Democracy sacrifices efficiency?

Serephel

Okay, so I was killing time earlier and reading the Economist, because I'm a nerd like that. I read this article about the infrastructure issues in China, posted here. It's a long article, but I bolded the area I want to discuss.

The article is really long. This is an excerpt, but I recommend anyone who is interested in the topic to take ten minutes to read the whole thing.

China's infrastructure splurge: Rushing on by road, rail and air

Oh for the open road

The expressway network has helped divert some of the freight traffic from the overburdened railway system. It has also—to the delight of China's burgeoning car industry but to the horror of environmentalists—helped to promote a sharp increase in private car ownership. The Asian Development Bank (ADB), which financed part of a 660km expressway linking Beijing with Shenyang in the north-east, found that the new toll road was little used after its completion in 2000. Now, says an ADB official, traffic flow (and therefore revenue) far exceeds initial predictions thanks to the growth of industries near the route and the increasing use of private cars for long-distance travel.

It is not just expressways that are getting attention. In 2005 China's leadership launched a programme to build what it called a “new socialist countryside”. This was an effort to assuage discontent in the countryside over the widening gap between rural and urban incomes and public services. The programme includes the planned construction of 300,000km of new rural roads between 2006 and 2010, an increase of nearly 50%.

Investment in railways has been far slower to gather pace. In southern China the worst snowstorms in decades paralysed much of the network in late January and early February. But the rail connections between north and south were already inadequate. Much of the south's coal supply is sent by rail from northern mines to the coast and then loaded onto ships. The World Bank says that China's railways carry 25% of the world's railway traffic on just 6% of its track length.

But change is coming. In the past couple of years investment has grown considerably. This year's target is $42 billion, compared with a total of $72 billion in the preceding five years. World Bank officials call it the biggest expansion of railway capacity undertaken by any country since the 19th century. China had 78,000km of track at the end of last year. The original plan, published in 2004, was to increase this to 100,000km by 2020. Last October this was revised to 120,000km (and officials now say the target will be met by 2015). Even sticking to the 2020 target, this will mean laying 60% more track in the next dozen years than was built since the start of the economic reform programme 30 years ago. Huang Min, the Ministry of Railways' chief economist, says that by 2020 the railway system's freight-handling capacity should be greater than demand. At present, he says, it can handle only 40%.

Mr Huang reckons that railway expansion will bring down logistics costs, which he says amount to 18% of GDP in China compared with 10% in America. It will also help reduce pollution, he says, since fewer polluting lorries will be needed.

Aviation facilities will expand rapidly too. The increase in air passenger traffic has been dramatic: from 7m passengers in 1985 to over 185m in 2007. To deal with this rise, the government announced last month that it planned to add another 97 airports by 2020 to the 142 China had at the end of 2006. The number with an annual handling capacity of over 30m passengers will grow from three to 13.

There will also be a huge expansion of seaport capacity. The government predicts container throughput will increase by 85% between 2010 and 2020.

In all this activity it greatly helps to have a secretive planning bureaucracy and a government that brooks little dissent. In Britain, as Mr Majidi points out, it took as long to conduct a public inquiry into the proposed construction of Heathrow's Terminal Five as it took to build Beijing's new airport terminal from scratch.

There was no consultation with the public on the terminal. Nor was there any public debate about the construction of Beijing's third runway, notwithstanding the noise pollution already suffered by thousands of nearby residents. Beijing is now planning a second airport (even with Mr Majidi's terminal, the current airport is expected to exceed its designed capacity of 60m passengers this year, seven years before schedule). The location is being considered in secret. Xu Li, an official at the Ministry of Communications' transport research institute, agrees that China's infrastructure expansion is not as restrained by rules as it is in America. Once a plan is made, it is executed. “Democracy”, she says, “sacrifices efficiency.”

An often heavy-handed approach to land appropriation also helps. For Beijing's airport expansion, 15 villages were flattened and their more than 10,000 residents resettled nearby. But several of the former farmers told your correspondent that they were still barred from the unemployment benefits and other welfare privileges of city dwellers even though their farmland had been grabbed from them. One elderly man said that officials had threatened them with violence if they refused to leave their villages.

No tree-huggers permitted

Another factor is the hazy definition of who owns rural land (see article). Local officials tend to regard it as the government's and readily seize it—often for little compensation. In a recent study of China's transport, the World Bank says that roads are sometimes built expressly for the purpose of converting countryside into revenue-generating urban land. This causes a rapid outward expansion of cities, which combined with a lack of adequate public transport increases dependence on private cars. Beijing's polluted air and congested streets, to which 1,000 cars are added daily, are evidence of the problem.

Some of China's grand plans for the coming years may encounter a bit more resistance. In urban areas a property-owning middle class that hardly existed a decade ago is now growing rapidly. Some of its members are becoming increasingly vocal in their demands for more open decision-making, particularly when it comes to projects that might affect property values.

In China's biggest-ever urban protest against a transport-related project, thousands of Shanghai residents gathered outside the city government's headquarters in January to demand the cancellation of plans to extend a Maglev (magnetic levitation) train line through the city's main urban area. The existing Maglev line was opened with much fanfare in 2003 as the first commercial service of its kind in the world. It provides a 30km ride at astonishing speed, peaking at 420kph, from the city's Pudong airport to a rather inconvenient spot on the city's outskirts. The government wants to link it with the city's other airport, Hongqiao. But many residents along the route say they are fearful of noise and radiation from the trains.

Many also question whether the Maglev will ever be much more than an expensive joy-ride that tourists will take once, just for the thrill of it. Shanghai has had a tendency in recent years to spend big money on projects of questionable value. The billions of dollars spent on Yangshan port and its cross-sea bridge might well have been better invested in expanding existing, and far more convenient, deep-water facilities in nearby Ningbo. The opening of the Hangzhou Bay bridge this year will make Ningbo's port all the more accessible to Shanghai. But cities in China have a poor record of co-operating, particularly when they belong, as these two do, to different provincial administrations.

Olympic swank
A show-off tendency among Chinese urban planners (as well as a dire lack of suburban rail networks) has helped to fuel a rapid expansion of costly underground railways. In some cases, says the World Bank, this is diverting resources away from urgent needs in the bus systems. Two decades ago only two cities, Beijing and Tianjin, had subways (and only three lines between them). Now 15 cities are building them at a total cost of tens of billions of dollars. Beijing and Shanghai are leading the way, spurred on by their desire to impress the world at the Olympic games and, in Shanghai's case, the World Expo which it will host in 2010. Beijing's official Olympics website displays a story saying that the city will have the biggest underground network in the world by 2015.

This brings up a very interesting issue I have discussed many times in my earlier business classes. Countries that have little transparency within their government, like in China, are at a distinct advantage in getting things done. They have the authority to walk up to its people and say "Get out, we're building this, fuck you."

In the US and undoubtedly in other Western cultures, we can't do this. I've seen this issue with regards to the US infrastructure. Our highways and streets are becoming more and more congested with private cars and semi trucks, and it's predicted to only get worse in the coming decade.

We could alleviate a lot of this strain by introducing a better rail network. The idea has a lot of support, but nobody is willing to support it if it negatively affects them; also known as the "not in my back yard" problem. Farmers and small communities are not going to up and leave for the betterment of the nation, no matter how beneficial it may be.

There are many other issues which could also be resolved if the government had more power. I'm not saying it's good one way or the other, I'm just presenting it to you all.

As Xu Li put it, "Democracy sacrifices efficiency." What do you all think?

Trireme

This is an interesting subject. The dynamics of how much power a government should hold never ends. It is true that efficiency- and maybe aesthetic- is cut from considering many opinions. This sort of applies to an article I read recently discussing architecture of pre-planed cities. “If a camel is a horse built by a committee, then most cities are camels; ungainly creatures that have evolved over many centuries. But a precious few are thoroughbreds, having sprung, Athena-like, from the mind of one man.” Having the government do what is best for the population can yield wonderful results, except when you think about how incompetent the government can be sometimes. Eminent domain can be a bitch.

X'o'Lore

I think the United States isn't technically a Democracy, so calling Democracy inefficient is slightly off target. Further more, the U.S. government was designed to be "inefficient" since it's creation as far as I know. Specifically, government is very slow in the U.S. precisely so that people have a chance to have a say in what's happening. It prevents the government from "pulling a fast one" on us. It's a barrier protecting the citizens from potential corruption in government, which in our founders minds was certainly very important. It's really not a bad thing. It's more like one of those "you can't have your cake and eat it too" situations. It's a safety vs. efficiency call is all. The U.S. favors safety, China favors efficiency. I think the efficiency approach is probably very fitting and more appropriate for China right now.