Newsnotes 2009 05

Notes On The News

by Gwydion M Williams

Conserving Casino Capitalism

Goldflinger [Brown Sold Britain’s Gold]

OECD – NATO Economics

Thailand – Revolution By Permission

Moldova – Electorate Deemed Wrong [And Taiwan Jails Former President]

Bury My Heart At General Motors

North Korea ‘Flies Over The Cuckoo’s Nest’

Hope for the Language of Jesus [Aramaic]

China: Healthy Economy

China’s Wild West

China: Healthy People?


Conserving Casino Capitalism

The G20 was hailed as a triumph, which means it was a flop. There was talk of action about tax havens, but it remains to be seen if much will happen. There was also a strong desire to get back to ‘business as usual’ as soon as possible.

It was a triumph for China. China holds enough dollars to bring down the world financial system, which would leave them still powerful. China remains the world’s leading manufacturer of cheap consumer goods, stuff people can’t easily do without.

There is loose talk now of a G2, the USA plus China. I doubt China will be so foolish as to play along, repeating the USSR’s mistake of letting world politics look like a two-horse race with the USA much stronger. For now, China’s status as a counter-weight to the USA is confirmed.

As for Western Europe and the USA, there was a strong desire to save the ‘Casino Capitalism’ that has grown up over the last 30 years. The merger of safe conservative banking with the riskier and speculative sort was allowed on the theory that highly-paid bankers would not buy up doubtful assets – not even if they were paid bonuses for paper profits. The regulators removed rules that had been put in place during the Great Depression of the 1930s. Rules that showed their merit during the West’s best period, the era of fast growth and relative stability from the 1950s to 1970s. Rules that have been systematically removed from the 1980s, as much by Labour and the US Democrats as by Tories and the US Republicans.

Nothing seems to have been learned from the current crash. Regulators of the sort who failed before are left in place to fail again.


Goldflinger [Brown Sold Britain’s Gold]

“Gordon Brown is to face questions in parliament after revelations that he disregarded advice from the Bank of England before he sold off more than half the country’s gold reserves at the bottom of the market…. [when he was chancellor and Tony Blair was Prime Minister]

“Bank of England officials had serious misgivings over the chancellor’s determination to sell 400 tons of bullion in a series of auctions between 1999 and 2002, when the price was at a 20-year low. Since then the price has almost trebled, meaning the decision cost the taxpayer an estimated £2 billion.” [A]

This particular topic was an issue back in 2007 and has since slipped out of the headlines. It reveals how much Brown was sold on a phoney model of a globalised economy in which information and finance dominated and nether manufacturing nor commodities mattered much.

Like Blair, he has an assured future if he loses the next election. The people who’ve done well out of Casino Capitalism know their friends and former Prime Ministers and Presidents can make vast sums for mediocre public lectures for ‘top people’. Nothing illegal – but think about what a pattern of influence it creates!


OECD – NATO Economics

“Yet the Sarkozy attack on tax havens and hedge funds outlined at his press conference with Merkel emerged not just to be an exocet aimed at the US liberals. It was also aimed at the Chinese, a less sensible target for Sarkozy.

“For some time the Chinese territories of Macau and Hong Kong have been what the French quaintly describe as ‘Paradis Fiscaux’, outside the transparency framework set up by the OECD, the world body responsible for controlling tax havens….

“Sarkozy had caused the Chinese deep offence by meeting the Tibetan leader in Poland last December.

“They finally agreed to meet at Sarkozy’s hotel, the Mandarin, a helpfully named venue. But the Chinese refused to turn up until the Elysée issued a joint diplomatic communique in which France moderated its position on Tibet.

“The meeting finally went ahead just after 10.30pm. The air cleared – the two men discussed whether Macau should be blacklisted or given more time….

“Brown was keen not to offend the Chinese over tax havens if the bigger prize was increased Chinese funding for the IMF.

“In the end, China produced $40bn. That money, as the emergency IMF fund was trebled to $750bn, was for Brown probably the biggest prize in his grand bargain since China’s status as a superpower was formalised. [B]

“Hu told Sarkozy that China was deeply sceptical about a tax haven blacklist. The Chinese president also indicated his unease that it would be monitored by the Paris-based OECD.” [C]

That was the key issue, the partisan nature of the OECD.. It began with the USA, Canada and West European countries plus Turkey – almost NATO, except it included neutrals like Ireland, Sweden and Switzerland. Japan joined in 1964 and some ex-Communist countries in the 1990s. It does not include China, nor does it include Brazil, India, Indonesia or South Africa. There is talk of having them join, but that remains to be negotiated. What this will mean for China’s free-market enclaves remains to be seen:

“China on Friday said that Hong Kong and Macau, both special administered regions, should not be labelled as tax heavens [sic]. Hong Kong, which has the largest stock exchange in Asia, allows foreigners great flexibility for brining in funds from across the world while Macau is the world’s biggest gambling centre in terms of revenues having surpassed Les Vegas Strip two years back.

“If put on the tax heaven black list, these two cities will lose their special appeal and popularity among investors, sources said. Hong Kong and Singapore, which also offers a lot of flexibility for money transfers from other countries, are major centres for private banking and wealth management. Thousands of rich people across the world use these centres to park their money.”[D]

Meantime the satirical magazine Private Eye suggests that the whole business about tax havens is flimflam, nothing much will really happen. Private Eye is mostly shallow in its judgements, but it is also the place where ‘insiders’ leak the stuff they’d not be able to publish elsewhere. Most British newspapers are controlled by corporate structures that use the tax havens to avoid paying their fair share of tax.


Thailand – Revolution By Permission

“The red-shirts held large rallies in the streets of Bangkok, forcing the cancellation of a high-profile Asian summit and clashing with security forces and local residents. Two people died in the violence…

“Protest leaders called off the action amid a major military crackdown to quell the riots.

“The red shirts took to the streets demanding that Prime Minister Abhisit step down, and fresh elections to be held.

“They say that he was illegally installed by parliament in December after courts ousted the government led by Mr Thaksin’s allies, and dissolved their parties.

“The red shirts have expressed anger over the detention of several protest leaders in recent days, while Mr Sondhi and his allies were never prosecuted for their political action.

“Last year, the yellow shirts occupied Government House for three months and seized Bangkok’s two airports for a week, stranding hundreds of thousands of travellers.” [E]

The violent crack-down in which troops are said to have opened fire and killed some demonstrators came after the West had given it the green light:

“The scenes on the streets drew international calls for an end to the crisis.

“The US State Department said Washington condemned the ‘unacceptable violence’ of the protests. The European Union expressed ‘great concern’.

“The EU’s Czech presidency called for ‘protesters to refrain from further violent action in the street’, which it said could only deepen tensions and harm the country’s stability….

“The street battles began after security forces moved to clear protesters from a big intersection in central Bangkok that they had blocked with burning tyres.

“Dozens were injured. The authorities took control of the intersection, but the protesters moved into surrounding streets, from where they threw petrol bombs and taunted soldiers.

“They also rigged a driverless bus to run into the lines of troops, but caused no casualties.

“Soldiers responded by firing at the protesters. The authorities say they used blank ammunition but the protesters have insisted they were live rounds.” [F]

None of the Western powers said anything about a fresh election. The red-shirts have won two elections already and would win a third. Instead you get a Guardian editorial saying:

“Thailand had built a democratic culture, which should have been strong enough to survive corruption and recession. But it is failing in the face of manipulative politicians and a public whose rage is being fired by a justified sense of exploitation and injustice…

“A democratic contest would go in Thaksin’s favour, which is why the urban elite want to deny him one. He has the loyalty of the rural poor. But his brand of billionaire politics has proved a dead end too. Thailand desperately needs to find a democratic leader who can overcome its divisions, before more bloodshed.” [G]

Translation, ‘democracy is the most sacred thing in the world, unless the voters dare chose someone we don’t like’. As Irish Nationalist leader Parnell explained in the late 19th century, Britain’s Liberals are very much ‘Cromwell’s people’. The paper formerly known as the Manchester Guardian began as the voice of Manchester Liberalism, the people who saw it as their sacred duty to bend the rest of the world to their wills. The people who blamed everyone but themselves when their own actions backfired.

How honest was British politics during the Industrial Revolution (mostly dated as 1760 to 1830)? How honest was politics in the USA when it became a major industrial power after its 1860s Civil War? Or Italy under the Christian Democrats, when it too industrialised? Are politicians of the ‘yellow’ faction noted for their honesty? Corruption is a pretext; the issue is about whether the people are allowed to use their votes to change things. An interview with Mr Thaksin lets him put the point more clearly:

“Do you think your supporters, the red-shirts, have been defeated?

“Thaksin: The movement’s aim is to get true democracy for all. Thailand has been telling the whole world that we are a democracy, but we are not really a democracy for all. It is a democracy for a few: for the political elites in Bangkok who still have a very big influence over Thai politics…

“The current prime minister used military force with true ammunition and shot at the people. So many people died, they dragged the dead bodies away, and tried to destroy the dead bodies. This is the same as what happened in October 1996 when there was a student uprising. There were so many missing, but you couldn’t find the corpses because they destroyed the corpses.

“We have 17 coups, 10 of them successful, and we have 22 elections. That means that every two elections we have a coup. What kind of democracy is this?…

“Even though the majority of the red shirts are my supporters, not all of them are. Many joined because they hate the injustice that has plagued Thailand for three years, and the double standards that are all over. That is the injustice.

“Secondly, those that understand democracy know very well that in the past Thailand was not a democracy. We look like a democracy but we are not a democracy. What kind of democracy is it when all the political power is not connected to the people?…

“Reconciliation is like a clapping hand. You need two hands to clap, you cannot use one hand. You need to reconcile between the divisions. But if instead of talking you try to punch them, hit them, and then you kill them, is that going to work?” [H]

If the protests are successfully crushed, it could later turn out to be a ‘Mosaddeq Moment’. Mohammed Mosaddeq was an Iranian leader vastly more sympathetic to the West than the present regime. But he dared to nationalise foreign oil companies in the early 1950s, an early move in the long struggle for local control of raw materials. British and USA helped overthrow and set up the Shah as an autocrat for the next quarter century, after which Iran went Islamist


Moldova – Electorate Deemed Wrong [And Taiwan Jails Former President]

“Protesters in Moldova stormed the country’s parliament today, smashing windows and hurling tables and chairs out onto the street, in a violent protest against Sunday’s elections which saw the ruling communists returned to power.

“Anti-communist demonstrators poured into the building and heaped whatever they found onto the street. They set fire to paper, computers, and furniture. A small group also broke into the president’s office – as police using tear gas and water canons tried to drive them back….

“Some 600,000 Moldovans have left to find work in the EU. The country’s provinces largely support the pro-Russian communists. But the [Moldovan capital city] Chisinau strongly favours the more western-orientated opposition, who want free market polices and closer ties with the EU and Nato.

“Today one analyst said the uprising in Moldova was similar to the 2004 pro-western Orange Revolution in next-door Ukraine. He added, however, that the protests were unjustified since western observers had confirmed the communists as legitimate winners of Sunday’s election, and had certified the poll as fair.”[J]

Unsurprisingly, you didn’t get Western leaders lining up to condemn this, just as they kept quiet when the ‘Yellow Shirts’ overthrew the elected government of Thailand. They implicitly endorsed violence when it suited them, but seem to have failed for now, a recount confirmed a Communist win.[K] It may end up like Mongolia last year, where the capital also wanted the Communists out but the rest of the country preferred them and they form the current government.[L] The West could also lose Ukraine: they were too mean and short-sighted to pump in money when pro-Western elements were riding high.

Meantime Taiwan has shown that less has changed than people thought a few years back. It was the first-ever peaceful transfer of power between Chinese political parties. (Singapore has multi-party elections but the ruling party keeps winning them, having done an astonishing job in transforming a vulnerable city-state.) I felt at the time that Taiwan had had a transfer of power only because it remains dependent on the USA, which was demanding it. Now the Kuomintang are back in power and the man who ousted them is on trial for corruption. Since corruption was routine and gross for the Kuomintang during its 20-year rule on the mainland and remained so for its subsequent rule on Taiwan, this can only be seen as political persecution.

“Taiwan’s former President Chen Shui-bian has gone on trial accused of a series of corruption charges in a case that has gripped the island.

“Mr Chen, 58, along with his wife and 12 others, is accused of embezzlement, taking bribes and money laundering.

“He denies the charges and says he is a victim of a ‘government purge’.

“Since leaving office in 2008, Mr Chen has been a vocal critic of the new government’s support for China, which claims sovereignty over Taiwan.” [M]

The USA was too bloody clever back in the 1990s. After successfully boosting the general principle of multi-party government, they must have decided that popular protest could usefully be used whenever an election produced a result they did not like. Rather than becoming the norm world-wide, as it has it Europe, it came to be seen as partisan. It became not much more than a tool for ‘nation-busting’, a way to undermine effective governments and create a chaos in which the US overclass could get what it wanted.

[Chen Shui-bian was indeed jailed for many years, but was released on medical parole early in 2015.  The Kuomintang is back in control of Taiwan.]


Bury My Heart At General Motors

If normal business rules had been applied, the Big Three car-makers in the USA would have been out of business ages ago. All US citizens would be driving cars made by foreign-owned manufacturers. A good idea?

I think it may happen anyway. China is developing its own motor industry. India has just produced the world’s cheapest car.

The USA’s problem is that too much of their talent and effort has gone into financial games. The ‘rocket scientists’ designed financial packages that went very high and then detonated, which was viewed as unexpected. I felt all along was that these activities shuffled wealth from one person to another but created no new wealth. Not unless it caused money to be invested in productive industry, and that mostly happened outside of the USA.

General Motors have an electric car. So has everyone else. They’ve had 30 years to change and don’t seem able to.


North Korea ‘Flies Over The Cuckoo’s Nest’

Up to the mid-1960s, North Korea was doing quite well. They even had a very successful football team in the World Cup that England won. They then suffered the general stagnation of the pro-Moscow block when Brezhnev took over. But tht doesn’t mean they are giving up just yet.

The USA has bungled negotiations, perhaps hoping North Korea would collapse after all, though no Leninist regime outside of Europe has yet collapsed. They got indignant when North Korea dared launch a large rocket that was claimed as a satellite launcher.

“The US, South Korea and Japan have all condemned the launch from the Musudan-ri base in the north-east of the communist country.

“They say it violates a UN Security Council resolution adopted in October 2006 which bans North Korea from carrying out ballistic missile activity.

“Susan Rice, the US envoy to the UN, called Pyongyang’s move a ‘clear-cut violation of [resolution] 17-18’, while her Japanese counterpart said Tokyo was seeking a ‘clear, firm and unified’ response.

“But, says the BBC’s Laura Trevelyan, who is at the UN in New York, countries such as China and Russia disagree.

“There was no general agreement at the council on whether North Korea was in breach of the resolution, let alone on whether it should be punished, our correspondent says.

“Zhang Yesui, China’s envoy to the UN, said that the world should refrain from taking action that might lead to increased tension.” [N]

In real terms, a long-range ballistic missile and a space rocket are almost the same thing. We know now that Sputnik was launched in 1957 because Russian designers pointed out that this was easily done with a rocket designed to let the USSR hit the USA. The USA had plenty of aircraft and submarines and its own ICBMs came more slowly. It was also embarrassed that its best team was Von Braun’s Germans who had built the V2 for Hitler and had shown utter indifference while labourers from the Nazi concentration camps were worked to death. In those days West Germany mattered more than Israel and US prestige mattered much more than both, so Von Braun got the job and put US citizens on the moon. After which the USA turned inwards and began a thirty-year orgy of greed and self-indulgence

If North Korea figures it can outlast US hegemony, and that they are safer breaking rules than trying to keep them, they are likely to be correct.


Hope for the Language of Jesus [Aramaic]

We know about the life of Jesus from Greek gospels, but everyone agrees that he spoke Aramaic. A language related to Hebrew, but which had become the common tongue of much of West Asia under the Assyrian and Babylonian Empires. It retained that status under the Persians, the Greeks and then the Romans.

Christianity began as a faith for Aramaic speakers, only later branching out into Greek and then Latin. The Greeks imposed their own vision, probably very different from the original, but Aramaic lingered on. Surviving the Arab conquest, which eventually made most of the older populations into Arabic-speakers.

“Ilyana Barqil wears skinny jeans, boots and a fur-lined jacket, handy for keeping out the cold in the Qalamoun mountains north of Damascus. She likes TV quiz shows and American films and enjoys swimming. But this thoroughly modern Syrian teenager is also learning Aramaic, the language spoken by Jesus.

“Ilyana, 15, is part of an extraordinary effort to preserve and revive the world’s oldest living tongue, still close to what it probably sounded like in Galilee, now in Israel, on the brink of the Christian era…

“Recognised by Unesco as a ‘definitely endangered’ language, Aramaic is spoken by 7,000 people in Maaloula, dominated by Greek Catholics (Melikites) whose churches and rites long pre-date the arrival of Islam and Arabic. Western Neo-Aramaic, to use its proper linguistic title, is spoken by about 8,000 others in two nearby villages, one now wholly Muslim.

“Aramaic’s long decline accelerated as the area opened up in the 1920s when the French colonial authorities built a road from Damascus to Aleppo. Television and the internet, and youngsters leaving to work, reduced the number of speakers…

“Syria being Syria, there are political sensitivities, not least because ‘Arabisation’ was a key feature of government education policy after the Ba’ath party came to power in the 1960s.

“‘In Syria there are a lot of minority groups: Circassians, Armenians, Kurds and Assyrians, so it’s a big decision to allow the teaching of other languages in government schools,’ said Reihan. ‘But the government is interested in promoting the Aramaic language because it goes back so deep into Syria’s history.’..

“Linguistic experts say that Syria is doing well in fostering this part of its heritage. ‘Aramaic is actually pretty healthy in Maaloula,’ said Professor Geoffrey Kahn, who teaches semitic philology at Cambridge University. ‘It’s the eastern Aramaic dialects in Turkey, Iraq and Iran that are really endangered.’ ” [P]

Meantime there seems no hope for the former cultural diversity of Iraq. Saddam and the Baath were secular, they’d accept anyone who kept the rules. Multi-party democracy split Iraq’s fragile identity into the three main groups, Kurds and Sunni Arabs and Shia Arabs, with little tolerance for smaller groups. Many have fled and most won’t come back.

[Sadly, things got worse in Iraq and very much worse in Syria.  At least one Aramaic community has now largely fled the rise of Islamic extremism is Syria, which was the foreseeable result of encouraging the ‘Arab Spring’ there.]


China: Healthy Economy

“China’s financial performance is best placed among economic powers, with its banking system as well as its international balance of payments and reserves being stable. China is also free from worries about the monetary crisis that results from speculative currency attacks…

“China, with its vast territory, is undergoing a rapid process of industrialization and urbanization, creating all types of demand. Indeed, the current crisis has, to some extent, struck the economy in the coastal regions. Nonetheless, its impact on the central and western areas is limited. There also exists a broad space for development, taking into account the proportion that consumption accounts for in China’s GDP.” [Q]

That comes from a People’s Daily Online, a discussion between three Chinese economists. But foreign experts say much the same thing, apart from staying silent about the usefulness of a non-convertible currency.

“With China showing tentative signs of an economic rebound, the theory that the world’s recently crowned third-largest economy could detach itself from the US economy – an idea that looked foolish during the autumn global slump – is being dusted off again.

“But for China to really ‘decouple’ from the global slowdown, it will need to demonstrate that its growth is not dependent on exports…

“Although China’s headline export figures are huge, some researchers believe this greatly exaggerates the importance of the sector. The reason is that many of China’s export factories only assemble parts that were manufactured elsewhere.

“One of the most striking examples is Apple’s iPod. A revealing research paper published last year by economists from the University of California at Berkeley and Irvine mapped the economic value-added from making iPods. Although the product leaves a Chinese factory with a price of $150, they estimated that only around 5 per cent of that value is actually created in China because key components are imported. Moreover, Chinese workers only receive around 2 per cent of the wages paid during the product’s manufacture.”[R]

The Chinese are reaping the benefits of ignoring Globalisation except where it suited them. Japan bungled its brief advantage – or possibly chose to lie low in the dangerous world of the 1990s, when US power seemed unlimited and Japan was the initial target for envy and fear. The ‘Asian Tigers’ opened their economies and suffered huge damage from massive financial flows that happened for no very clear reason/

Meantime Bush Junior financed tax cuts for the rich and high executive salaries with money borrowed from the Chinese. The Chinese now need to be paid. The rich in the USA are likely to hang onto their money, while the real manufacturing potential of the USA continues to decline.


China’s Wild West

“China risks misallocating investment by overspending on airport projects in poorer western provinces and skimping on allocations to some fast-growing coastal provinces in its $70bn plan to expand capacity until 2013, according to a study by McKinsey, the consultancy.

“Of the 97 greenfield airport projects planned by Beijing until 2020, McKinsey categorises only 20 to 30 as offering ‘attractive’ investment opportunities by addressing expected capacity shortfalls…

“‘China is really trying to speed up construction to create jobs, so additional airport supply will almost certainly outpace demand,’ said Yuwa Hedrick-Wong, who tracks Asian economic developments for MasterCard. He draws a parallel with Shanghai’s Pudong airport, which stood ‘almost empty for four or five years’ before establishing itself as an international hub.

“‘In other countries, such projects would die if they failed to produce a quick return but, in the case of China, they can sustain them,’ he said….

“‘I’m sure that they can build as cheaply and effectively as anyone on the planet but, in terms of optimising the financials, that is something where they would be well advised to draw on western expertise,’ he said.” (China risks misallocating airport funds, [S])

Fortunately China is in a position to ignore such advice, the sort of thing that led the USA and much of Europe to move out of manufacturing and into finance. The logic that has led Britain to run down Wales and Northern England and cram everything possible into the South-East. China’s biggest current problem is that its coastal provinces have advanced much faster. The poorer and less densely populated west isn’t yet discontent, the people there are much better off than they were. But it seems that China’s leaders are thinking long-term. Get the western provinces thoroughly integrated.

It has something to do with the sort of people who lead. As the Economist explained:

“When Barack Obama met Hu Jintao, his Chinese counterpart, at the G20 summit in London, it was an encounter not just between two presidents, but also between two professions and mindsets. A lawyer, trained to argue from first principles and haggle over words, was speaking to an engineer, who knew how to build physical structures and keep them intact.

“The prevalence of lawyers in America’s ruling elite (spotted by a Frenchman, Alexis de Tocqueville, in the 1830s) is stronger than ever…

“President Hu… is a hydraulic engineer (he worked for a state hydropower company). His predecessor, Jiang Zemin, was an electrical engineer, who trained in Moscow at the Stalin Automobile Works. The prime minister, Wen Jiabao, specialised in geological engineering. The senior body of China’s Communist Party is the Politburo’s standing committee. Making up its nine members are eight engineers, and one lawyer. This is not a relic of the past: 2007 saw the appointments of one petroleum and two chemical engineers. The last American president to train as an engineer was Herbert Hoover.” [T]

Lawyers are actually trained to bend first principles: this has emerged scandalously with lawyers deciding that suffocating helpless prisoners is not torture, but it happens continuously. China meantime flourishes because China favours people who show an ability to get something done.

And what about the world’s largest democracy, the Republic of India?

“Considerations of immunity may also help to explain the remarkably large number of legally challenged politicians in India: according to the Public Affairs Centre, a think-tank based in Bangalore, 23% of members of India’s parliament have been served with criminal charges.

“Some mature democracies, especially Britain and America, are seeing a new phenomenon: the rise of politics itself as a profession. In the old days, politics was something you went into after doing a real job. In Britain, Tory MPs were stereotypically squires of independent means or retired businessmen; Labour ones, trade-union leaders or university lecturers. No longer. David Cameron, the Tory leader, went from university into the party’s research department and, apart from a few years studying the dark arts of public relations, has been in politics all his adult life. Gordon Brown and Tony Blair, Britain’s current and former prime ministers, became members of Parliament at the tender ages of 32 and 30 respectively, their other careers (journalist and barrister) having been merely useful preludes.” [T]


China: Healthy People?

“China will build or maintain a clinic in every one of the country’s 700,000 villages over the next three years, the government announced today, as part of a 850bn yuan (£84.5bn) revamp of the healthcare system…

“In the 1960s, the government raised an army of ‘barefoot doctors’, who were given basic training in western disease control and traditional Taoist medicine.

“Partly as a result, the health of China’s rural population was once one of the proudest boasts of the Communist party. Government figures suggest life expectancy jumped from 35 to 65 years in the three decades after Mao Zedong took power in 1949.

“But the market reforms of the late 1970s eradicated the rural co-operative insurance system, making it impossible for most farmers to afford treatment and difficult for rural clinics to stay solvent.

“In a comparison of health systems in 2000, China was ranked 144th out of 191 states. In terms of access to medical care, it was fourth from bottom, beating only Sierra Leone, Brazil, and Burma.” [W]

That’s from the Guardian, being surprisingly frank about the fact that the Mao era did some things much better than Deng’s ‘Reform Era’. And it looks like the Chinese are less impressed with the West than they used to be, take a more balanced view of their past:

“After the founding of the People’s Republic of China in 1949, governments covered more than 90 percent of medical expenses for urban residents, while rural people enjoyed simple but essentially free health care.

“But when China began its economic reforms in the early 1980s, the system was dismantled as the country attempted to switch to a market-oriented health care system.

“Due to low government funding, doctors at state-run hospitals were forced to ‘generate’ incomes for the hospitals through prescribing highly-profitable, sometimes unnecessary drugs and treatment. In many places this could account for 90 percent of a hospital’s income.

“Soaring fees plunged many into poverty and made medical services less affordable to ordinary citizens.

“Statistics from the Ministry of Health show that the personal spending on medical services has doubled from 21.2 percent in 1980to 45.2 percent in 2007, while the government funding dropped to 20.3 percent from 36.2 percent in 1980.

“In 1997, the State Council moved to correct the previous concept that medical services were a type of commercial product. In the next ten years, a series of medical reforms, such as the basic medical insurance for urban employees and the new cooperative medical scheme for farmers, were gradually implemented.

“But the central government admitted in 2005 that previous reform was ‘basically unsuccessful,’ then started a new round of reforms that led to Monday’s plan.” [X]



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