The 4-2-1 Model
[Ferret is sitting at a bar, talking shit with Hummingbird. She is at least six drinks in on the night, and as usual, engages in manic, frenetic conversation:]
Hummingbird
Do you know about the 4-2-1 model?
Ferret
The what?
Hummingbird
The 4-2-1 model. It’s an idea about China and shit, man.
Ferret
What is it?
Hummingbird
[gesticulating wildly with her hands as she speaks]
Okay, so you’ve got the Chinese grandparents here, and there’s four of them. And then they can only have one kid each, so there’s two, and they put all their money into them, getting them a good education and nice living standards and stuff. And they’re all Chinese so they save lots, you know? So then these two parents now only have one kid, and they benefit from all this wealth and stuff, you know?
Ferret
So each generation is exponentially richer than the last because all of their resources can only be poured into one kid?
Hummingbird
Yeah, basically. You see, and that’s why there’s a huge market for anything in China. There’s just such a wealth of money here. Especially in Shanghai. You can sell anything you want here. You know?
Ferret
Yeah, I guess so.
***
I wonder about this model for a society in a state where negative population growth results in a sharp rise in per capita incomes. Books like A Farewell to Alms suggest that the Black Death in 14th century Europe was a contributing factor to the advent of the Renaissance.
What? Will the policies of China’s authoritarian regime accomplish what a lethal bacterium did centuries ago? Are we at the beginning of a Chinese Renaissance?
That theory about the black death was obviously made up by neo-liberal economists.
The significant advances of today’s world, computers, internet and commercial flight, add space exploration too, were all the product of a large nation-state in the wholly tax funded military sector.
They had everything to do with big gov, a large state and public funding and nothing to do with personal affluence, societal freedoms or enlightened values.
And to rub it in, they were all sold back to us with no regard for the years of massive taxation that paid for them.
Comment by Andy Best — April 8, 2010 @ 3:48 am
Malcom Gladwell glances over this topic in Outliers. I am not sure if I buy it whole-heartedly. It would be interesting to compare the baby boomer generation in the US to the Chinese 4-2-1 generation.
Comment by amc — April 8, 2010 @ 3:55 am
Andy – I’m confused. Are you saying that the Renaissance (the one that started in Italy in the 15th century) was actually a case of big government style spending, patronage, etc.?
If indeed all the great advances of the contemporary world are state-sponsored, the Chinese are in a great position, living in a state unabashedly committed to the idea giant, state sponsored projects (e.g, Hangzhou-Shanghai maglev line, lunar mission, Shanghai Expo, etc.)
AMC – I’m not sure if a proper analysis of the problem holds up either. Gregory Clark (author of A Farewell to Alms) relied on a multifaceted, economic analysis for the rise of Europe where the Black Death was only one of the contributing factors.
More interesting to me, is the fact that this idea has a certain cachet with a lot of people. Intuitively it makes sense. Fewer people, same amount of capital, then everyone is richer and has more time to “develop themselves”. It plays well into the common lament, at times legitimate, but more often legitimating inaction: “if only I had more time/money.”
Comment by ferret — April 8, 2010 @ 11:33 am
I guess I got on to several different things. I think the 4-2-1 idea makes no sense at all. Let me just throw out some more ideas here.
Who’s to say that wealth is successfully passed down at all. If your parents have 5 rmb each in the bank and they croak. You get 10. yeah, that’ll free you up. What if the previous generation have nothing to give you and you have to go out fresh? What about the poor (80% of the world population according to the World Bank development indicators).
Any of those ideas requires ignoring the distribution of wealth. The global average these days is around 5% of the population having 95% of the wealth and resources.From the point of view of personal monetary wealth, you could ‘disappear’ most of the population without significantly increasing that of the rest. If you see what I mean. But then, if it does have an effect, without the others who is going to carry out or perpetuate your innovations practically?
The value of wealth is dependent on the size and make up of the society it exists in.
Also, even back in the middle ages, individual scientific efforts of a much smaller scale than today were often reliant on ‘patronage’. Not to mention the fact that basic literacy and education were only available to an elite minority.
If you had a suddenly shortfall in labor and food producing farmers back then – how does it translate into less work/more time for the rest?
It goes on and on.
There’s nothing that makes less sense than the various ‘economics’ analysis of …well ..anything.
By that I mean neo-liberal economic theory of the Friedman school. Which is often passed off as simply ‘economics’. ‘Economics’ also includes, for example, Marx, whose Das Kapital is the second earliest major economic analysis of our times, after The Wealth of Nations.
I think the idea of 4-2-1 goes hand in hand with the ‘China has too many people’ defense.
It is equally infuriating
Comment by Andy Best — April 8, 2010 @ 8:56 pm
Andy – I understood the definition of “wealth” here as confined only to increasing material wealth and capital for potential investment. It doesn’t include culture, quality of life measurements (like “happiness”, “sense of purpose”) etc. If you want a more holistic description of “wealth”, we definitely need another model.
In most places in the world, the opportunities for capital accumulation are very small. However, the argument here is that the development in places like China’s urban centers is conducive to this kind of accumulation. Furthermore, China’s population controls make it more likely that a larger proportion of that capital will be given to the offspring. So… the 4-2-1 model.
That said, this IS a very neo-liberal analysis, and is subject to the various pitfalls of this type of analysis. I don’t think it’s as useless as you suggest, but it certainly isn’t conclusive or by any means definitive. I understand classical, neo-liberal economics to be this: a scientific model for the analysis of the allocation of scarce resources by human agents. (Whew!) By “scientific” I mean that the theory proceeds by describing a set of fixed “principles” or “laws”, describing a network of causation, coupled with a surrounding frame work of statistical analysis to demonstrate the deviation from these laws and inferences therefrom. (Double whew!)
Of course the problem with the scientific method is that it is unable to reconcile the individual. A doctor can tell you that you have a 15% chance of death if you take a certain medication, but what does that tell you about YOU? Similarly, an economic analysis might say that an economy overspending itself and shipping its debt abroad is bound to collapse at some point unless it changes its behavior, but what about a certain, individual economy (that need not be named) which seems to be surviving while doing just that?
Comment by ferret — April 9, 2010 @ 7:47 pm