Attention Economy


Sunday, November 6, 2016

Lin vs. Zhang – The Chinese Version of Keynes vs. Hayek

The Economist notes –
“IT IS not quite Keynes-Hayek, but Lin-Zhang is a marvel in its own right. …Justin Lin, a former chief economist of the World Bank, who leans to Keynesian faith in public spending, has squared off against Zhang Weiying, a self-professed Hayekian who doubts bureaucrats can ever beat the free market.
Like their predecessors, Mr Lin and Mr Zhang have been sparring over two decades. And whereas Keynes and Hayek were down the road from each other (respectively, in Cambridge and London), the Chinese professors are now only a few paces apart, both at the prestigious Peking University. Their latest debate has been one of their fiercest, becoming a talking point for the domestic press, other academics and even officials.
At issue is one of the big questions facing China’s economy: does industrial policy work? The idea that the government can champion specific industries is central to Chinese policy. Officials have long favoured different sectors, from textiles in the 1980s to renewable energy this decade. China’s growth record would seem to vindicate this. But critics disagree, arguing that favoured companies produce little innovation.”
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Meanwhile, Xi Jinping is consolidating his power
“China’s leader, Xi Jinping, already general secretary of the ruling Communist Party, president, and commander of the country’s military forces has been given another new title – “core” of the party leadership”