[FoRK] Re: Investing in China?

Luis Villa < luis at tieguy.org > on > Wed Sep 13 10:20:51 PDT 2006

On 9/13/06, Bill Stoddard <bill at wstoddard.com> wrote:
> Luis Villa wrote:
> > On 9/13/06, Zee Roe <zero at rawbw.com> wrote:
> >>
> >>
> >> On Tue, 12 Sep 2006, Luis Villa wrote:
> >>
> >> [snip]
> >>
> >> > with.  I am not OK with a *dictatorship* that would put the same
> >> > system of law in place; I think denying people the right to regularly
> >> > elect their government is unambigously wrong.]
> >>
> >> I have to ask here -- why? Assuming (and this is one hell of an
> >> assumption, admittedly) that you have a benevolent dictator who plays by
> >> the rules, enacts laws you and a rational majority consider "right", and
> >> would be willing to step down if faced with overwhelming opposition to
> >> his/her rule... what's the problem? Or is my last clause a suitable
> >> replacement for regular elections?
> >
> > Hypothesis: Because it is a hell of an assumption. Democracy is fairly
> > robust; not perfect, but (in engineering terms) *robust*- it has
> > checks; balances; mechanisms to recover from error. Various
> > dictatorships may at various points in time do a decent job of
> > protecting rights, running the economy, etc., but they fail, and their
> > failure modes are very poor. You can basically guarantee that they
> > will fail, and fail in ways vastly detrimental to basic human/civil
> > rights. (Your 'overwhelming opposition' is a mediocre substitute for
> > regular fine tuning, though better than nothing.)
>
> Changing the topic slightly... in some of the investor circles I frequent, I've expressed the opinion that
> China is not a good place to 'invest' (as opposed to 'speculate') because their hybrid pseudo capitalist yet
> centralized system of government is doomed to fail for exactly the reasons outlined above. It may take a
> while, but eventually their government will fail spectacularly because it lacks the robustness of a true
> democracy.  On the other hand, perhaps my base assumption that Democracy and capitalism are hand-in-hand
> compliments is seriously flawed.  What do FoRK'ers think?

China is likely going to be a glaring historical exception to my
thesis, for at least a while.

* demonstrated willingness and ability to use military force against citizens

* strong political mythology (around Mao, etc.) that is effectively
distributed by the media that will crowd out the political viability
of alternative political myths.

* explosive economic growth. Way harder to foment revolution when
people are busy getting rich. (Wealth disparities help foment
revolution, but that can take generations- if your expectation is
poverty and lack of change, then it won't bother you as much that you
are staying poor, even if others are no longer poor.)

* potentially the most effective censorship bureau in the history of
censorship bureaus (with a little help from Cisco, etc.)

They *will* get democratic eventually, because people used to making
their own economic decisions will demand to make their own political
decisions eventually. But that may well be outside the time horizon of
investors- if that is 25-50 years out (not unlikely) then an
investment right now that will pay off in 5-10 years isn't insane.

Luis

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