a collection of interviews with people he encountered in prison and during wanderings in the southwest, tells the unadorned stories of 27 people, among them a public toilet attendant, a persecuted landlord, and the men, known as corpse walkers, whose job it is to transport the dead back to their hometowns for burial.

After it was published, his already strained relationship with the authorities worsened. He was barred from traveling to literary festivals in Germany, Australia and the United States, and was forced last spring to sign a vow to cease publishing outside China. Breaking the pledge, he was warned cryptically, would bring even greater torment.

Given the predicament of his friend Liu Xiaobo, the Nobel Peace Prize winner and writer who is serving an 11-year sentence for subversion, Mr. Liao knew what might await him. The threat gained greater urgency with the impending publication in the United States of “God Is Red,” a book by Mr. Liao about Chinese Christians, and a memoir about his time in jail, “The Witness of the 4th of June.” The memoir, whose title refers to the military suppression of the Tiananmen Square protests in 1989, has been delayed several times by skittish publishers in Germany and Taiwan.

His most recent travails are part of a wholesale stifling of creative expression and dissent by the ruling Communist Party. Rattled by turmoil in the Arab world, the government began cracking down on scores of activists and rights lawyers in February. The most prominent victim has been Ai Weiwei, the caustic artist and social critic.

“I think Liao Yiwu’s decision to leave really reflects the extreme unease that writers in China are facing right now,” said Larry Siems, the director of international programs at the PEN American Center, an advocacy group. “It’s a shame, because he is one of China’s most interesting writers, and he has his eyes on some of the great human dramas that accompany China’s emergence as an economic power. China should be unleashing the imagination of its writers instead of trying to restrain and control them.”

The Chinese government has yet to respond to news of his escape. The public security bureau in his hometown would not discuss his case; calls and e-mails to the Chinese Embassy in Berlin were not returned.

Like many of his generation, Mr. Liao has endured a numbing cascade of hardships. He nearly starved to death as an infant during Mao’s disastrous Great Leap Forward, when famine killed more than 20 million people. When he was a child, he and his classmates were forced out of school by the Cultural Revolution, the decade in which education was maligned as a bourgeois indulgence. Much of what he learned came from his father, a teacher of Chinese literature, and his mother, a music instructor.

“As a boy, my dad would make me stand high up on a table and not allow me to come down until I finished reciting the classics,” he said.

As early as 1987, he drew the ire of cultural bureaucrats for poetry, printed in official journals, that was condemned as too pessimistic and anti-establishment. After the Tiananmen crackdown, he experienced the stinging limits on free expression. Inspired by Allen Ginsberg and by Dante’s “Inferno,” he and five friends circulated poems recited on video that lamented the bloodshed in Beijing. Mr. Liao called the piece “Massacre.”

Not long afterward, in 1990, he and the others were jailed as “counterrevolutionaries.” His four years of confinement were characterized by torture and the terror of watching 20 inmates be dragged out for execution. Twice, he said, he tried to kill himself.

But it was in jail that Mr. Liao met many of the characters who would fill “The Corpse Walker.” It was also where he learned to play the xiao, an ancient flutelike instrument that sustained him as a street musician during long bouts of joblessness after his release. Those were bitter years, he said, when friends and even his wife found him politically radioactive.

“I never imagined they would distance themselves from me as if I were the plague,” he said. “From this, I concluded that people’s memories can be easily erased.”

Since then, Mr. Liao has devoted himself to collecting the memories of people on the margins of society. For “God Is Red,” he sought out Christians in rural Sichuan and Yunnan Provinces who had endured years of official persecution.

Mickey Maudlin, the executive editor of HarperOne, described it as refreshingly devoid of polemics. “Liao isn’t trying to score ideological points,” Mr. Maudlin said by phone from San Francisco. “He’s just trying to describe how people survived in an environment that is not very friendly.”

Mr. Liao said that since he reached Germany, he has been too overwhelmed and excited to eat or sleep much. Having arrived with no money, he is relying on the generosity of friends, his German publisher and, he hopes, royalties from his forthcoming books. He speaks neither German nor English, and said he was unsure whether to plunge into learning a new language.

“Germany, the U.S. and Australia have all welcomed me,” he said. “But the place I really want to be is China.”

Li Bibo contributed research.

(Non) Democracy in China - The Economist

Democracy v China
What China challenges
by M.S.
Blog Democracy in America, The Economist, July 11th 2011, 13:54

MY COLLEAGUE at Free exchange made a series of good points in arguing that the rise of China shouldn't really challenge our certainty that in order for countries to become and remain wealthy, they need to be democratic. He's quite right that an overwhelming majority of wealthy countries are democratic, and that China isn't wealthy yet. I think there are two questions here. The first is whether China is in the long run going democratic as it gets rich. The second is whether, if it doesn't, this implies anything broader about the inevitability of democracy in other wealthy modern countries.

My views on this subject are influenced by having lived for many years in the world's other fast-growing capitalist communist confucian country, Vietnam, and watching predictions that rising wealth leads to democratisation fail to bear any but the most modest of fruit. China and Vietnam have structures and cultures of governance that are about as similar as one can expect for cross-country comparisons. And what's striking in both countries is the remarkable absence of any serious challenge to Communist Party domination of every corner of political life. Both countries have dissidents aplenty; but these dissidents have no public organisations, and, at the first hint that organisations are beginning to form, they're quickly dismantled through arrest and intimidation.

Of course, many autocracies are competent at attacking and dismantling political threats. Fewer repressive autocracies have been able to produce well-founded economic growth for decades in a row, though there, too, there are success stories. But what sets China and Vietnam apart is the ability of their governing institutions to carry out long-term stable political succession. The communist parties of Vietnam and China are very different from the relatively flimsy and short-lived governing parties of most single-party dictatorships, usually constructed around a single personality and his relatives and cronies. Since the late 1970s, they have managed transitions to new generations of leadership every five years with very little disruption. In part this is due to mechanisms and traditions within these parties that provide for some level of internal democracy, or at least of peaceful factional competition. But the ability to recruit new cadres, allow them to rise through the system, assume top leadership positions, and then push them into retirement, without being overwhelmed by nepotism or personality cults, makes this type of autocracy markedly different from the weak family-run shell parties or military fronts that have run or are running autocratic shows in Indonesia, South Korea, Syria, Iraq, Chile, Spain, Burma and so on. And, obviously, China and Vietnam no longer have to worry about the great weakness that doomed single-party rule in most of the ex-communist world, ie pointless and crippling state-socialist economic policies.

The combination of smooth political succession and strong economic growth helps explain why China is more stable than the USSR was at a similar level of development. In 1990, just before its collapse/democratic transition, the USSR had a PPP-adjusted per-capita GDP of just under $7,000 (in 1990 Geary-Khamis international dollars), according to Angus Maddison, whose research everybody seems to use on this. Mr Maddison put China at $4,800 (same units) in 2003; since then its economy has grown by 8-10% a year, suggesting it's now richer than the USSR ever was. Having spent a few months in the USSR in 1990, I wouldn't be surprised if this were the case. (Though Chinese PPP conversions are controversial. IMF and World Bank figures put Chinese incomes lower than Mr Maddison's. But others warn the IMF/WB figures are based on 2005 price surveys that were too high, which would mean current Chinese per capita GDP is 21% of America's, and China will become the world's largest economy in 2012, not 2016 as the IMF estimates. This ADB paper suggests China is now as rich as the USSR was even as a percentage of contemporaneous US per-capita income, but it puts that figure at almost 30%, which seems absurdly high.) Anyway, China appears to be hitting income levels where other countries have experienced democratic transitions without any sign of a plausible challenge to CPC rule.

Why would that be? Political scientists looking at the relative stability of different autocracies break the category up into subgroups with varying characteristics. For example, a recent paper by Krister Lundell, delivered at what sounds like a truly awesome panel in February in Sao Paulo (“Bad Guys, Good Governance? Varieties of Capitalism in Autocracies”), runs through a bunch of different categorisation schemes in trying to sort out what characteristics might distinguish autocracies that go democratic (or "hybrid", ie part of the way towards democracy) from those that remain permanent autocracies. He doesn't come up with much. Income levels, interestingly, don't seem to be that important. The oil-exporting factor is important, as my colleague mentions. Islamic countries are more likely to stay autocratic, but that's confounded by the oil-export factor so it's not clear how important it is. Another significant factor is that autocratic countries that are large, especially in terms of land area, are less likely to cease being autocratic than small ones. And military dictatorships are pretty short-lived, while single-party states and monarchies last longer. China, obviously, is a very large one-party state. But I feel the variables on offer here don't do justice to the uniqueness of the Chinese and Vietnamese systems. The combination of successful capitalist economies with monopoly parties that can successfully manage non-fatal non-nepotistic leadership transitions six times in a row is new. It's a big deal.

Now, maybe the Chinese and Vietnamese communist parties will fail to manage economic growth to truly developed levels, or will be torn apart by the stresses of increased demand for participation from empowered, educated, wealthy middle classes. Maybe they're too slow and unwieldy for the modern media environment, as James Fallows writes about the silly internet censorship surrounding rumours of Jiang Zemin's death. But then again, maybe not. Maybe this morally troubling type of rule, in which the responsibility and privileges of governance are essentially assigned to a guild or corporation with internal but not external competition and mainly informal, not formal, accountability to the broader population, is a sustainable model of governance for a modern society. Or maybe it's only viable in East Asia, for cultural reasons; anyway, China isn't seeking to export it anymore, and it's hard to see how any other country could start to build such a model in an era when peasant revolutions seem to be a thing of the past.

I confess I can't really imagine what a fully developed wealthy society with a single-party state would look like. But a few years back I visited the then-leader of Singapore's tiny opposition party in his apartment, where he was under house arrest. He was under house arrest because he was unable to pay his debts, and he was in debt because the state had convicted him of slander and fined him hundreds of thousands of dollars for saying, in effect, that Singapore is not a democracy. Which is a nice little manoeuvre. People in Singapore are, in my experience, even more afraid of talking about these kinds of issues than people in Vietnam are. But Singapore is extremely well-governed on most dimensions, and it's not clear when a transition in power is ever going to occur. Singapore is also significantly richer than the United States. All of which is why it's often cited as a model by Vietnamese and Chinese political elites. Many people feel this system of government can't be scaled up from an island city-state like Singapore to a large country like Vietnam or China, which is perhaps why my colleague restricted his survey of wealthy countries to those with populations over 10m. But the thing is, political-science researchers widely conclude that small countries, and especially islands, are more likely to be democracies, not less.

But granting for the sake of argument that China could become as wealthy as Singapore, or at least Spain, without becoming a democracy. So what? Would this say anything about democracy in the modern world overall, or would it just say something about China? Obviously, there is zero risk of a single-party takeover in any developed multiparty democracy in the world. This isn't the 1930s; it's not even the 1970s.

Rather, I'd phrase the risk this way. My broad feeling is that representative democratic institutions are not functioning right now as they did 20 or 30 years ago. When we look at countries trying to make the transition to stable democratic rule, such as Thailand or Russia, we see that they're trying to institutionalise democracy as it exists in the early 21st century, and that it's very hard to do, because the forces enlisted are often too powerful to be contained by institutional restraints. Just like wealthy democracies these days, they have personality-driven political campaigns fueled by wealthy donors who fund or control integrated media empires, candidacies shaped by professional consultants, and internet/flashmob street rallies and self-branded grassroots movements ("colour" movements, tea-party groups and so on). The "Daily Me" phenomenon simultaneously organises and polarises partisan participants into angry camps who can barely understand each others' language. It often seems impossible for contestants for power to win and consolidate legitimacy, because it's easy to build resistance to legitimacy and the rewards are high. It feels to me like there's a relationship between the "birther" phenomenon and the years of Yellow Shirt refusal to accept Shinawatra legitimacy, between the "Not a cent for Greece" brinksmanship of the Party for Freedom and the no-taxes debt-ceiling brinksmanship of the tea-party GOP, between constant filibusters in the Senate, the record-length coalition negotiations in Belgium and the rash of hung parliaments recently in Westminster systems.

I think this has to do with the way democracy functions in the current communications environment. Democracy is supposed to build public legitimacy for governance. I think there's a legitimacy deficit because of the way communications work nowadays. Democracy is also supposed to communicate problems to government so that government can respond. I think the constant crisis-atmosphere contrarianism of the current media and internet environment overwhelms the signal-to-noise ratio there, and preoccupies government with addressing blaring non-issues. And I think this has all weakened the advantage that democracies have generally enjoyed over autocracies in addressing real problems and in generating public support for fixing them. I think the result of that could well be that an increasing number of important policymaking issues are gradually shifted to non-democratic institutions, while political democracy increasingly devolves into a form of reality-TV contest.

Or maybe I'm just contributing to the blaring non-issue alarmism here. Thailand has recently taken a strong turn back towards democracy; maybe the Red Shirt/Yellow Shirt years were just growing pains, no worse than what France went through on its way to democracy in the 19th century, and a lot less bloody. The Arab world has just seen a bunch of autocratic regimes fall, and if some of those countries move towards democracy while others don't, that'll be par for the historical course. Here in America, well, if we throw away a perfectly good 200-year-old credit rating, that'll be pretty dumb, but nobody's killing each other yet. And American politics were often mean and stupid in the old days too, long before the internet arrived. But what I would say is that we should not be comfortably sure of anything. We're not in an era when fascism is on the march, but we are in an era when democracy is not generally showing its best governing face. What that means, I think, is that people who believe in democracy on moral grounds should make the case, again, on moral grounds, rather than relying on a comfortable assumption that countries will naturally go democratic as they get richer. And I think the fact that autocracies sometimes enjoy real advantages in policymaking should remind us of the need to behave responsibly in democratic activity and to make sure that our representative institutions are actually capable of governing, and are not paralysed by political brinksmanship.

As for my other colleague's comments, I pretty much agree with everything he says. He's probably right that increasing the role of automatic stabilisers would actually be a move towards enhancing democracy by letting political debate focus on deep public issues of what our society should look like, rather than short-term issues of the interaction between unemployment, inflation, private liquidity preference and government spending that Congress really isn't well equipped to handle agilely.