China’s political system

Via Greg Mankiw, here is a link to a fascinating TED talk by Shanghai venture capitalist Eric X. Li: “A tale of two political systems” (3 July 2013).

After listening to the TED talk (about 20 minutes), do not fail to read MIT Professor Yasheng Huang’s commentary on the talk. Both Li and Huang are political scientists by training.

Read all of Professor Huang’s reaction to Li, but I cannot resist posting this short quote:

To a hammer, everything is a nail. Li sees ills of democracies everywhere — financial crises in Europe and the United States, money politics and corruption. I readily agree that money politics in America is a huge problem and that it is indeed making the system utterly dysfunctional. But let’s be very clear about exactly how and why money politics is dysfunctional. It is dysfunctional precisely because it is fundamentally antithetical to democracy.  Money politics is a perversion of democracy. It undermines and invalidates a canonical pillar of democracy — one person, one vote. To be logically consistent, Li should celebrate money politics because it is moving the United States in the direction of the authoritarian way of politics that he is so enamored of.

This may be a shocking revelation to Li, but US and European democracies did not patent financial crisis. Many authoritarian regimes experienced catastrophic financial and economic crises. Think of Indonesia in 1997 and the multiple junta regimes in Latin America in the 1970s and the 1980s. The only authoritarian regimes that go without suffering an explicit financial crisis are centrally planned economies, such as Romania and East Germany. But this is entirely because they failed to meet a minimum condition for having a financial crisis — having a financial system.

Yasheng Huang, “Why democracy still wins“, TED blog, 1 July 2013.

Listen to Li, then read Huang. Their positions are diametrically opposed, and the presentations are equally impressive. This is a useful and important debate.

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