The dilemma that is cental to our world’s economic and development future as seen by a Chinese economist:
Sooner or later, the public themselves need to choose which path of development path to take.
By Wang Ding Ding, Professor, China Center for Economic Research Peking University
(Caijing.com.cn) Recently, gas prices have raised controversy again. Let’s not look at the numbers just yet, but go according to intuition, alright? I feel like every one of my readers in China (whether or not the reader owns a car, or is from Hangzhou or Beijing), is troubled by car emissions in some manner or another.
Mr. Wang points out pollution effects and traffic deaths in China are of greater consequence than in the United States and Western Europe.
If we really are to conscientiously choose a new, uniquely Chinese path of development, then we first have to find a sort of lifestyle not based on the car culture; maybe we should even cultivate a sense of guilt in driving. However, this sort of choice may be too late or too difficult to implement already, because as the distance between home and workplace continues to grow, public transportation may not be suitable for replacing private cars.
I can give more examples, but the above three are sufficient to come to this conclusion: reasonably speaking, gas prices in China should be even higher than in Western Europe and North America. If we are to assume that every human life is of equal worth, then, according to population density, gas prices in China should be many times higher than North America’s! On the other hand, my friend Ye Hang, many years ago, along with my other friend Fan Gang, have both argued that, statistically speaking, the car and construction industries are the pillars of any kind of industrial process. They are still the most effective means of development to improve GDP or employment. So the debate continues.
Wang blames much of this on the preeminence of the energy, manufacturing and construction industries and the monopolistic design of the energy complex.
This is a similar pattern to what exists here and in the Eurozone; in the energy sector the priority of suppliers both national and corporate is to protect pricing power first and everything else afterward.
Why do I insist on teaching “new political economy” as a graduate course? Because I believe that sooner or later, the public themselves need to choose which path of development path to take, what kind of lifestyle to lead, what sort of political process is necessary. This is what is meant by public choice.
It’s really no choice; the dynamics of supply and demand have shifted to favor the producers who can choose not to produce or to produce and hold off the market. The market can only choose to be subject to pricing forces that will eventually unbalance their own supply – demand dynamics or step away from the economies-of-scale industrial production model altogether.