The China Thread

[The Minsky Moment]

Probably through trial and error.

But what to try and how do you recognize error?
Hayek was wrong about almost everything but not about the knowledge problem. We don't even know what it is we need to know.

[Valmy]

I have thought that a centrally planned economy might work with sophisticated enough data and computer resources.

We'll see if China successfully models it for us 

It's an interesting thought experiment, that might work if (and it's a big if) self interest of the decision makers is removed. What we are seeing in China are decisions being made for a reason other than optimal well being of the population.  It's a bit like the when say communism failed in the Soviet Union and the reply being that Communism was never tried in the Soviet Union.  But the question remains, could it ever really be implemented, or would self interest of those in charge always become the imperative.


I tend to think it is the latter, and for all its warts, Liberal Democracy may be the best model.

Well central planning has almost certainly been tried. Seems to me a regulated market economy works with the least disastrous results.

Liberal Democracy is not an economic model But if it is I would say straight up liberalism has a long history of disastrous economic meltdowns.

[crazy canuck]

I have thought that a centrally planned economy might work with sophisticated enough data and computer resources.

We'll see if China successfully models it for us 

It's an interesting thought experiment, that might work if (and it's a big if) self interest of the decision makers is removed. What we are seeing in China are decisions being made for a reason other than optimal well being of the population.  It's a bit like the when say communism failed in the Soviet Union and the reply being that Communism was never tried in the Soviet Union.  But the question remains, could it ever really be implemented, or would self interest of those in charge always become the imperative.


I tend to think it is the latter, and for all its warts, Liberal Democracy may be the best model.

Well central planning has almost certainly been tried. Seems to me a regulated market economy works with the least disastrous results.

Liberal Democracy is not an economic model But if it is I would say straight up liberalism has a long history of disastrous economic meltdowns.

Central planning to achieve political objectives yes.  But I read into your thought experiment an attempt to achieve optimal economic outcomes.  I don't think that has ever been attempted.

[Valmy]

Probably through trial and error.

But what to try and how do you recognize error?
Hayek was wrong about almost everything but not about the knowledge problem. We don't even know what it is we need to know.

Yeah I don't know. It is really just a theoretical thought experiment. If we had some kind of super AI gathering all the important data and managing the economy to achieve certain objectives could it work?

[DGuller]

I have thought that a centrally planned economy might work with sophisticated enough data and computer resources.

That's a very old debate.  Oskar Lange was arguing its possibility in the 1930s.

The problem is that even if you had the computing power needed and a workable model, how do you know and how can you get all the necessary information to input into the model?

I think in the age of AI China would eventually have better information about your wants than you do. 

[Jacob]

I tend to think it goes in this order (from best to worst):

• A liberal economic order with competent leadership and appropriate regulations and safeguards
• Centrally planned economy with competent leaderships and appropriate safeguards
• A liberal economic order with incompetent or corrupt leadership with misaligned regulations and safeguards
• Centrally planned economy with incompetent or corrupt leadership with misaligned regulations and safeguards

My read is that China's is tending towards 2, with dashes of 4; while the US is going all in at 3.

[Tonitrus]

I have thought that a centrally planned economy might work with sophisticated enough data and computer resources.

That's a very old debate.  Oskar Lange was arguing its possibility in the 1930s.

The problem is that even if you had the computing power needed and a workable model, how do you know and how can you get all the necessary information to input into the model?

I think in the age of AI China would eventually have better information about your wants than you do. 

It's not just your final duty...you want to go into the tanks and become one with all the people.

[DGuller]

I tend to think it goes in this order (from best to worst):

• A liberal economic order with competent leadership and appropriate regulations and safeguards
• Centrally planned economy with competent leaderships and appropriate safeguards
• A liberal economic order with incompetent or corrupt leadership with misaligned regulations and safeguards
• Centrally planned economy with incompetent or corrupt leadership with misaligned regulations and safeguards

My read is that China's is tending towards 2, with dashes of 4; while the US is going all in at 3.

I'm not sure that good planned economy can beat out shitty liberal economy, even with excellent leadership.  Part of the reason is that the scale of what needs managing is just too much, and would require many more levels of delegation than humans have learned to manage.  Another reason is that keeping the system competent and free of corruption for long is very hard.

I think it gets more uncertain when you add a hybrid category, something that has both a Five Year Plan and NEP.  That may have more of a chance at beating the shittiest of liberal economies.

[The Minsky Moment]

I think in the age of AI China would eventually have better information about your wants than you do. 

Judging by today's spam it thinks I want:

• A 3 bottle lot of DRC Richebourg 1991 for 80,000 Hong Kong dollars - I do actually want this, but no chance of affording it, even if I had any Hong Kong dollars
• A Pyrex container set - no interest
• Christmas lollypops - I'm Jewish and I don't eat lollypops
• A GLP-1 prescription - granted I'm not in peak shape, but again not in the market
• Canvas Photo prints - no interest

[Jacob]

I'm not sure that good planned economy can beat out shitty liberal economy, even with excellent leadership.  Part of the reason is that the scale of what needs managing is just too much, and would require many more levels of delegation than humans have learned to manage.  Another reason is that keeping the system competent and free of corruption for long is very hard.

I think it gets more uncertain when you add a hybrid category, something that has both a Five Year Plan and NEP.  That may have more of a chance at beating the shittiest of liberal economies.

Yeah that's a fair point.

My thinking is that competent central planning leadership allows for a certain amount of decentralized decision making, while still retaining the central authority and direction setting. Conversely, poor liberal economic leadership leads to industrial and economic policy (and personality driven decision making) that undermines the benefits of liberal economic order in practice.

... but what that boils down to, I suppose, is the degree to which competent/incompetent leadership models one system while ostensibly being another type of system. So it really just becomes a true Scotsman type thing - "is it really centrally planned when..." or "there's not much liberal economic order left when the policies are actually...".

[Josquius]

Truly effective AI that actually create for a perfect centrally planned world that is good for everyone are some way off....

... But then we are talking about China. Would they really care if they get a few things critically wrong, starve a few villages, poison some kids.... They'll see this as a price worth paying with pretty in reach data crunching tech.

[Zanza]

At the moment, central planning in China must be assumed to neither have perfect information nor ideal planning premises.

Information being imperfect is almost certain as a lot of reported figures are suspect and there are strong incentives for local governments of all levels to deliberately report wrong figures.

The planning premises are also not ideal as despite strong regulation, the overcapacity and misallocation of capital is obvious. It's clearly not realizing the maximum potential value creation as it follows other policy goals.

As long as there are still humans in the loop, both issues will persist. I doubt that an authoritarian state (or any human society) will give up on the human in the loop.

[Jacob]

I think the reality is that the overcapacity and misallocation of capital is being done for very real and "very good" reasons, only those reasons are political in the broad sense and not economical.

A human (or group of humans) could probably make the decision to address the overcapacity and misallocation of capital just as well as an AI at this stage. The problem is not identifying the issue, nor (I expect) identifying measures to address it - it's that effective measures effect a whole bunch of consequences that the CCP does not want to deal with. That doesn't change whether it's AI or humans who make the decisions, or because AI information collection on the populace gives greater details on the consequences.