Scott Sumner predicts China's future:
China boosters like Robert Fogel claim that China will soon grow to be twice as rich as the EU. Others pundits claim it will get stuck in the middle income trap. Both the boosters and pessimists are wrong. Like Japan, like Britain, like France, indeed like almost all developed countries, it will grow to be about 75% as rich as the US, and then level off. It won’t get there unless it does lots more reforms. But the Chinese are extremely pragmatic, so they will do lots more reforms. (emphasis mine)I'm with Sumner all the way up until the end. It's just common-sense, reasonable stuff. Why shouldn't China follow the path that other countries followed? Why shouldn't the Solow Model hold? And then...and then...and then at the end, Scott summons the Culture Fairy. China's continued growth is dependent on further reforms. But we know that they will do lots more reforms because...because the Chinese are extremely pragmatic.
We know this about The Chinese, you see. It's a fixed characteristic of their culture. Easy to observe...just open your eyes! Also, they're very good at the violin. Not such great drivers, though, I'm afraid.
Also, we know that this sweeping cultural characterization is fixed, eternal...structural. Pragmatism is ever the hallmark of the Chinese, from the days of the An Lushan Rebellion to the Ming Dynasty shipping ban, to the Qing embargo on foreign manufacturers, to the Great Leap Forward and the Cultural Revolution, to...oh, wait. Never mind. Those must have been some other Chinese. Or a mistake. Data blips. Aberrations.
And there are other peoples we know to be pragmatic. Take Koreans, for example. The Koreans are pragmatic, just look at South Korea if you want proof. Any other country populated by Koreans would naturally develop just the same!
OK, end sarcasm.
Maybe I just read Scott wrong. Maybe he just meant that the current Chinese regime is an inherently pragmatic one, blessed with institutions that embed pragmatism...nope, it's cultural stereotypes all the way:
If we want to learn from the Chinese culture, learn from Singapore (or Hong Kong), which is how idealistic Chinese technocrats would prefer to manage an economy...China...will join the ranks of Japan, Korea, Taiwan, and the other moderately successful East Asian countries.I expect China to end up in the “normal” category, mostly based on its cultural similarity to other moderately rich East Asian countries.First of all, notice how confident these pronouncements are. They are stated as facts: This will happen, that will happen. Period. No verbal qualifiers or admission of uncertainty. To quote Tyler Cowen: "That is from Scott Sumner, Q.E.D."
But my real gripe is that this is emblematic of a type of economic analysis that just does not sit well with me at all. It goes like this:
Step 1: Take the parts of the economy you can't explain (i.e. the residuals) and label them either "culture" or "technology".
Step 2: Make ultra-confident pronouncements about the future behavior of culture and/or technology.
What I don't like, first of all, is that Step 2 just never makes any sense. The thing you are calling "culture" or "technology" is precisely the part that you couldn't explain with your models. Hence, it is the least likely thing for you to be able to predict going forward.
Admit it, economists: You don't know what is going to happen with technology. You don't know what is going to happen with culture. If you did, you would have included those things as endogenous variables in the model instead of simply labeling the residual.
But I have to say, of the two, I dislike "culture" a LOT more than I dislike "technology". The reason is that it takes about 5 seconds for "culture"-based arguments to turn into racism in the mind of the average reader. The Chinese will end up like the Japanese and Koreans because...why? Because of Old Man 孔子? No, John Q. Public, admit it: I'll bet you yuan to won that you were thinking it's because they all have similar hair, eyes, and noses.
This is sloppiness. Sheer and utter sloppiness. Sloppiness delivered confidently, at a rapid clip, in short direct statements. But BS fired out of a machine gun is still BS. China's future development depends very heavily on whether it continues to reform. Whether it will do this is not known. It cannot be predicted by invoking hand-waving stereotypes about Chinese culture. A lot of very smart people have been trying to predict the future path of Chinese institutions, and they are well aware of these stereotypes. Trust me, they are well aware. And their level of uncertainty is high. Ours should be equally high.
Update: Scott has a thoughtful response.