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Sharing a "cliffnotes" of my book, China's Gilded Age
Unusual for an author to write a summary of one’s book.
But I thought: why not? I like cliffnotes, too.
https://sites.lsa.umich.edu/yy-ang/2021/02/04/summary-of-chinas-gilded-age-2/
Unusual for an author to write a summary of one’s book.
But I thought: why not? I like cliffnotes, too.
https://sites.lsa.umich.edu/yy-ang/2021/02/04/summary-of-chinas-gilded-age-2/
China’s Gilded Age answers one of the most enduring puzzles in Chinese political economy: Corruption is normally believed to impair growth—so why has the Chinese economy grown for so fast and so long despite corruption of crisis proportions?
P1
P1
The answer lies in understanding the type of corruption that has come to dominate in China: I call it access money – lavish perks extended by businesses to powerful officials in exchange for lucrative, exclusive privileges.
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P2
This is the same type of corruption that prevailed in late 19th century America, a period known as the Gilded Age. If the American economy could and did boom despite rampant corruption, why not China today?
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P3
Although corruption is always harmful, not all types of corruption directly impede growth.
Over time, in China, access money came to dominate, while directly growth-damaging types of corruption such as embezzlement and bureaucratic extortion came under control.
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Over time, in China, access money came to dominate, while directly growth-damaging types of corruption such as embezzlement and bureaucratic extortion came under control.
P4
Access money provided the financial rewards in a political economy where the careers of political elites were tied to economic performance and whose formal salaries were paltry. I call this a “profit-sharing” model.
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P5
To outshine their peers in a fiercely competitive economy and to collect more rents, politicians must have ambitious development plans and build more, rather than prevent things from being built (with thanks to @tylercowen for this line).
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P6
Yet power is more easily monetized in some sectors than others, so politicians have poured particular energy into promoting construction and real estate.
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P7
In this context, access money spurred growth and investment, but with inequality, financial risks, and misallocation of capital.
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P8
And that is how China became a high-growth but also risky and imbalanced economy. “Risk and imbalance” cannot be taken out of the story; it is part of the whole package.
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P9
The leader Xi Jinping inherited a Chinese Gilded Age from his predecessors. That is why he has made anticorruption and eradicating poverty his two signature policies.
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P10
How does this mean for our understanding of corruption and capitalism? The rise of capitalism was not accompanied by the eradication of corruption, but rather by the evolution of the quality of corruption from thuggery and theft toward legalized access money.
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P11
Compared with countries that prospered earlier, China is still a newcomer on this evolutionary path.
Hence, by exploring China’s Gilded Age, we are forced to revisit idealized narratives about the rise of the West.
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Hence, by exploring China’s Gilded Age, we are forced to revisit idealized narratives about the rise of the West.
P12
Did rich countries become rich by first eradicating corruption? Did corruption really disappear, or did it only change in structure and forms? Rising inequality and discontent among rich democracies today boils down to unequal political influence.
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P13
We may well be living in a twenty-first century Gilded Age. 
P14. The end.
P14. The end.
