Hubris and Free Markets


THE COLLAPSE of communism in Europe in 1989 brought about a good deal of self-congratulation in the United States which at times verged on hubris. Reading an article this week by Editor Robert Bartley on the editorial page of Wall Street Journal, for example, you'd think the world had just emerged from the Dark Ages into a new dawn of democracy and freedom based on free markets and capitalism.

Few people ever doubted that communist regimes eventually would collapse of their own torpid weight. Central planning, the economic linchpin of communist regimes, was pretty good at creating heavy industry, but it failed monumentally when it came to producing consumer goods. The most notable comparison is found in the two German nations since World War II.

But Europe, and its robust child, America, were cradle and laboratory of democracy and Adam Smith capitalism. When we examine how the system has worked in other parts of the world, the comparison falters.

Let's compare, specifically, China and India -- two nations with centuries of history in the same part of the world. They are, respectively, the world's largest and second-largest countries in population. Each endured a long period of foreign intervention based on economic exploitation.

But just after World War II, the two countries turned in opposite directions. In 1947, after a long period of colonial tutelage under Britain, and with the promise of substantial aid and trade from the West, India gained its independence as a democratic, free-market nation; in 1949 Mao Zedong imposed on China a rigid system of communism based on isolation and self-sufficiency. So today we can compare the two countries based on nearly half a century of experience.

The major problem for each country has been willy-nilly population growth. But China, at times using coercive methods unacceptable in democratic societies, has managed to get its annual population growth rate to 1.24 per cent, while India's remains at a troubling 2.01 per cent. If these patterns prevail, India will surpass China in population sometime before the LTC middle of the next century. By then India will have a population of more than two billion, living in an area far smaller than China.

How have the two nations fared in economic and social conditions in the post-war period? Well, only one in three Indians today is literate; three out of four Chinese are literate.

By the yardstick of health: China, whose population of 1.1 billion is only a quarter higher than India's 850 million, has twice the number of doctors and hospitals. The result: Life expectancy in China is 68; in India, it is 55. The infant mortality rate in India is double that of China.

What about economic productivity, which is supposed to be the chief advantage of democratic free-market systems? According to the most recent figures available from the World Bank, the gross national product in communist China is virtually identical to that in free-market India; both are dismal, but China is gaining a little faster.

Ethnic strife constantly stalks India; in China, it is subdued.

Critics like Robert Bartley would argue, of course, that India has been stunted by its flirtation with socialism. These critics were heartened by the emergence of Rajiv Gandhi in the latter half of the 1980s. An editorial in the Journal even anointed him "Rajiv Reagan." But when Gandhi put his free-market policies on the line in democratic elections, he was defeated.

Similar comparisons could be found in other countries of Asia. The literacy rate in communist North Korea, for instance, is 95 per cent, compared to 84 per cent in democratic Thailand. Thailand has just 7,000 doctors, compared to 40,000 in North Korea -- never mind that Thailand is now confronted with a horrendous AIDS epidemic as a result of its booming free-market intercourse in sex with the West.

When people like Robert Bartley gloat about the ascendancy of free-market capitalism, they always talk about the two Germanies. You never hear them compare China and India, or Thailand and North Korea.

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