China: Daydreams of the Fall

Philosopher Nassim Taleb is famous for his theories regarding black swans, described in his book of that name as events of large magnitude and disproportionate consequence that are unexpected and unpredictable.  According to the summary of his ideas on his webpage,

We don’t understand the world as well as we think we do and tend to be fooled by false patterns, mistake luck for skills (the fooled by randomness effect), overestimate knowledge about rare events (Black Swans), as well as human understanding, something that has been getting worse with the increase in complexity.

The collapse of the Soviet Union has my vote for the greatest Black Swan of the 20th century.  As Taleb predicted, once it happened, it immediately became a basis for “overestimating our knowledge about rare events.”  Transformed in the public imagination from an unprecedented and unpredicted anomaly into a commonplace, it now serves as the basis for all sorts of fanciful predictions, the most prominent of which are probably the recurring reports of China’s eminent demise.  Insty just linked another typical example penned by Lawrence Solomon.  According to the first two paragraphs:

In 1975, while I was in Siberia on a two-month trip through the U.S.S.R., the illusion of the Soviet Union’s rise became self-evident. In the major cities, the downtowns seemed modern, comparable to what you might see in a North American city. But a 20-minute walk from the centre of downtown revealed another world — people filling water buckets at communal pumps at street corners. The U.S.S.R. could put a man in space and dazzle the world with scores of other accomplishments yet it could not satisfy the basic needs of its citizens. That economic system, though it would largely fool the West until its final collapse 15 years later, was bankrupt, and obviously so to anyone who saw the contradictions in Soviet society.

The Chinese economy today parallels that of the latter-day Soviet Union — immense accomplishments co-existing with immense failures. In some ways, China’s stability today is more precarious than was the Soviet Union’s before its fall. China’s poor are poorer than the Soviet Union’s poor, and they are much more numerous — about one billion in a country of 1.3 billion. Moreover, in the Soviet Union there was no sizeable middle class — just about everyone was poor and shared in the same hardships, avoiding resentments that might otherwise have arisen.

Right.  Except for the fact that the Chinese economy today does not parallel that of the latter-day Soviet Union (how prominent were Soviet consumer goods in the U.S. market in 1988?), the mentality of China’s citizens has nothing in common with the descriptions of pervasive despair in the Soviet Union so poignantly described by David Remnick in Lenin’s Tomb, and the rest of these “obvious” parallels amount to a broad comparison of apples and oranges.  Such stuff might have figured prominently in Taleb’s book if it had been written a little earlier.  In a chapter about World War I, for example, he describes how no one expected it before it happened, and everyone suffered from the illusion they had known about it and predicted it all along after the fact.  They then used it as the basis for all kinds of delusional predictions, almost none of which came true.  Copious examples can be found in the intellectual journals of the decade following the war.

Meanwhile, predictions of China’s doom have become something of a cottage industry for some writers.  Gordon Chang, for example, wrote a book in 2001 predicting China’s collapse not later than 2011, and spend the intervening years writing articles proving inductively and deductively that it must be true.  China’s leaders apparently didn’t read the book.  We have arrived at 2011, and China’s governing class seems to be as alive and kicking as ever.   Black Swans can always happen, but I will not be too astounded if they are still around and still cheating their “inevitable” fate in 2021.

China’s rise is itself a Black Swan of sorts.  She was a basket case in the 1920’s, and still patronized as little removed from a third world country as recently as the 1980’s.  Many in the West are uncomfortable with her sudden rise to superpower status.  However, it’s unlikely she will be toppled by wishful thinking.  In the long term, her government is in a state of unstable equilibrium.  It does not govern by the consent of the governed, and bases its legitimacy on a failed alien philosophy which its economic policy entirely contradicts.  However, Rome’s government was similarly unstable during the reign of Augustus Caesar.  Somehow she managed to stagger on for another four centuries and more.

Leave a Reply