Hisha Sorel
Senior Member
- Dec 27, 2017
- 192
- 140
Warning: long read.
Tanzanian president Magufuli has order the Min. of Health to be caution on the new vaccine, demanded mining companies to form partnership with Tanzanian firms, restricted import of certain products to protects local market, increased tax collection, blocked export of unrefined minerals and many other policies have all met the same response; they are too restrictive and they don't reflect the principles of free market and liberalism hence they will fail.
Instead they demand the country to be left to private and foreign firms with no oversight for maximum benefits.
To refute this assertion we should examine unhinged free market reforms and compare them to strategic reforms. The two vary significantly in the outcome: Put it simply, strategic reforms prioritise the core interest of the country and its people in expense of principles.
A nation may sacrifice rapid growth in favour of preserving control of its agriculture or choose to impose restriction so to protect some of its industry. At the same time, the same nation may momentarily sacrifice its principles for temporary gain: for instance, short term reduction of regulation to encourage foreign investment. Such sacrifices are however momentary and often done with clear objective such as gaining technological and leadership experience.
On the contrary, unhinged reforms often involve rapid transformation of a country with minimal restrictions in expense of the nation’s principles.
Governments and its institutions are often weakened to pave a way to private sector which, though efficient, it does not consider the core objective of the nation or its people. Consequently, nations undertaking this pathway, while prosperous, often lack control of their own economy and are highly dependent on foreign assistance. In worst cases, even growth may stagnate consequence of actions beneficial to foreign investors but toxic to domestic interest.
A comparison of Russia and China’s transition from communism explains this phenomenon well, with the former representing unhinged free market reforms while the latter strategic reforms.
Russia and Unhinged reforms
From a prosperous empire which ended with abdication of its emperor Nicholas II on March 15 of 1917 and massacre of his family in July 1918, Russia experienced a length period of stagnation under communism. Coming to an end in December 25, 1991, the end of the Soviet Union raised hope among Russian with many expecting modernisations through economic reforms and deviation from their soviet past.
Under Boris Yeltsin, new Russia underwent rapid changes economically and socially. Public companies were privatised, and foreign investment was accommodated. Yet Russia of the 90s and 2000s is not remembered for its prosperity, but for its corruption, decay, and weakness.
Russia effectively became an oligarchy with few elites, wealthy enough and well connected to purchase state assets, controlling much of the wealth while the poor suffered in extreme poverty. These took charge of the weak Russian government—stripping it of any regulatory capacity.
Consequently, rather than becoming a free market meritocracy, Russia effectively declined into plutocracy (a government for the wealthy). Russian declined from a superpower to one of the poorest and weakest country in Europe.
China
China decline was severe and longer as it went from being robbed of its lands (Hong Kong and Macau) in 1800s; a subsequent period of civil war starting from 1911 to 1928 where warlords fought for control after the end of imperial rule in Wuchang Uprising; unification under Chiang Kai-shek’s Northern Expedition; Japanese invasion in 1937 to 1945; to rise of the communist on the 1st of October 1949.
On its founding; the People's Republic of China, just as the Soviet Union; understood the danger posed by western nations’ strain of capitalism. Both nations understood imperialist western agenda which trapped nations under in servitude under the name of civilisation, freedom, and capitalism.
This is more so in China it being a victim of British subjugation after two opioids war where it was forced to accept narcotics sales in its land. Elsewhere around the world, United states aggressively enforced the interest of its corporations
America, Corporate Interest, Democracy, and Capitalism In South America
In Honduras for instance, in 1911, in the interest of Cuyamel Fruit Company, united states Gen. Lee Christmas overthrew a civil government to impose military rule friendly to foreign businessmen. Consequent to the coup d'état, Honduran economy stagnated—accumulating an unpayable external debt of US$4 billion which led to the exclusion from accessing international investment capital.
This functionally weakened the Honduran government hence enabling foreign corporations to manage the country, become sole employers, build and control economic infrastructure (road, rail, and port, telegraph and telephone).
In Guatemala, the US government, responding to distribution of arable land to peasants lacking access to adequate subsistence; authorised and participated in the 1954 coup d'état named operation success where a democratically elected government of President Jacobo Árbenz Guzmán was deposed in favour of a pro-business government of Colonel Carlos Castillo Armas.
China and Strategic Reforms
It was apparent then that military and economic strength was needed to spare their countries from a similar fate. After a disaster that was the Great Leap Forward— a five-year Plan starting in 1958 to rapidly industrialise through focused productivity and forced mobilisation, China begun considering reforms.
Yet, unlike Russia, China strategically focused it reforms on specific areas so to preserve the country’s core identity and principles. Premiere Jiang Zemin and vice premiere Zhu Rhongji recognised the inefficiency of micromanagement of labour and markets.
In the Great Leap forward experienced farmers were sent to produce steel—effectively reducing farming and harvest while producing inferior steel. Hereafter the government recognised the limit of its expertise thus driving it to begin a process of strategic market liberalisation.
Here, China only allowed certain aspects to change while retaining state control. In fact, the state under vice premiere Zhu Rhongji, and not the private sector was central to significant reforms.
The Cautious Strategy
The government begun by increasing its wealth by 20% through centralising its control over the country's tax revenues.
The next target was the financial sector with creation of asset-management companies which quarantined bad loans— accumulated through profligate local lending to unprofitable State-Owned Enterprises (SOEs); and recapitalized the China's four colossal state-owned banks through government bonds.
Zhu only saved the biggest SOEs thus allowing thousands of other small and medium-sized firms and factories to fail. This strategy reduced "iron rice bowl" workers' who were guaranteed cradle-to-grave employment, health care benefits, and pensions despite poor performance.
Zhu ensured salaries reflected performance and market competitiveness with profitability and productivity influencing managerial and executive promotions.
Profit-remission system was replaced with tax and contracting systems which rewarded managers by permitting their firms to retain a significant portion of increases in production.
The biggest reforms however were to strategically quarantine free market capitalism in special economic zones in Shenzhen, Zhuhai, and Shantou in Guangdong province and Xiamen (Amoy) in Fujian province.
Through this, the state was able to gain the benefit brought by free market without threatening its strategic interest. Local governments were allowed to grant tax incentives to foreign investors and to develop their own infrastructure without the approval of the central government.
Beginning as small towns, the new SEZs rapidly grew into metropolis through rapidly expanding light and consumer-goods industries and growing populations. Shenzhen’s population for instance, grew from 30,000 in 1979 to more than 1,000,000 by the beginning of the 21st century.
Chinese firms with government support used this opportunity to study and mimic western products and technology to establish their independent equivalents. Through this Chinese firms such as Alibaba, We-chat, Huawei, and many others came to dominate above Google, Facebook, and Apple.
China strategically maintained control of some sectors such as IT and Arts later using access as a bargaining chip. Apple and other tech companies for instance were demanded to share their intellectual property to access the Chinese market, meanwhile Hollywood has continuously been forced to censor anti-China messaging in its film. All of these demonstrated the effectiveness of strategic reforms.
Many Western leaders and scholars were sceptical when Deng announced his strategy to pursue "socialism with Chinese characteristics”. They perceived absolute free market strategy that was adopted in Russia as more superior—as any government involvement would hinder progress. Yet as of 2021, China is about to pass United states economically while remaining under the firm grip of the Communist Party.
I find these events mirroring ours: Tanzania reforms are currently been met with criticism of note being too restrictive with opposition demanding absolute opening of the country without considering the long term interest of the Nation.
Tanzanian president Magufuli has order the Min. of Health to be caution on the new vaccine, demanded mining companies to form partnership with Tanzanian firms, restricted import of certain products to protects local market, increased tax collection, blocked export of unrefined minerals and many other policies have all met the same response; they are too restrictive and they don't reflect the principles of free market and liberalism hence they will fail.
Instead they demand the country to be left to private and foreign firms with no oversight for maximum benefits.
To refute this assertion we should examine unhinged free market reforms and compare them to strategic reforms. The two vary significantly in the outcome: Put it simply, strategic reforms prioritise the core interest of the country and its people in expense of principles.
A nation may sacrifice rapid growth in favour of preserving control of its agriculture or choose to impose restriction so to protect some of its industry. At the same time, the same nation may momentarily sacrifice its principles for temporary gain: for instance, short term reduction of regulation to encourage foreign investment. Such sacrifices are however momentary and often done with clear objective such as gaining technological and leadership experience.
On the contrary, unhinged reforms often involve rapid transformation of a country with minimal restrictions in expense of the nation’s principles.
Governments and its institutions are often weakened to pave a way to private sector which, though efficient, it does not consider the core objective of the nation or its people. Consequently, nations undertaking this pathway, while prosperous, often lack control of their own economy and are highly dependent on foreign assistance. In worst cases, even growth may stagnate consequence of actions beneficial to foreign investors but toxic to domestic interest.
A comparison of Russia and China’s transition from communism explains this phenomenon well, with the former representing unhinged free market reforms while the latter strategic reforms.
Russia and Unhinged reforms
From a prosperous empire which ended with abdication of its emperor Nicholas II on March 15 of 1917 and massacre of his family in July 1918, Russia experienced a length period of stagnation under communism. Coming to an end in December 25, 1991, the end of the Soviet Union raised hope among Russian with many expecting modernisations through economic reforms and deviation from their soviet past.
Under Boris Yeltsin, new Russia underwent rapid changes economically and socially. Public companies were privatised, and foreign investment was accommodated. Yet Russia of the 90s and 2000s is not remembered for its prosperity, but for its corruption, decay, and weakness.
Russia effectively became an oligarchy with few elites, wealthy enough and well connected to purchase state assets, controlling much of the wealth while the poor suffered in extreme poverty. These took charge of the weak Russian government—stripping it of any regulatory capacity.
Consequently, rather than becoming a free market meritocracy, Russia effectively declined into plutocracy (a government for the wealthy). Russian declined from a superpower to one of the poorest and weakest country in Europe.
China
China decline was severe and longer as it went from being robbed of its lands (Hong Kong and Macau) in 1800s; a subsequent period of civil war starting from 1911 to 1928 where warlords fought for control after the end of imperial rule in Wuchang Uprising; unification under Chiang Kai-shek’s Northern Expedition; Japanese invasion in 1937 to 1945; to rise of the communist on the 1st of October 1949.
On its founding; the People's Republic of China, just as the Soviet Union; understood the danger posed by western nations’ strain of capitalism. Both nations understood imperialist western agenda which trapped nations under in servitude under the name of civilisation, freedom, and capitalism.
This is more so in China it being a victim of British subjugation after two opioids war where it was forced to accept narcotics sales in its land. Elsewhere around the world, United states aggressively enforced the interest of its corporations
America, Corporate Interest, Democracy, and Capitalism In South America
In Honduras for instance, in 1911, in the interest of Cuyamel Fruit Company, united states Gen. Lee Christmas overthrew a civil government to impose military rule friendly to foreign businessmen. Consequent to the coup d'état, Honduran economy stagnated—accumulating an unpayable external debt of US$4 billion which led to the exclusion from accessing international investment capital.
This functionally weakened the Honduran government hence enabling foreign corporations to manage the country, become sole employers, build and control economic infrastructure (road, rail, and port, telegraph and telephone).
In Guatemala, the US government, responding to distribution of arable land to peasants lacking access to adequate subsistence; authorised and participated in the 1954 coup d'état named operation success where a democratically elected government of President Jacobo Árbenz Guzmán was deposed in favour of a pro-business government of Colonel Carlos Castillo Armas.
China and Strategic Reforms
It was apparent then that military and economic strength was needed to spare their countries from a similar fate. After a disaster that was the Great Leap Forward— a five-year Plan starting in 1958 to rapidly industrialise through focused productivity and forced mobilisation, China begun considering reforms.
Yet, unlike Russia, China strategically focused it reforms on specific areas so to preserve the country’s core identity and principles. Premiere Jiang Zemin and vice premiere Zhu Rhongji recognised the inefficiency of micromanagement of labour and markets.
In the Great Leap forward experienced farmers were sent to produce steel—effectively reducing farming and harvest while producing inferior steel. Hereafter the government recognised the limit of its expertise thus driving it to begin a process of strategic market liberalisation.
Here, China only allowed certain aspects to change while retaining state control. In fact, the state under vice premiere Zhu Rhongji, and not the private sector was central to significant reforms.
The Cautious Strategy
The government begun by increasing its wealth by 20% through centralising its control over the country's tax revenues.
The next target was the financial sector with creation of asset-management companies which quarantined bad loans— accumulated through profligate local lending to unprofitable State-Owned Enterprises (SOEs); and recapitalized the China's four colossal state-owned banks through government bonds.
Zhu only saved the biggest SOEs thus allowing thousands of other small and medium-sized firms and factories to fail. This strategy reduced "iron rice bowl" workers' who were guaranteed cradle-to-grave employment, health care benefits, and pensions despite poor performance.
Zhu ensured salaries reflected performance and market competitiveness with profitability and productivity influencing managerial and executive promotions.
Profit-remission system was replaced with tax and contracting systems which rewarded managers by permitting their firms to retain a significant portion of increases in production.
The biggest reforms however were to strategically quarantine free market capitalism in special economic zones in Shenzhen, Zhuhai, and Shantou in Guangdong province and Xiamen (Amoy) in Fujian province.
Through this, the state was able to gain the benefit brought by free market without threatening its strategic interest. Local governments were allowed to grant tax incentives to foreign investors and to develop their own infrastructure without the approval of the central government.
Beginning as small towns, the new SEZs rapidly grew into metropolis through rapidly expanding light and consumer-goods industries and growing populations. Shenzhen’s population for instance, grew from 30,000 in 1979 to more than 1,000,000 by the beginning of the 21st century.
Chinese firms with government support used this opportunity to study and mimic western products and technology to establish their independent equivalents. Through this Chinese firms such as Alibaba, We-chat, Huawei, and many others came to dominate above Google, Facebook, and Apple.
China strategically maintained control of some sectors such as IT and Arts later using access as a bargaining chip. Apple and other tech companies for instance were demanded to share their intellectual property to access the Chinese market, meanwhile Hollywood has continuously been forced to censor anti-China messaging in its film. All of these demonstrated the effectiveness of strategic reforms.
Many Western leaders and scholars were sceptical when Deng announced his strategy to pursue "socialism with Chinese characteristics”. They perceived absolute free market strategy that was adopted in Russia as more superior—as any government involvement would hinder progress. Yet as of 2021, China is about to pass United states economically while remaining under the firm grip of the Communist Party.
I find these events mirroring ours: Tanzania reforms are currently been met with criticism of note being too restrictive with opposition demanding absolute opening of the country without considering the long term interest of the Nation.
