Until very recently I had the idea in the back of my mind that high rates of economic growth in China could be explained largely in terms of expansion of the private sector to meet export demand – with this rapidly growing sector absorbing a large amount of surplus labour from the agricultural sector. I knew that high economic growth in China was associated with substantial disparities in income between the industrial areas along the coast and the rural hinterland, but I imagined that the latter areas would also share in the benefits of growth as surplus labour was drawn out of the agricultural sector.
I must have connected the wrong dots. A recently published book by John Lee, Will China Fail?, points out that 75 percent of China’s growth comes from capital accumulation and over 70 percent of the capital goes to state owned enterprises (SOEs) – which produce less than 30 percent of output (Policy Monograph 77, Centre for Independent Studies, September 2007, p 60). Growth of employment in the non-state sector fell from 6.8 percent per annum in the 1980s to 3.4 percent in the 1990s (p 89). The capital allocation to SOEs apparently has more to do with preserving existing jobs than creating additional ones. So that means that high economic growth has not been doing much to absorb surplus labour from agriculture or to employ over 100 million people who are apparently floating around looking for jobs.
How could this happen? The story John Lee tells is about state banks that are flush with funds (high levels of private savings to fund health and education) which they direct to state owned enterprises, which have powerful friends in politics. This means that increasing amounts of money are being poured into production of goods that are not being consumed. The result for the banks is an increasing proportion of non-performing loans.
It is difficult to obtain independent confirmation that the situation with regard to non-performing loans is currently as bad a Lee claims. A relevant study by the IMF published in 2004 (see here) suggests that there had been some improvement - but the study may be out of date.
Can the Chinese government resolve these economic problems? I am more optimistic than John Lee, but I must admit I don’t have much basis for my optimism. From what I read in the papers, the present crop of Chinese leaders seem at least to acknowledge that they have problems and to be announcing policies to address them. They might manage to reform the system to a sufficient extent to enable economic growth and some degree of social harmony to be sustained.
What would it mean for us if China fails? There are obvious implications for Australia’s mineral exports. The people who have been saying that the mining boom would not last for ever were always going to be right one day. A weakening in mineral export prices in the next few years now seems to me to be a distinct possibility. It would represent a significant shock to the Australian economy, but not an economic disaster.
The more worrying implication of economic failure in China would be the possibility of a retreat from its peaceful rise policy and adoption of an increasingly belligerent stance in international relations.
Sunday, April 27, 2008
Does a challenge make us happy?
Charles Murray has argued that self-actualization can be viewed as the exercise of competence in the face of challenge (“In pursuit of happiness and good government”, 1988). He based this view largely on the work of Edward Deci and Richard Ryan. (See here, here and here for some discussion and references.)
Evidence from narrative research presented by Dan McAdams also supports this view. McAdams has found that the presence of redemption themes in life stories to be correlated with measures of psychological well-being such as life satisfaction and self-esteem (“The redemptive self”, 2006, p 44).
Redemption themes are not just happy themes. One of the characteristics of redemption themes is that the narrator encounters many obstacles and suffers many setbacks but is eventually redeemed and develops toward actualization of an inner destiny. The presence of a redemptive theme person’s story predicted their psychological well-being much more strongly than did a measure of how positive or happy the story was.
These research findings are also revelevant to my speculations about the things we regret most. See here.
Evidence from narrative research presented by Dan McAdams also supports this view. McAdams has found that the presence of redemption themes in life stories to be correlated with measures of psychological well-being such as life satisfaction and self-esteem (“The redemptive self”, 2006, p 44).
Redemption themes are not just happy themes. One of the characteristics of redemption themes is that the narrator encounters many obstacles and suffers many setbacks but is eventually redeemed and develops toward actualization of an inner destiny. The presence of a redemptive theme person’s story predicted their psychological well-being much more strongly than did a measure of how positive or happy the story was.
These research findings are also revelevant to my speculations about the things we regret most. See here.
What do life stories tell us about human flourishing?
It seems obvious that life stories should contain just about all the information that anyone would want to know about human flourishing. When you ask someone to tell you about their life you get a much more complete picture of how satisfied they are with what life has offered and what they have accomplished than you could ever get by asking them for a numerical rating of their life satisfaction. Actually, asking someone to give you a numerical rating of their satisfaction with life as a whole could even be a good way to stop someone from telling you about those things.
So why don’t researchers ask people about their life stories – the high points, the low points, the turning points etc – rather than the questions asked about happiness, life satisfaction etc in surveys? The reason why little use has been made of life stories in the past, at least in scientific research as opposed to literary works, must have to do with the difficulty of adding different life stories together (or averaging them in some way) to obtain an overall picture of some dimension of human flourishing.
The secret of success in making quantitative analytical use of life stories is to focus on identifying whether or not the stories display particular characteristics of interest to the researcher. For example, in their study of narratives relating to high points, low points and turning points Jack Bauer, Dan McAdams and April Sakaeda coded the paragraphs that participants wrote about each episode according to the presence or absence of integrative and intrinsic memories. Integrative memories were present if there was evidence in the account that the participant had learned from the experience or come to a deeper understanding of self or others as a result of it. Intrinsic memories were present if participants focussed on matters of intrinsic interest, e.g. meaningful relationships, rather than extrinsic interests, e.g. money and status. (See: ‘Interpreting the good life ...’, Journal of Personality and Social Psychology, 2005).
Participants in this study were also asked to complete more conventional survey questionnaires to provide measures of happiness, maturity (measuring such things as the degree to which individuals can hold impulses in check and respect others’ standards) and personality traits (neuroticism, extraversion, openness, conscientiousness and agreeableness). The results of study enabled the authors to reach the following conclusions:
People who emphasised what they learned from their experiences tended to be more mature than others.
People who emphasised the effects of experiences on personal growth and relationships tended to be happier than others.
For the most part these results could not be explained by simply knowing the broad personality traits of individuals in the study.
It seems to me that narrative research may be able to play a role in studying the inter-relationships between the rules of the game of society (including both formal institutions and informal rules associated with cultures) and the extent to which people respond positively or negatively to challenging experiences.
So why don’t researchers ask people about their life stories – the high points, the low points, the turning points etc – rather than the questions asked about happiness, life satisfaction etc in surveys? The reason why little use has been made of life stories in the past, at least in scientific research as opposed to literary works, must have to do with the difficulty of adding different life stories together (or averaging them in some way) to obtain an overall picture of some dimension of human flourishing.
The secret of success in making quantitative analytical use of life stories is to focus on identifying whether or not the stories display particular characteristics of interest to the researcher. For example, in their study of narratives relating to high points, low points and turning points Jack Bauer, Dan McAdams and April Sakaeda coded the paragraphs that participants wrote about each episode according to the presence or absence of integrative and intrinsic memories. Integrative memories were present if there was evidence in the account that the participant had learned from the experience or come to a deeper understanding of self or others as a result of it. Intrinsic memories were present if participants focussed on matters of intrinsic interest, e.g. meaningful relationships, rather than extrinsic interests, e.g. money and status. (See: ‘Interpreting the good life ...’, Journal of Personality and Social Psychology, 2005).
Participants in this study were also asked to complete more conventional survey questionnaires to provide measures of happiness, maturity (measuring such things as the degree to which individuals can hold impulses in check and respect others’ standards) and personality traits (neuroticism, extraversion, openness, conscientiousness and agreeableness). The results of study enabled the authors to reach the following conclusions:
People who emphasised what they learned from their experiences tended to be more mature than others.
People who emphasised the effects of experiences on personal growth and relationships tended to be happier than others.
For the most part these results could not be explained by simply knowing the broad personality traits of individuals in the study.
It seems to me that narrative research may be able to play a role in studying the inter-relationships between the rules of the game of society (including both formal institutions and informal rules associated with cultures) and the extent to which people respond positively or negatively to challenging experiences.
What will you regret on your deathbed?
There is a saying going around that no-one on their deathbed ever regrets not spending more time at the office.
It is a witty thing to say - but the people saying it are making a serious point. Does the point stand up to scrutiny? It seems reasonable to expect that some people would regret not working harder or longer to accumulate more wealth to leave to their children and grandchildren. I suppose there would also be a few who would be wishing that they had spent more of their wealth during their lifetime – they would be regretting that they could not take it with them.
I suspect that it is safer to assert that few people on their deathbed ever regret the time they have spent with their families - but that doesn’t sound so witty. It would also be very hard to confirm (or disprove). Imagine an elderly person lying on her deathbed with her family gathered around when someone conducting a survey comes in and starts asking her to nominate the things she most regrets in her life. How would she respond? Then think about the potential bias in the survey sample that would come from leaving out all the people who die unexpectedly, all those who die peacefully in their sleep and those who are not able to think clearly about anything when on their deathbeds.
Why focus on deathbed regrets? Despite Solon’s ancient view that no-one can tell whether they have had a happy life until they reach the very end, it seems to me that survey findings about regret are no less valid because researchers don’t wait until people are on their deathbeds before asking them about their regrets. As discussed in an earlier post there have been interesting research findings about regret. For example, in the long run we tend to regret the things we have not done more than the things we have done (see here).
When someone makes an assertion about deathbed regrets they are obviously just inviting us to conduct a thought experiment.
Some of these deathbed thought experiments are worthwhile. For example, when you are on your deathbed will you regret that you didn’t live a more healthy lifestyle? That seems to me to be worth thinking about – even though the answer could depend on the reason why I am on my deathbed. What would I be thinking if I was on my deathbed because I had been bitten by a snake while out getting my daily exercise?
However, there is one assertion about deathbed regrets made to me by a wise person the other day that seems to be to be just about beyond dispute: “No-one on their deathbed ever regrets not spending more time ironing clothes”.
It is a witty thing to say - but the people saying it are making a serious point. Does the point stand up to scrutiny? It seems reasonable to expect that some people would regret not working harder or longer to accumulate more wealth to leave to their children and grandchildren. I suppose there would also be a few who would be wishing that they had spent more of their wealth during their lifetime – they would be regretting that they could not take it with them.
I suspect that it is safer to assert that few people on their deathbed ever regret the time they have spent with their families - but that doesn’t sound so witty. It would also be very hard to confirm (or disprove). Imagine an elderly person lying on her deathbed with her family gathered around when someone conducting a survey comes in and starts asking her to nominate the things she most regrets in her life. How would she respond? Then think about the potential bias in the survey sample that would come from leaving out all the people who die unexpectedly, all those who die peacefully in their sleep and those who are not able to think clearly about anything when on their deathbeds.
Why focus on deathbed regrets? Despite Solon’s ancient view that no-one can tell whether they have had a happy life until they reach the very end, it seems to me that survey findings about regret are no less valid because researchers don’t wait until people are on their deathbeds before asking them about their regrets. As discussed in an earlier post there have been interesting research findings about regret. For example, in the long run we tend to regret the things we have not done more than the things we have done (see here).
When someone makes an assertion about deathbed regrets they are obviously just inviting us to conduct a thought experiment.
Some of these deathbed thought experiments are worthwhile. For example, when you are on your deathbed will you regret that you didn’t live a more healthy lifestyle? That seems to me to be worth thinking about – even though the answer could depend on the reason why I am on my deathbed. What would I be thinking if I was on my deathbed because I had been bitten by a snake while out getting my daily exercise?
However, there is one assertion about deathbed regrets made to me by a wise person the other day that seems to be to be just about beyond dispute: “No-one on their deathbed ever regrets not spending more time ironing clothes”.
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