Poor democracy (India) vs. Wealthier dictatorship (China)?

[compson III]

10 years from now it will likely be "wealthier democracy" vs. "poor dictatorship." Guess which characteristic is more likely to change?

There is no scope for entrepreneurship in China, unless you have no need of capital to start up your business. Look at the list of non-crony billionaires in China. Mostly the only ones are website founders, who had no need of startup capital or regulatory permits.

The Chinese leadership will not give up control of the economy, because that would mean they have to give up control of political power. And that means they are stuck in the middle income trap.

[compson III]

False dichotomy.

It is a false dichotomy and a classic cognitive error.  "China has developed in spite of an authoritarian government" is a lot less interesting story than "China has developed because it has pioneered a hybrid third-way form of state driven development."  Even though I've never heard that story articulated in a non fuzzy form.

[compson III]

(Infrastructure is sort of a red herring- these flashy projects draw attention, but government willingness to build isn't the decisive factor that drives development. That is why India will still develop in spite of the things Sbane points out, and probably why Indians aren't clamoring for a dictatorship.

You might be interested in this old Larry Summers paper I was reading the other day:
http://qje.oxfordjournals.org/content/106/2/445.abstract

Once you disaggregate the capital stock into investment in structures vs. investment in equipment, the former is irrelevant to economic growth.

[compson III]

I know it'll piss people off but the problem in India isn't so much democracy as it is the Gandhi legacy of being suspicious of markets. One can of course claim that this wouldn't have been in place without democracy but I doubt that that is particularly true, actually.

Having been to both I think I'd rather be in India.

You can call it what you want but capitalism was not going to be important until Westernization to some degree wiped away much of the strength of the caste system.  You can't have a productive class of capitalists until money is the primary means of social distinction.

[compson III]

Westernization to some degree wiped away much of the strength of the caste system.  

Yes, it's a good thing that the English showed up in India to teach Sammy egalitarianism because, you know, the English have never gone in for any sort of caste system.

Full egalitarianism is not as important as that the bourgeoisie is at parity in social standing with other classes and that it drives the social dynamics at the top level.  You don't need everyone to be an entrepreneur, just a solid class of them.  You change the social dynamics so that the upper class competes for distinction via wealth accumulation.

To clarify, the point isn't that the gap between the top and the bottom is narrowed; rather the maintenance of that gap is dependent on wealth accumulation.

[compson III]

Well admittedly the West has benefited from some pretty strong boundaries.  Wealth accumulation without boundaries is just pure Vikingism.

Not sure if I'm really talking about the banal "rule of law" though when I say "strong boundaries."  This is what the libertarians get wrong.  You could say government is off limits as a tool in wealth accumulation.  Well eminent domain was rapacious before and during the Industrial Revolution in England.  Yet somehow the British bourgeoisie declined to use government permanently as a means for rent seeking and instead spent their time tinkering with machines and inventing new things.

I don't think there's an institutional answer for this really.  There's a kind of benevolence behind it that's inexplicable.  It's just cultural superiority perhaps (for its time and place).  Or pure circumstance.