Opinion

Mark Leonard

China’s affluence crisis

Mark Leonard
Jul 31, 2012 15:40 UTC

For most of the last 30 years China’s leaders have been kept awake at night worrying about their country’s poverty. But as the country approaches its once-in-a decade leadership transition this fall, it is China’s affluence, rather than its poverty, that is causing sleepless nights.

Deng Xiaoping declared in 1979 that the goal of China’s modernization was the creation of a “Xiaokang (moderately well-off) society, where citizens would be comfortable enough to lift their eyes above the daily struggles of subsistence. For more than a decade, Chinese people have been living a version of this once-utopian concept.

On a recent trip to the prosperous Guangdong province on the Pearl River Delta I was struck by the sophistication and wealth of China’s urban experience – but also by the fragility of the social compact on which it is founded. The country’s economic growth “slowed” to 7.6 percent in the second quarter (the weakest quarter since 2009, when 20 million Chinese lost their jobs as a result of the global financial crisis). Only last week, Premier Wen Jiabao warned of tough economic times ahead.

In Guangdong – where migrant laborers repeatedly riot, and where a new middle class fights hard to protect its advantages in the face of an economic slowdown – the regime is particularly challenged. After the experience of Tiananmen Square in 1989, China’s leaders are painfully aware that social strife and revolution are more likely to come about as a result of the thwarted ambitions of the aspirational than because of the complaints of the very poor.

Now that China is flush with wealth, some of its intellectuals are turning to a surprising source to understand its problems. J.K. Galbraith’s book The Affluent Society was a critique of the obsessive focus on GDP growth and production in the United States in 1958. He made waves by arguing that America’s obsession with the quantity of goods produced would have to give way to the larger question of the quality of life that it provided. In the introduction he famously argued that while poor men have a clear sense of their problems and the solutions, the rich man has “a well-observed tendency to put [wealth] to the wrong purposes or otherwise to make himself foolish”. As with individuals, claimed Galbraith, so with nations.

Terminating the European status quo

Mark Leonard
Jul 5, 2012 19:02 UTC

VIENNA — When Arnold Schwarzenegger declared “I’ll be back” at the end of the first Terminator film, very few thought he was talking about returning to Austria. Yet here in Vienna, where Schwarzenegger made a surprise trip this week, there is speculation that his political career will be resurrected – Lazarus-like – in his abandoned homeland. And if he does take the leap, the Terminator could find himself playing a walk-on part in the most grandiose story of his career: the breakdown of the postwar European political order.

The talk is that Schwarzenegger could be one of the most visible faces supporting a putative new “Alliance for Austria” party that is being planned. The man behind it is the expatriate self-made billionaire Frank Stronach, who has pledged to launch a revolution in this placid corner of Central Europe. Last month he released a glossy eight-page personal manifesto that starts with the memorable phrase “unhappily, government is made up of politicians.” Pledging to rectify this anomaly, he talks about instituting lotteries that will allow ordinary people to suggest topics for parliament to debate, introducing a flat tax, and scrapping all corporate taxation for companies that invest in Austria.

According to the Austrian magazine News, Stronach has not yet decided whether to launch a brand-new party or effectively to buy the existing BZO party (a more moderate breakaway from the neo-fascist Freedom Party) by making a big enough donation. Apparently the former would cost 20 million euros, while the latter would be cheaper at 7 million. Stronach hopes to capture up to 20 percent of the vote, which would be the biggest political upset to hit this country since Jörg Haider’s party won a shock victory in the 1999 general election.

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