Capstone Journal Volume VI 2014
WORCESTER ACADEMY Graduation Projects: Explorations in the Real World
Table of Contents The Chaos of Order: How 3 Western Satirists Used the Clash of Hegemonies to Deconstruct Cold War Realities
The Influences of Historical and Economic Factors on the Inequality Between the Haitian and Danish Health Care Delivery Systems
Pages 4 - 51
Pages 123 – 165
Kerstin Peterleitner ‘14
China’s Continuing Future Economic Success by Sudeep Jandyam, ‘13
Pages 166 – 241
Bowers Table of Contents Abstract……………………………………………………………………..……………….2 Cold War Politics: The Eagle and The Bear………………………..………….3 Introduction to Marxist-Leninism………………………………..………………4 Introduction to the Underpinnings of American Foreign Policy…...10 Cold War Psychology and the Role of Satire………………………………..15 Kurt Vonnegut: The Nihilist……………………………………………………….17 Joseph Heller: The Existentialist………………………………………………...28 George Orwell: The Non-Determinist…………………………………………36 Conclusion: Lenses on the Chaos of Order…………………………………..46 Bibliography……………………………………………………………………………..49
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John Bowers Worcester Academy Class of 2014 The Chaos of Order: How 3 Western Satirists Used the Clash of Hegemonies to Deconstruct Cold War Realities Abstract Of all the events that defined the 20th century’s latter half, few have been so deeply influential as the cold war. Though it never escalated to the point of direct large-scale violence between the two world powers—the United States and the Soviet Union—the Cold War reshaped the world’s geopolitical and ideological landscapes. Rather than a collection of nation states maintaining what the Austrian statesman Klemens von Metternich called the “Balance of Power,” the world was unquestionably bipolar. Disturbingly, these two ideological poles saw conflict and escalation as necessary or even entirely inevitable, compromising diplomatic options and creating strife across the globe. USSR MarxistLeninism (and its variants) was unquestionably aligned against Western capitalist democracies, first among which was the United States.
This climate, which offered a constant threat of horrific violence, was
psychologically and at times physically devastating to those living within it. Given the increasingly interconnected nature of the Cold War world and the two powers’ massive spheres of influence, virtually everyone was forced to do so. Residents of first-world, second-world, and third-world countries found themselves pawns in the stratagems of forces far beyond their understanding. More than ever, governments became disconnected from their people, justifying increasingly inhuman policies with us-against-them ideological rhetoric.
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From this highly destructive and—in the minds of many—essentially futile world
order emerged late 20th century satire. Art is and always has been a means of protest and persuasion, offering the common man a means of voicing his concerns. In the Western world where freedom of expression was protected, artists used their respective mediums to create powerful commentaries on the conflict that were seen far and wide. In literature, none did so as provocatively as British and American satirists. This paper will focus on three of the Cold War satire movement’s most widely read practitioners: Kurt Vonnegut, Joseph Heller, and George Orwell. In many of their works, these men use the implements of their trade—absurdism, dark humor, and brutal irony—in conjunction with the clash of fictional hegemonies to deconstruct the cold war order. Focusing in particular on individuals caught in the crossfire, each author offers a cold critique on the misalignment of government interests with those of the world’s people through their own distinctive lens.
Cold War Politics: The Eagle and The Bear As WWII drew to a close, the world’s remaining powers were thrust into a politically
amorphous world. Humanity’s greatest conflict to date had redrawn political boundaries, purged entire schools of thought, and crushed the life from burgeoning empires. Fascism lay defeated at the feet of the Axis powers, offering an entirely different sort of terror in death: that of uncertainty. The Yalta conference of 1945 brought this tremendous sense of irresolution to a head. Churchill, Stalin, and an ailing Roosevelt came together in the Crimea to discuss the fate of war-ravaged Europe, bringing with them all their ideological baggage. Though the powers had little trouble finding accord with regards to matters of the past—Nazism and its highest proponents were damned, and reparations were extracted—but matters of the future proved far more foggy. Roosevelt and Stalin clashed
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over the fixation of national boundaries, the establishment of free elections, and the integration of Soviet republics into the UN. The two powers were being forced to confront essential differences suppressed by the crises of WWII, differences which would ultimately define the political climate of the 20th century’s latter half. As the meeting disbanded, most of the world was cognizant of these international tensions, but only time would reveal the true scope of their destructive power.
The clash between the West—primarily the US—and the USSR was not, however,
merely a diplomatic issue to be rationally solved. Rather, it was a product of their increasing awareness of the incompatibilities between their underlying social theories. For the first time, human ideology had become truly bifurcated on a global scale. Communism and capitalist democracy—the essential economic philosophies of the USSR and the United States respectively—struggled to occupy the void left by the fall of the Nazi state and its ancillaries. The tension between these philosophies and, as such, the impetus for the collision of the US and the USSR came from a mutual sense of inherent incompatibility that came to govern their relations. To fully understand such a seemingly irreconcilable division, one must examine its entrenched ideological basis.
Introduction to Marxist-Leninism Though Soviet philosophy was in a constant state of evolution from the days of
Lenin through the bloc’s eventual fall under Gorbachev, most of its variants have a common base referred to as Marxist-Leninism. In essence, Marxist-Leninism has the ultimate objective of developing socialism to the point where it becomes full-fledged communism. In a perfect society, Marxist-Leninism holds, all means of production are publically owned and full social equality is extended to all citizens. During the transitional stage when
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socialism is developing towards its end goal, the government is responsible for continually supporting economic development. By improving the nation’s efficiency and infrastructure—though the exact means of doing so were often a matter of contention, one needs only look to the clash between Stalin and Trotsky—a socialist government could ensure a richer future for all of its people. In addition to this constructive pursuit, MarxistLeninism also calls for the elimination of a nation’s bourgeoisie. As proposed in Marx’s original writings, the bourgeoisie are considered the proletariat’s natural enemy. Concentrations of wealth and power outside the communist party itself—more is to be said about that particular fixture presently—were by definition contrary to the realization of communism, and were thereby to be eliminated with all speed. Organized religion faced a similar fate, cast aside in favor of atheist rationalism and an emphasis on science. Religious hierarchies and faith in non-material beings served no practical purpose within a communist system; directives passed down by party leadership carried a weight unparalleled by the moral absolutism of any deity.
Marxist-Leninism is largely based on Marx’s original works and material
philosophy—particularly in terms of their shared emphasis on dialectical materialism—but it diverges from its inspiration in terms of how communism is to be practically implemented. Though attempts to distill this implementation vary wildly, it is fair to say that an application of Marxist-Leninism springs from two primary axioms. The first among these holds that the welfare of mankind is dependent on the development and spread of socialism and, eventually, communism. Only when socialists are in the global majority can humanity truly prosper, as capitalism is the natural harbinger of economic and political disintegration. The idea that capitalism is fated to break down ties back to Marx’s original
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didactic-materialist arguments, which essentially posited that capitalism was in pursuit of an ever-shrinking “surplus value,” which can effectively be considered profit or net economic gain for the investor. Since this value, according to Marx, is forever on the decline, capitalist economies must either expand or die. Given that earth’s resources are finite, capitalism will eventually reach a plateau and cave in under its own size and sophistication. However despite its essential belief in this chain of reasoning, MarxistLeninism was forced to adjust to a reality that flew in the face of Marx’s predictions. Marx claimed that the proletarianization (i.e. the transformation of the working class into a highly exploited proletariat for the sake of capitalist gain) of Western Europe would occur naturally, but it actually reversed in the years following his death. The late 19th and early 20th centuries were home to upwards trends in workers’ conditions, quality of life, and purchasing power. Rather than falling into exploitation, workers were actually granted a greater measure of control. Faced with this essential incompatibility, Lenin suggested that socialist revolutions be incited across Western Europe and eventually beyond for, as the axiom holds, the good of mankind. Different Soviet leaders had different takes on this strategy—Trotsky was its most notable and rabid advocate after Lenin—but it remained close to the heart of communist doctrine and played a huge part in Western perceptions of communism. The USSR’s attempts to expand its sphere of influence were seen as invasive extensions of this ultimate aim.
The second axiom of Marxist-Leninism concerns itself with how this vast and
sweeping improvement of human circumstances is to be implemented. It calls for an intense program of central planning by a body outside the proletariat, referred to as the “Revolutionary Vanguard.” This body was to oversee revolutions and the expansion of
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Soviet ideology, as well as the continued growth and maintenance of a Soviet state’s economy and strategic interests. In the case of the USSR, this vanguard was referred to as the Communist Party. Marxist-Leninism holds that the Party is able to understand the plight and struggles of the workers better than they themselves can and, as such, can effectively coordinate the bettering of their lives. As Lenin says in his Chto Delat’ (What is to be done?): “We have said that there could not have been Social-Democratic consciousness among the workers. It would have to be brought to them from without. The history of all countries shows that the working class, exclusively by its own effort, is able to develop only trade union consciousness, i.e., the conviction that it is necessary to combine in unions, fight the employers, and strive to compel the government to pass necessary labour legislation, etc. The theory of socialism, however, grew out of the philosophic, historical, and economic theories elaborated by educated representatives of the propertied classes, by intellectuals.”
Despite Marxist-Leninism’s emphasis on full social and political equality, its founder clearly voices a need for top-down governance by a carefully selected intellectual elite. Power may be granted provisionally to the workers themselves so long as their actions are in line with the party’s will, but Lenin makes it clear that they are incapable of fully protecting and furthering their own interests outside the realm of immediate political action. Such a system, Lenin argued, was essential for the long-term success of a large-scale communist society. The parts cannot govern the whole as is the case in a democracy, but are instead controlled by a highly organized and immensely powerful central body. To this end, the Party is justified in using martial force as a means of furthering its directives. Its centrality is to be unquestionable and absolute, as workers lack the foresight and scope of vision to fully realize communism on their own. They must be willing to sacrifice themselves and their autonomy for the good of society. Even at the top of the party, there is little room for
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democracy. By limiting democratic processes, an organized central body can bypass divisive inefficiencies and efficiently govern its nation. Political parties were especially frowned upon. The party was not to be questioned, goaded, or refuted.
In conjunction, these two major axioms of Marxist-Leninism—firstly that the
widespread cultivation of socialism into communism is essential to the well-being of mankind, and secondly that workers cannot autonomously direct this initiative without the vision of a centralized party of elite thinkers—lend a communist state’s central governing body absolute power. Since the propagation of socialism is necessary for the protection and liberation of mankind, it must be undertaken as quickly and efficiently as possible. Since centralized rule is, according to Marxist-Leninism, the best and only means of doing so, an act against the party is essentially an act against mankind. Failure to recognize the party’s authority is a declaration of war against the good of the species. Logically, the state has the responsibility to work against these threats to the best of its ability, even to the point of using force. Given Leninism’s base in Marxist dialectical materialism, the state’s power can be extended infinitely. Dialectical materialism is the study of how economic and political trends interact through Hegelian synthesis. According to Marx, the evolution of human ideas ultimately leads to communism through natural dialectical progression. Since all of nature—mankind and its institutions included—is locked in a constant state of evolution, literally every natural force or entity is subject to the rulings and control of the central party. The workers, themselves unversed in dialectics, are unable to see how individual elements of the material world must coalesce to form a utopian communist state. “Right,” “Wrong,” “black,” and “white” are to be defined by the communist party, and these definitions must be taken as unequivocal fact.
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In the context of late 20th century geopolitics, Marxist-Leninism’s core tenants and
the corollary described above contributed to global polarization and escalated hostilities between the US and the USSR. According to the combined analysis of Marx and Lenin, indefinite coexistence of capitalist and communist states is ultimately impossible. Marx’s consideration of surplus value introduced above hypothesizes that capitalist economies will eventually collapse if they are unable to continually expand their markets and holdings, which has dire implications for any cohabitant communists. If the capitalist state becomes desperate enough—as it undoubtedly will, given the natural decline of surplus value—it will resort to requisitioning communist territory and resources for the sake of self-preservation. A unified communist world could, however, remain at peace eternally, as theoretical communism is detached from surplus values due to the direct allocation of wealth to members of the collective. This worldview was espoused by Joseph Stalin in his address to the 8th Party Congress in 1919: “We are living not only in a state, but in a system of states, and the existence of the Soviet Republic side by side with imperialist states for a long time is impossible. One or the other must triumph in the end, and before the end comes, a series of frightful clashes between the Soviet Republic and the imperialist states is inevitable. Sooner or later, a funeral dirge will be sung over one of them.”
In this statement, the Soviet Union’s constant awareness of the capitalist threat is readily apparent. If communism is to survive and prosper, it must arm itself for an inevitable conflict with capitalist forces. This philosophy is ultimately what drove and justified Soviet foreign policy during the Cold War era with regards to military action, espionage, and international diplomacy. It formed the impetus for the escalation of the nuclear arms race—a military superior capitalist state would naturally crush a weaker communist one
Bowers 10 without the presence of deterrents—and the USSR’s obsession with its ideological sphere of influence. Russia’s leadership and policies evolved and changed following the death of Stalin, but never truly deescalated this ideological standoff. For example, Khrushchev’s efforts to diplomatically ‘thaw’ the Cold War coincided with his massive expansion of the Soviet nuclear arsenal. When he entered office in 1953, the USSR is estimated to have had approximately 120 nuclear warheads stockpiled. When he left office in 1964, more than 5,000 new warheads had been added to bring the total to about 5,221 (NDRC). Occasional diplomatic charades aside, Soviet foreign policy was aligned unflinchingly against western capitalism. Driven by absolutist ideology and the absolute power of its central Party, the USSR cast compromise aside and embraced a decades long struggle for supremacy: only by outcompeting capitalism could it ensure its own survival.
Introduction to the Underpinnings of American Foreign Policy Though the capitalist west was often united in its confrontations with the USSR and
its allies, it goes without question that the US provided both the face and the military backbone of the capitalist world order. It directed capitalist efforts abroad, made efforts to stem the expansion of communism, and challenged the USSR in a military and technological arms race. The American capitalist ethos rests on a pair of socioeconomic principles. The first of these is the concept of a free market. The free market effectively shifts a nation’s economic fate into the hands of its private businesses. These businesses ultimately drive economic expansion and prosperity by functioning as self-interested and autonomous players in a vast global marketplace for goods and services. Though the government’s role in commerce was, and is to this day, a matter of intense debate, its primary role was as a facilitator and detached moderator of economic growth. Its powers are clearly delineated
Bowers 11 and, as such, limited. The private sector even has the right—controversial as it may be—to lobby for the passage of legislation. The American government certainly has a vested interest in the nation’s economy, but its powers come nowhere remotely close to those of a central planning agency. Wealth created by private enterprise for personal gain is considered to be beneficial for the nation as a whole, giving rise to a philosophy that was famously summed up as “What’s good for GE is good for America.” Obviously, this socioeconomic philosophy is wholly at odds with that of the USSR. In a capitalist system, the foresight and autonomy of individuals is considered to be an asset rather than a liability to be mitigated. In principle, capitalist economies essentially build themselves. Independent players are free to exchange the fruits of their labor under relatively mild regulatory conditions. There is no call for an all-powerful central organization with a single economic vision. In fact, such an organization would be considered restrictive and detrimental to economically dynamic individuals.
The second principle, clearly laid out in the Declaration of Independence and US
Constitution, is that individuals are to be afforded autonomy within the bounds of law. Though this freedom of action is obvious in the capitalist sector, it actually expands beyond mere economics. The idea that any man or, increasingly, woman should be free to pursue their personal desires and objectives is central to the American identity and conception of freedom. Government exists to, in the words of the Preamble to the Constitution, “ensure the blessings of liberty to ourselves and our posterity.” Individuals are agents of their own fate, entitled to what the Declaration of Independence calls “the pursuit of happiness”. America’s veneration of personal autonomy is, like the free market, entirely contrary to socialist principles. The idea of a system so centralized and top-down as that espoused by
Bowers 12 Marxist-Leninism flies in the face of American thought. The expansion of such a system across the world, therefore, was contrary to the well being of humanity and ultimately an affront against personal liberty. It threatened not only those on the peripheries, but also the American way of life as a whole. As such, the nation assumed a foreign policy position that emphasized the restriction or—as it was termed—containment of communism. In the words of NSC-68, one of the policy’s central documents: “In essence, the fundamental purpose [of this doctrine] is to assure the integrity and vitality of our free society, which is founded upon the dignity and worth of the individual. Three realities emerge as a consequence of this purpose: Our determination to maintain the essential elements of individual freedom, as set forth in the Constitution and Bill of Rights; our determination to create conditions under which our free and democratic system can live and prosper; and our determination to fight if necessary to defend our way of life, for which as in the Declaration of Independence, ‘with a firm reliance on the protection of Divine Providence, we mutually pledge to each other our lives, our Fortunes, and our sacred Honor.’”(Section II)
The United States saw communism’s expansion as a threat to its own existence, and was— like its supposed enemy—willing to escalate conflicts for the sake of its own survival. By examining the policy of containment, one can reach more detailed conclusions with regards to the motivations America’s foreign policy.
Containment is must effectively delineated in 2 major documents: George Kennan’s
The Sources of Soviet Conduct (commonly referred to as “the long telegram”) and an internal government document called NSC-68. George Kennan, one of the US’s foremost diplomats during the Cold War era, was the progenitor of containment doctrine. In The Sources of Soviet Conduct, he forms an outline for American foreign policy with regards to the USSR. The essay centers around a number of core ideas, chief among which is the
Bowers 13 proposition that the USSR believes itself to be locked in a constant state of war with capitalism: “There can never be on Moscow's side an sincere assumption of a community of aims between the Soviet Union and powers which are regarded as capitalist. It must inevitably be assumed in Moscow that the aims of the capitalist world are antagonistic to the Soviet regime, and therefore to the interests of the peoples it controls. If the Soviet government occasionally sets it signature to documents which would indicate the contrary, this is to regarded as a tactical maneuver permissible in dealing with the enemy (who is without honor) and should be taken in the spirit of caveat emptor. Basically, the antagonism remains. It is postulated. And from it flow many of the phenomena which we find disturbing in the Kremlin's conduct of foreign policy: the secretiveness, the lack of frankness, the duplicity, the wary suspiciousness, and the basic unfriendliness of purpose. These phenomena are there to stay, for the foreseeable future.” (Part 2)
In essence, Kennan is pointing to the Soviet feelings of essential ideological incompatibility that Lenin and Marx themselves lay out in their works. He posits that in the current geopolitical context the USSR is inherently untrustworthy and should be considered hostile. Kennan’s lack of faith in the possibility of fruitful diplomacy and conflict deescalation is further illustrated in a consequent passage, wherein he reflects on the immense power of the central party: “The accumulative effect of these factors is to give to the whole subordinate apparatus of Soviet power an unshakable stubbornness and steadfastness in its orientation. This orientation can be changed at will by the Kremlin but by no other power. Once a given party line has been laid down on a given issue of current policy, the whole Soviet governmental machine, including the mechanism of diplomacy, moves inexorably along the prescribed path, like a persistent toy automobile wound up and headed in a given direction, stopping only when it meets with some unanswerable force. The individuals who are the components of this machine are unamenable to argument or reason, which comes to them from outside sources. Their whole training has taught them to mistrust and discount the glib persuasiveness of the outside world. Like the white dog before the phonograph, they hear only the "master's voice."… Since there can be no appeal to common purposes, there can be no appeal to common mental approaches. For this reason, facts speak louder than words to the ears of
Bowers 14 the Kremlin; and words carry the greatest weight when they have the ring of reflecting, or being backed up by, facts of unchallengeable validity.” (Part 2)
Though the language of this passage is diplomatic and, at times, vague, it is clear that
Kennan believes that abstract diplomacy alone is incapable of keeping the Soviet Union in check. The “facts of unchallengeable validity” to which he refers are implied to be material, most likely military and economic coercion. His vision for an effective US foreign policy is honed to a finer point and made more explicit as the essay draws to a close: In the light of the above, it will be clearly seen that the Soviet pressure against the free institutions of the western world is something that can be contained by the adroit and vigilant application of counter-force at a series of constantly shifting geographical and political points, corresponding to the shifts and maneuvers of Soviet policy, but which cannot be charmed or talked out of existence. And there it is: the zeitgeist of American foreign policy during the Cold War era. The US and the USSR both see themselves as beset by forces entirely contrary to their economic well being, and ultimately devoid of substantive diplomatic options. In the opinion of Kennan and the US government, communism’s spread must be limited in its expansion by any means necessary. Through this policy, the US justified involvement in espionage, proxy wars, and economic incentives such as the Marshall Plan. It is at this juncture that the two hegemonies can, in their opacity and mutual distrust, truly be defined as enemies. The following decades would see endless efforts at détente, disarmament, and the search for common ground between the powers, but ultimately—as per their own potentially selffulfilling predictions—one hegemony would have to fall for true peace to be reinstituted. The grave nature of this standoff is reiterated in NSC-68:
“The Kremlin regards the United States as the only major threat to the conflict between idea of slavery under the grim oligarchy of the Kremlin, which has
Bowers 15 come to a crisis with the polarization of power described in Section I, and the exclusive possession of atomic weapons by the two protagonists. The idea of freedom, moreover, is peculiarly and intolerably subversive of the idea of slavery. But the converse is not true. The implacable purpose of the slave state to eliminate the challenge of freedom has placed the two great powers at opposite poles. It is this fact which gives the present polarization of power the quality of crisis.” (Section IV A)
The US would pursue its policy of containment throughout the Cold War era, pushing back the expanding frontiers of communism with all the tools at its disposal. Boundaries were crossed, powers overreached, and lives sacrificed in a decades-long scramble for position and preeminence between the world’s two ruling hegemonies. It would be a time of immense terror and national uncertainty, defined in equal measure by nearly catastrophic flashpoints and the slow, constant pressure of waiting. Almost all of the world’s people fell in the shadow of this most terrible standoff, pawns in an uncompromising and costly game of power politics.
Cold War Psychology and the Role of Satire For the average individual living in a western capitalist society, this unflinching,
nuclearized standoff between powers expanded far further into the realm of the abstract than Mr. Kennan predicted. The implications of nuclear conflict and worldwide ideological warfare were absolutely overwhelming, forming a tumid undercurrent of fear throughout American society. The horror of nuclear warfare stems—as is often the case—from uncertainty and imprecision. When a nuclear warhead is deployed, it kills indiscriminately and without restraint. There is nothing political or apparently rational about a ball of atomic fire that engulfs a city and leaves its ruins inhospitable to organic life. It doesn’t matter who one is or what one is or why one is; “is” becomes “was” just the same. Hundreds, soon thousands of these meticulously engineered and utterly pitiless devices
Bowers 16 were arranged on either side of the conflict, each one prepared to end millions of little worlds at the push of a button. Practice drills were held in schools, and children huddled under the wood frames of their desk. These drills served virtually no practical purpose other than to give the individual a false sense of control, to grant the slightest semblance of a hope that one’s future might be determined by a force outside the opaque fog of power politics. Those caught between the two clashing giants were pushed, pulled, and shredded in line with political “necessity.” As is often the case, individuals’ disillusionment, fear, and recognition of governmental failings were channeled into the creation of art. A writer, painter, or filmmaker may not have the power of a nuclear arsenal at his back, but he benefits from the utter democracy of culture. All it takes to write is a pen, all it takes to write convincingly is a pen and conviction. The artist can wrest control of his mind from external forces and, in sharing his work, allow others to do the same. Of all the cultural genres that rose to challenge the period’s societies, governments, and systems of thought, satire shines through as among the most valuable. By blending humor, absurdism, logic, and raw human emotion, the period’s satires strove to expose the dark heart of the Cold War paradigm.
Among the most notable of these western satirists were Kurt Vonnegut, Joseph
Heller, and George Orwell; the former two hailing from the US and the last from Britain. The three wrote from very different contexts and with a variety of styles, but all of their works share an unflinching incisiveness with regards to interactions between power structures. All of them use clashes between organized, ideologically justified hegemonies as a means of exposing the devastating and institutionalized lunacy that defined the Cold War. Their works emphasize in particular the effects this ‘chaos of order’ has on
Bowers 17 individuals caught in the crossfire, commenting on the misalignment of strategic national interests with those of the people. The authors’ divergent worldview ultimately offer the reader three discrete lenses through which the situation may be examined, each of which uses absurdity and cutting irony to lay bare its version of the truth. Kurt Vonnegut: The Nihilist
Vonnegut’s satires are unrelenting in their brutal nihilism, amusedly crushing any modicum of hope as a matter of course. His characters inhabit absurd, often horrific worlds where time, space, and the laws of physics are subject to sudden caprices. The reader is granted no lifeline of absolutes; relativity is the order of the day. Narrative threads are not tied up with a bow at a work’s conclusion, but rather incinerated, unwound, or noisily devoured. The good guys—if there are good guys, which is very much up to the reader—rarely fare well, shredded by the momentum of established forces or the introduction of absurd new ones.
This nihilist framework—or, perhaps, this nihilist absence of a framework—is
frequently inhabited by conflicting ideological and political orders. These groups rip into one another with tremendous force, launching conflicts that frequently end in the annihilation of characters caught between them. The end states of Vonnegut’s narratives are almost always utterly devoid of hope, their players victims of the forces which surround them. Whether catastrophe is dealt via super weapon, extraterrestrial intervention, or sheer ignorance, individuals are robbed of their lives and purposes. To resist the incomprehensible and often destructive powers that be is futile. In the context of the Cold War era, these hopeless, cynical plot arcs are a recognition of the individual’s lack of power within the confines of a broken world order. The universe’s hegemonies—be
Bowers 18 they fictional or all too real—are unstoppable in their violence, locked in a state of war that can only be ended by the absolute destruction of one or both. A living, breathing, sentient human being is doomed if it attempts to interfere with these conflicts, and perhaps even if it does not. The ordered absurdity of organizational bureaucracy is without a face, utterly disconnected from those it allegedly protects. Human lives are taken or spared by such a bureaucracy in accordance with utility. Recourse is a word to be chuckled at.
Slaughterhouse 5, arguably Vonnegut’s most famous work, offers an illustration of
these dynamics at work. It follows the misadventures of a man named Billy Pilgrim as he travels through both time and space. Pilgrim witnesses the bombing of Dresden, is captured by aliens, and ultimately loses his live through a chain of increasingly absurd events. The novel begins with the line “Listen: Billy Pilgrim has become unstuck in time,” a striking and bizarre phrase that aptly sets the tone of the narrative. A man without purpose, Pilgrim is reluctantly pulled from situation to situation by forces that are beyond his understanding and frequently heedless of his well-being. His time-travelling antics even grant him a glimpse of his own death, which renders him a fatalist. Pilgrim is forced to come to terms with that he is approaching—albeit in a supremely roundabout way—an impending demise he has no power to forestall. He is driven towards this end by 4 powerful hegemonies, some concrete and some entirely abstract. Together, they tear Pilgrim’s world apart while he looks on helpless.
The two concrete hegemonies Pilgrim faces are easy to define, but offer him the
most immediate danger. The first of them is the Nazi army by which he is captured and mistreated. Pilgrim and some fellow soldiers fall into Nazi hands, and are dragged across Germany. The men are shepherded through a prison camp and, ultimately, to a Dresden
Bowers 19 slaughterhouse. They are sapped of their dignity and liberty, exploited and underfed. The Germans, however, are not the only concrete force driving Pilgrim and his fellow soldiers to catastrophe. The US army, Pilgrim’s employer and ostensibly his protector, also exerts a deadly and insurmountable force over his destiny. Vonnegut actually commingles the two hegemonies throughout the novel, implying that Pilgrim’s horrible experiences are a result of his position between them. This is most profoundly illustrated in chapter eight, wherein Pilgrim and his fellow prisoners receive a lecture from an American Nazi propagandist. Vonnegut pays particular attention to the lecturer’s accouterments: “He had a broad armband which was red, with a blue swastika in a circle of white”(Slaughterhouse 163). By rendering the iconic Nazi insignia in traditionally American colors, the propagandist’s armband reflects the essential commonality between the two opposing forces. Both are willing to use patriotism and propaganda—the propagandist himself is an instrument of the Nazi establishment coopted from America—to justify atrocities and the exercise of power. This manipulation is made even more evident as the speech progresses; Pilgrim and his fellow prisoners are told that they will be fighting against Russia on the eastern front under the banner of a “Free American Corps” (163). In the words of the propagandist, “You’re going to have to fight the Communists sooner or later” (163-164). The absurdity of this situation is apparent. The Nazi party which is unabashedly self-justified by means of uncompromising nationalistic sentiment is driving American soldiers to action by means of nationalism towards a nation devoted to the destruction of Nazism. Vonnegut’s embrace of relativism is on full display. The Nazi state is more than willing to compromise its own ideology for political reasons, sacrificing human lives in the process. The world put forward by the propagandist is one in which any major power is inevitably pitted against
Bowers 20 its peers. Any sort of collaboration or peace is ultimately temporary and borne of necessity; conflict follows as soon as this necessity dissipates. Of course, the individuals who fight for hegemonies ultimately bear the cost of such caprice.
Pilgrim’s position between the two powers comes to a head in the books closing
chapters. He is forced to cower in a Nazi-controlled slaughterhouse while his compatriots bomb Dresden to rubble from above: “Dresden was one big flame. The one flame ate everything organic, everything that would burn… The stones were hot. Everybody else in the neighborhood was dead” (178). Like propagandists, the instruments of war are indiscriminate in their destruction of human life. The “one big flame” that expunges all organic life from Dresden’s landscape is as terrifying to the Americans as it is to their captors and the city’s civilians. There is a chaos inherent in this arbitrary termination of life, a sense that individuals are forever at the whim of forces beyond their control. Billy and his fellow prisoners are a rounding error, their deaths would have no influence on American military policy or the operation’s perceived success. Vonnegut describes postbombing Dresden in apocalyptic terms: “like the moon now, nothing but minerals”(178). The clash of ideologies, both of which purported to improve the condition of mankind, has ironically culminated with a mass forfeiture of life. Such a calamity defies its observers to rationalize their experience. How can the destruction of human life be justified in political terms? Even if the collective profits overall, isn’t a government’s willingness to sacrifice individuals indicative of a sort of abandonment? Vonnegut confronts the inherent implicative quandaries of a massacre in the novel’s opening chapter: “It is so short and jumbled and jangled, Sam, because there is nothing intelligent to say about a massacre. Everybody is supposed to be dead, to never say anything or want anything ever again”(19).
Bowers 21 Pilgrim is stuck in a hell of futile political rationalization and concrete terror, an easily dispensable tool of a system for which he has little passion.
The second pair of hegemonies between which Pilgrim finds himself are far more
abstract and existentially terrifying. Throughout the novel, Pilgrim finds himself torn between two different conceptions of time. The first of these is traditional and linear; Pilgrim advances through his life and experiences a wide range of human experiences. Like any other person, he is mortal. However, the mechanism of his mortality is wildly divergent from the norm. Pilgrim finds himself the prisoner of an alien race referred to as the Tralfamadorians. Unlike human beings, Tralfamadorians are not bound by linear time. They exist simultaneously across the space-time continuum, granting them a sort of omniscience. They ‘live’ by the credo “So it goes,” which effectively encompasses the Tralfamadorian conception of being. In effect, it implies that all material states are temporary and transient. No organism is truly dead, it simply appears to be at a certain place and time. There are an infinity of other moments where it remains full of life. The Tralfamadorian conception of time is yet another hegemony by which Pilgrim and, by implication, all individuals are manipulated, as one alien puts it: “All time is all time. It does not change. It does not lend itself to warnings or explanations. It simply is. Take it moment by moment and you will find that we are all, as I’ve said before, bugs in amber”(86). According to this philosophy, all living organisms are locked in multiplicitous yet concurrent states of being. Free will is, as Pilgrim’s captors so readily inform him, an earthly construct. Fatalism comes naturally to the Tralfamadorians, they even accept that the universe will come to an end following an accident by one of their test pilots. Pilgrim is roped into their paradigm against his will; his escapades through time grant him a glance of
Bowers 22 his own death that leaves he himself a fatalist. However, unlike his captors, Pilgrim is still very much vested in linear time. He has a terrestrial life, but none of the autonomy—or perceived autonomy—of his fellow human beings. Just as in the concrete world, Pilgrim’s position within time itself is horrific and incomprehensible in equal measure. The individual is torn between two seemingly immutable and exclusive forces with no hope for recourse.
Applied to the Cold War, the themes present in Slaughterhouse 5 paint a chilling
picture of existential terror and isolation. Like Pilgrim himself, the men and women caught between the era’s dueling hegemonies lacked stewardship over their own destinies. The policies and doctrines that shaped the era’s geopolitical events were crafted by a small minority fixated on ideological supremacy. Given the Cold War’s assumedly high stakes and the involved parties’ unwillingness to compromise, it is no surprise that these policies frequently blurred ethical and philosophical boundaries. Fiery nationalist rhetoric and the constant possibility of escalation left mankind in an overt state of flux, anchored to life by the threat of mutual death. The political world might have been polarized, but its inhabitants did not divide so evenly. Cold War psychology offers far more shades of grey than the jingoistic us-versus-them communiqués that established each power’s doctrine and dogma. While nationalism was certainly a powerful force during the period, it was largely eclipsed by fear and even outrage. This resistance is most evident in reactions to visible, concrete engagements such as the Vietnam War, but it resonated from less immediately apparent standoffs as well. “The bomb” was likely a common topic of discussion on psychiatrists’ couches, an unthinkable force lying far beyond the scope of an individual’s control. Proxy wars and nuclear devices alike were controlled and leveraged
Bowers 23 by ideological hegemonies more concerned with strategic advantage than psychology or individuals’ well being. Just as Billy Pilgrim floats “unstuck” through time and space, pulled by powerful opposing forces, Cold War era individuals were subject to the whims and topdown ordinances of the US and USSR. Political necessity took precedence over individual welfare and safety, a state of affairs not dissimilar from the sort of realpolitik employed by both the Nazis and the Americans throughout Slaughterhouse 5. Vonnegut’s construction of the novel speaks to the irony that springs from this disconnect between the purity of ideologies and the unscrupulousness of the methodologies used to further them.
Though it shifts away from Slaughterhouse 5’s overt connection to large scale
warfare, Vonnegut’s Cat’s Cradle offers a similarly powerful corroboration of this “clash of hegemonies.” The novel’s plot is narrated by its main character, a writer by the name of John. Its events bring him to the impoverished island nation of San Lorenzo, which is locked in an absurd battle between the nation’s despotic government and the practitioners of a strange, largely nihilistic religion called “Bokononism.” Bokononism is a cynical yet outwardly peaceful faith which advocates the propagation of what it calls foma, or harmless lies. Religions themselves—Bokononism included—are predicated upon these foma, but they shape human behavior in largely positive ways and are therefore acceptable. It is, in essence, a utilitarian postmodern philosophy. Bokononism is strongly repressed by the island’s despotic leader, who claims to be a devout Christian. Its practitioners are impaled on a large hook and left to die as a warning. As such, the devotees and their holy man—Bokonon—are either driven into the jungle or forced into secrecy. These two organized ideological forces—one of them abstruse and spiritual, the other dictatorial and repressive—are the novel’s central hegemonies, but the dynamic between them is revealed
Bowers 24 to be far more complicated than a simple clash. As the novel progresses, John learns that Bokononism is actually practiced by the island’s entire population. Even San Lorenzo’s oppressive and ostensibly inquisitorial dictator practices the faith; executions serve the sole purpose of furthering its subversive allure. As John is told, “He never made a really serious effort to catch Bokonon… without the holy man to war with, he himself would become meaningless”(Cat’s Cradle, 175). A clear parallel is apparent with Slaughterhouse 5’s American Nazi propagandist is evident, in both cases the purity of ideology is supplanted by political maneuvering. The oppositely aligned hegemonies are actually far more closely intertwined than is evident to those caught between them, but their interconnectedness does nothing to ease the individual’s pain. Their clash is pure posturing predicated on lies. Nationalism and piety become tools of the powers that be, readily plied as a means of manipulating those they claim to be fighting for.
Vonnegut’s emphasis on deception throughout his account of the interplay between
Bokononism and San Lorenzo’s government reflects an inherent cynicism with regards to Cold War power politics. San Lorenzo’s ideological forces consider their perpetual state of war—one attacking physically, the other subverting spiritually—to be inherently necessary to their mutual survival. Without repression, they argue, Bokononism’s allure would surely fade away. In similar fashion, the US and USSR considered their ideological beliefs to be intrinsically contradictive and even combative. As is noted above, Marxist-Leninist doctrine dictates that capitalist forces will inevitably attempt to encroach on Communist territory. Likewise, US containment policy was predicated on the belief that an expanding Soviet sphere of influence would threaten the survival of capitalism and, by proxy, Western life as a whole. In the novel and reality alike, war has become the de facto state of being.
Bowers 25 US-Soviet relations and San Lorenzo public policy are deceptive by nature, knowingly fomenting violence as a political measure. As the novel comes to an end, Vonnegut offers a deeply nihilistic solution to this kind of unbridgeable embrace—the destruction of all life on earth.
Throughout Cat’s Cradle, frequent reference is made to an advanced and highly
dangerous substance known as Ice-9. In effect, Ice-9 locks all water molecules with which it comes into contact in a brittle lattice, causing a chain reaction that freezes entire bodies of water solid in seconds. San Lorenzo’s dictator is in possession of a small shard of the substance, which he uses to commit suicide after being diagnosed with an inoperable tumor. Through a thoroughly Vonnegutian chain of evens involving a Nazi physician, a poorly flown airplane, and a seaside palace, Ice-9 comes into contact with the ocean. In a matter of days, it freezes all of the planet’s water and wipes out natural life almost entirely: “There was a sound like that of the gentle closing of a portal as big as the sky, the great door of heaven being closed softly. It was a grand AH-WHOOM. I opened my eyes - and all the sea was ice-nine. The moist green earth was a blue-white pearl. The sky darkened. ... [T]he sun became a sickly yellow ball, tiny and cruel. The sky was filled with worms. The worms were tornadoes.” (261). The devastating psychological power of Ice-9 stems in equal measure from its uncontrollable power and ease of use. Once the chain reaction starts, there is no stopping it. The tiniest fleck can lock an ocean into ice or freeze a million people solid, and deploying it takes only a second. In a moment of anger, foolishness, or extreme distress, anyone with access to the substance could very easily end the world. San Lorenzo’s dictator uses his access to Ice-9 as a means of committing suicide painlessly; his last words are “Now I will destroy the whole world” (238). A dark double entendre, this closing
Bowers 26 remark is both a prophecy and a solipsistic Bokononist mantra to be uttered in the act of suicide. The discord between these two meanings is reflective of one of the central dangers of hegemonies: the interests of the ruler are often misaligned with the interests of the ruled. Though the dictator’s suicide—and his last words—are ostensibly deeply personal, they create a ripple effect that tears everything around him to pieces. The innocent are made to pay for the rashness and of a powerful man. The apocalypse comes without reason or justification.
The connection between Ice-9 and the nuclear arms of the Cold War era springs
from a devastating realization: that a detached, largely unaccountable minority possesses the means of wiping out all natural life. In both cases, the chain reaction of doomsday is already set in place, ready to be initiated by any one of many possible parties. Reason and logic may form buttresses against the looming slaughter, but even they are susceptible to the shocks of fear and confusion that may at any moment tip the balance. In the words of the narrator, “Death has never been quite so easy to come by”(269). The introduction of Ice-9 to the ocean comes as the result of an absurd flashpoint; San Lorenzo’s dictator makes a reckless decision which, in conjunction with a number of other circumstances, dooms terrestrial life. Though no Cold War event escalated to this sort of absolute devastation, there were certainly moments where the world’s people looked on helpless as their leaders explored nuclear options. The line between posturing and all out conflict is a thin one, and it is this fragility that Cat’s Cradle ultimately reflects. Like all of Vonnegut’s works, it introduces the reader to a world lacking in stability. Its parameters are absurd and, at times, even incomprehensible, a web of contradictions and outright impossibilities. Implicit in this patently satirical chaos, however, is a degree of thematic truth. Readers might not
Bowers 27 connect directly with Vonnegut’s characters’ plights, but echoes of the material world are nonetheless noticeable. Ice-9 is, in its implications, deployment, and aftermath, a powerful symbol of those things which we fear but cannot control. Cat’s Cradle is, at its core, a nihilistic recognition of mankind’s tentative grasp on life itself. Its world is deceptive, idiosyncratic, and appallingly familiar.
Through his use of clashing hegemonies in concert with the principles of nihilistic
absurdism, Kurt Vonnegut crafts a darkly beautiful lens through which the Cold War world can be aptly viewed. His characters inhabit universes ruled by uncanny or outright bizarre forces, scrambled into a constant state of flux by constantly shifting physical, psychological, and political boundaries. They offer the reader a way into the story, but it quickly becomes apparent that even the most compelling are little more than pawns in a great cosmic power struggle. They scramble, break, surrender, and are destroyed, stripped of all control by forces of which they cannot truly conceive. Though his satire is full of adroit commentary and clear illustrative parallels, it is more a statement on—or, perhaps, an embrace of—the Cold War era’s sociopolitical chaos than a clear call to action. In the words of Mr. James Morrow, “no one can accuse Vonnegut of optimism.”
However, even in this implicitly nihilistic rejection of hope, it is clear that Vonnegut
holds an immense respect for human life. His characters are all ultimately rendered into grease for the great machine that is, but their deaths are clearly not something to be taken lightly. There is a great deal of pain present in Vonnegut’s narrative voice, even if those things that precipitate it are held up to be satirized. At times, he even goes to far as to engage in a deeply personal sort of metanarrative, perhaps most notably at the beginning of Slaughterhouse 5. Vonnegut based the novel partially around his own experiences
Bowers 28 during WWII, which unquestionably shaped both his worldview and personal convictions. In its first chapter, he writes directly from the first person about the composition of Slaughterhouse 5 itself. His comments are not a forward, not a preface, but an integral part of the novel. In constructing the first chapter thus, Vonnegut removes all distance from his observational satire. He makes it absolutely clear that the book is more than an intellectual exercise: “And Lot’s wife, of course, was told not to look back where all those people and their homes had been. But she did look back, and I love her for that, because it was so human. So she was turned to a pillar of salt, so it goes. People aren’t supposed to look back. I’m certainly not going to do it anymore. I’ve finished my war book now. The next one I write is going to be fun. This one is a failure, and had to be, since it was written by a pillar of salt” (21-22 Slaughterhouse 5). Vonnegut isn’t a sadistic, manipulative narrative god or a gleeful nihilist with no empathy for those shredded in the machinery of global conflict. He is, by his own admission, a “pillar of salt,” doomed to failure by his inability to detach from subjectivity and his own humanity. Vonnegut may be fully capable of acknowledging and even, at times, coming to terms with the absurdity of man’s predicament, but he never loses sight of his era’s tragedy. Simply being human is an offense punishable by annihilation, with sentences meted out according the laws of chance.
Joseph Heller: The Existentialist Unlike those present in Vonnegut’s novels, the narrative worlds of Joseph Heller
abound with full-fledged human beings. Beset as they might be by hegemonies as persistent and absurd as those present in Cat’s Cradle or Slaughterhouse 5, protagonists (protagonists!) cling to their convictions and rights. The powers that be bear down, but their targets refuse to roll over even in the face of overwhelming odds. In this, Heller is
Bowers 29 offering a more optimistic, life-affirming alternative to Vonnegut’s bleak nihilism. He recognizes the absurdity and inhumanity of existing power structures, but never admits that their threats are insurmountable. Heller’s existentialist heroes can achieve victory even in the face of chaos by turning inward, disconnecting themselves from the agendas of their oppressors. In living for themselves—carving out an existence in the face of unimaginable strife—individuals are able to reassert a degree of control over their own lives. Catch-22, Heller’s undisputed magnum opus, features a lead who strains against the demands and destructive efforts of the hegemonies that surround him. This lead, a man named Yossarian, is a true existentialist. Confronted with the realities of war, he refuses to lay down his right to life for the sake of any external philosophy or idea. Rather, he makes it his goal to cling white-knuckled to existence. As he says in response to an appeal to his patriotism: “It doesn’t make a damned bit of difference who wins the war to someone who’s dead” (Catch-22, 123).
Catch-22 follows Yossarian and a number of other soldiers as they fly bombing
missions in WWII’s Italian theatre. From their base on the island of Pianosa, the crew provides air support to the Allied forces during their “liberation” of Italy. The novel makes a number of leaps through time, gradually opening and closing a series of mysteries and filling in the narrative’s gaps. In effect, this construction allows Heller to effectively mimic the institutionalized confusion and farce that plagues Yossarian and his compatriots. Like the men themselves, the reader is forced to splice a version of the truth together from fragmented accounts and the plot’s quasi-logic. Even Yossarian’s thoughts are obfuscated; references to “past” events often enter his thoughts and musings with little or no introduction, only to be revealed dozens or hundreds of pages later. However, this
Bowers 30 tortuous and often willfully abstruse method of storytelling ultimately serves to clarify Heller’s imagining of Yossarian as a character. While we might only be privy to the protagonist’s inner workings via short, anachronistic vignettes, his internal stability is never in question. Even when he’s being illogical or obnoxious, Yossarian never wavers in his quest to continue living by any means necessary. This absolute dedication to survival is often interpreted as paranoia by his fellow soldiers, but Yossarian’s certainty never wanes. This is made abundantly clear in his interactions with the less existentially inclined:
“They’re trying to kill me,” Yossarian told him calmly. “No one’s trying to kill you,” Clevinger cried. “Then why are they shooting at me?” Yossarian asked. “They’re shooting at everyone,” Clevinger answered. “They’re trying to kill everyone.” “And what difference does that make?’” (Catch-22, 16) Unlike his more patriotic brothers in arms, Yossarian is completely objective in terms of how he perceives the violence around him. In the above quote, Clevinger attempts to form a distinction between two types of killing, one of them a function of the honorable slaughter of warfare and the other more akin to murder. Yossarian, on the other hand, simply sees the Nazi hegemony for what it is: a force that would rather see him dead than alive. Perhaps he is, as the others say, paranoid, but the fact that such a large number of people want him dead weighs heavily on Yossarian’s mind. He has the impression that only he and his equally self-preservative friend Dunbar are cognizant of the war’s reality: “outside the hospital there was still nothing fun going on. The only thing going on was a war, and no one seemed to notice but Yossarian and Dunbar”(16). There are no valid nationalistic justifications for war, only lies and fabrications intended to keep the big picture safely hidden. In Yossarian’s mind, war is the domain of the clueless. He spends
Bowers 31 most of his time finding ways to avoid service and the associated danger however possible. Even sickness or utter inactivity and boredom are infinitely preferable to flying missions. Dunbar, a kindred spirit, offers a similar perspective on the struggle:
“Well, maybe it is true,” Clevinger conceded unwillingly in a subdued tone. “Maybe a long life does have to be filled with many unpleasant conditions if it’s to seem long. But in that even, who wants one?” “I do,” Dunbar told him. “Why?” Clevinger asked. “What else is there?” (39)
Once again, Clevinger plays the foil to the spirit of existential self-involvement that rules Yossarian and Dunbar. Dunbar’s final question, “What else is there?”, is particularly powerful from an existential perspective. To him, there are no causes worth dying for. An individual’s life is only valuable so long as it continues. The moment isn’t to be seized in some fit of idealistic fervor, but rather stretched as far as it can possibly go. This mentality, of course, is entirely contrary to that espoused by the war machines. Therein lies the essence of Yossarian’s clash with another major hegemony within the novel: the US military itself. He sees the US government as being complicit in his untimely death, a perspective he states clearly and unequivocally in his definition of an enemy: “’The enemy,” retorted Yossarian with weighted precision, “is anybody who’s going to get you killed, no matter which side he’s on… And don’t you forget that, because the longer you remember the longer you might live”(124). Yossarian defines people with respect to no other criteria then whether or not they’re willing to let him die. There are those who share his interests, and those who do not. Nationalism, patriotism, and idealism are fickle instruments that more often then not work against him, so he tosses them aside.
Bowers 32
These existential tendencies are struck into higher relief by Yossarian’s frequent
clashes with the jumbled, incompetent, and Kafkaesque bureaucracies and organizations that dictate his orders. The novel takes its name from a fictional US Air Force regulation called “Catch-22,” which governs whether or not airmen are eligible for release from service: “There was only one catch and that was Catch-22, which specified that a concern for one’s own safety in the face of dangers that were real and immediate was the process of a rational mind… If he flew [additional missions] he was crazy and didn’t have to; but if he didn’t want to he was sane and had to”(46). In effect, Catch-22 is a brutally ironic insult to those with existential tendencies. By placing a premium on survival, a pilot ultimately resigns himself to danger. The rule becomes something of a metonymy for the US military bureaucracy as a whole, offering a sort of officially sanctioned absurdity that manipulates individuals through technicalities. This tactic is also employed by Milo, a ruthless capitalist who rises from the ranks of the US army to form yet another life-threatening hegemony: the Syndicate. Milo rationalizes the syndicate, which engages in ruthless war profiteering on both sides of the conflict, by a fallacious rhetoric of mutual gain: “’The syndicate benefits when I benefit,’ Milo explained, ‘because everybody has a share”(232). In many ways, the completely fraudulent claim that every soldier has a share in the syndicate mirrors the sort of jingoism that Yossarian so rejects. Milo engages in activities that actively threaten the lives of these so called members, even going so far as to bomb his own airfield in what is perhaps the novel’s most absurd scene:
“He had landed another contract with the Germans, this time to bomb his own outfit. Milo’s planes [borrowed from the outfit itself] separated in a well coordinated attack and bombed the fuel stocks and the ordinance dump, the repair hangars and the B-25 bombers resting on the lollipop-shaped hardstands at the field. His crews spared the landing strip and the mess halls
Bowers 33 so that they could land safely when their work was done and enjoy a hot snack before retiring”(257)
Clearly, Milo’s personal interests far outstrip any sort of altruism in determining the
syndicate’s actions. Still, even after the bombing, he is able to justify himself by claiming that the destruction resulted in a net gain for the Syndicate and, as such, for the soldiers themselves. Aside from Yossarian (“People are dying. Look around you, for Christ’s sake!”(256)), everybody is swayed by Milo’s claims. The concept of a greater good, no matter how fallacious or superficial it might be, adequately justifies grievous and reprehensible crimes. Everyone but Yossarian and Dunbar, who gradually fades out of the plot, is willing to accept the absurd after the thinnest of explanations. The unjustified manipulation and destruction of individuals by these hegemonies is made particularly evident in the novel’s darkest chapters, which describe Yossarian’s travels through a wartorn and bombed out Rome. In a powerful commentary on the devastating power of socalled order, he describes a man calling out for help:
“The screaming, struggling civilian was a dark man with a face white as flour from fear… “Help!” he shrieked shrilly in a voice strangling in its own emotion as the policemen carried him to the open doors in the rear of the ambulance and threw him inside. “Police! Help! Police!”… Yossarian smiled wryly at the futile and ridiculous cry for aid, then saw with a start that the words were ambiguous, realized with alarm that they were not, perhaps, intended as a call for police but as a heroic warning from the grave by a doomed friend to everyone who was not a policeman.” (416) Rather than a man appealing to order and institutionalized power for rescue, Yossarian sees an innocent man resisting that which ostensibly exists to save him. He is reflecting on an irony that extends to his own relationship with the US military: the protector becomes a threat in and of itself, perhaps more dangerous than the things against which it is aligned.
Bowers 34 Yossarian, the civilian, and every other human being is engaged in a constant struggle for survival in the face of a chaos that often stems from order itself.
This existential struggle is crystallized and won in the novel’s final chapters. The
climax of Catch-22 occurs during a bombing mission gone wrong. Yossarian cradles a wounded airman by the name of Snowden as he breathes his last, forcing him to consider what makes a human being: “Yossarian was cold, too, and shivering uncontrollably. He felt goose pimples clacking all over him as he gazed down despondently at the grim secret Snowden had spilled all over the messy floor. It was easy to read the message in his entrails. Man was matter, that was Snowden’s secret. Drop him out a window and he’ll fall. Set fire to him and he’ll burn. Bury him and he’ll rot like other kinds of garbage. The spirit gone, man is garbage. That was Snowden’s secret. Ripeness was all. “(440) In this moment, Yossarian truly formulates his existentialist beliefs into one comprehensive statement. Man is garbage. Man is ripeness. Man is matter. Without existence, spirit, the spark of being that facilitates animation and emotion and cognition, there is nothing special about a human being. In death, this spark is forever grounded. Snowden lapses from being while his corpse stays behind, a pathetic reminder of the man that was. As he sits in the bloodied interior of his plane, Yossarian becomes truly aware for the first time. Yossarian might not always be rational or predictable, but he knows without the shadow of a doubt that he’s not ready to relinquish his hold on “spirit” for anyone or anything. Thus begins the final stage of his battle against the hegemonies that surround him, a fight fraught with passion, energy, and desperation. In the end, Yossarian makes a desperate escape to neutral Sweden. Facing desperate odds one last time, Yossarian channels the raw desire to live that informs all of his actions. Confronted with the extreme risk he’s about to take,
Bowers 35 Yossarian says the following: “Hell, Danby, I know that. But at least I’ll be trying”(452). For the first time, he truly wrests control of his fate from the hands of the powers that be. In this unflinching self-definition, this reckless pursuit of freedom, Yossarian shows himself to be an existential hero. Heller offers no hints as to whether he is successful in his escape, but the point is essentially moot: Yossarian has won.
In the context of the Cold War era, Yossarian’s existentialism offers a commentary
on the world orders’ inhumanity. From Yossarian’s perspective, nations and power blocs are simply collections of individuals tied together by some arbitrary designation. In the words of an elderly Italian lecher with whom one of the more patriotic soldiers argues, "’What is a country? A country is a piece of land surrounded on all sides by boundaries, usually unnatural… There are now fifty or sixty countries fighting in this war. Surely so many countries can't all be worth dying for’"(247). The cold war world might be easily rationalized through bifurcation, but Heller argues through Yossarian that no conflict is so simple. Nations and alliances may claim that they serve as a means to further the livelihoods of their constituents, but on an individual basis convictions and objectives vary wildly. Yossarian gives very little thought to the war itself, focusing instead on his role within it. Cold War era psychological profiles reflect this deeply personal existential fear. Like Yossarian, citizens of the Cold War era suffered the traumas of an ever-present and seemingly uncontrollable danger. Like the hegemonies of Catch-22, the power structures responsible for this instability considered their existences mutually exclusive and, as such, were locked in a sort of existential struggle of their own. Combined, these two parallel struggles for survival—one between hegemonies and the ideologies they represented, the other between the individual and the chaos created by the former clash—create a
Bowers 36 destructive and seemingly irreconcilable disconnect between a government and its people. In order to survive, the government argues, individual lives must be put at risk or sacrificed outright. But self-interested—naturally, even admirably so, Heller argues—individuals are entirely opposed to taking on these sort of risks, as their existential tendencies gear them towards personal survival. When viewed through this lens, the central question of the Cold War and, in fact, any other conflict becomes this: Does a nation or ideological hegemony have the right to demand existential tributes of its citizens? In Heller’s mind and that of his protagonist, the answer is a resounding no. To find meaning and security in the midst of geopolitical turmoil, we must turn inwards.
George Orwell: The Non-Determinist Across the ocean from Vonnegut and Heller, another satirist was hard at work.
George Orwell, a Brit, predated the two by a number of years—he was already writing actively before the commencement of WWII—but his work reflects on many of the same themes. His work might use literary hegemonies and power dynamics similar to those present in the previously examined works, but Orwell’s message is decidedly different. Throughout his writings and discourses, Orwell always made it clear that the visions he committed to paper were not, in his opinion, prophetic. Rather than heralds to the fall of mankind or embraces of chaos itself, Orwell presented his works as warnings. Implicit in this is the sort of constructive optimism that Heller and Vonnegut seem to largely defy. Rather than bemoaning the state of the world around him, Orwell presents a possible version of the future and, by implication, the chance to escape it. In Animal Farm and 1984, Orwell develops societies torn apart by the clash of entrenched ideologies and power
Bowers 37 structures. By following the lives and psychological profiles of these societies’ inhabitants, he constructs a pair of powerful commentaries on the nature of Cold War strife.
In Animal Farm, the beasts of a British farmstead rise up against their human
master. Seizing control of the land and its resources, they strive to construct a nation of their own. However, as time goes by, infighting and political necessity drive the nature of this new state in a very ironically ugly direction. The plot is a clear allegory for the rise of Stalinism following the Russian Revolution, but its implications extend beyond communism alone. The devastating impact of the novella’s ideological clashes—first the revolution itself, and then the pigs’ (analogous to a vanguard party) manipulation of its aftermath in pursuit of power—offers a clear commentary on the dangers of ideological absolutism.
The novella opens with a stirring speech from a wizened pig named Old Major. An
analogue to both Lenin and Marx, Old Major offers the assembled animals a future in which animals might escape human oppression and prosper: “Is it not crystal clear, comrades, that all the evils of this life of ours spring from the tyranny of human beings? Only get rid of Man, and the produce of our labour would be our own” (Animal Farm, 9). His words are altruistic and clearly based in sincerity, but even from the start inflammatory rhetoric can be observed. Old Major establishes a clear and absolute enemy for all of animal kind, promising that only in their eradication or expulsion can liberty be possible. There is no note of compromise or reconciliation in his speech, only the claim that mankind must be stopped by any means necessary. As the revolution progresses this manner of thinking becomes more and more prevalent, as illustrated by the evolution of the animals’ statement of purpose. Initially, the leadership unveils a set of seven “commandments” for the new philosophy of “animalism.” Although they begin with the statement “Whatever goes upon
Bowers 38 two legs is an enemy”(24), the commandments also include provisions ensuring the protection of individual rights: “All animals are equal”(24). However, these commandments are quickly deemed far too difficult to remember, and are simplified to the mantra “Four legs good, two legs bad”(34). Even before the pigs’ bald-faced exploitation of the conflict between men and animals begins in earnest, the fundamental message of animalism has been stripped of its complexity. The new mantra unifies and informs the animals only by pitting them against mankind, making the movement destructive rather than constructive in nature. This negativity and fear is ultimately what allows the pigs to seize control and entirely subvert the revolution’s original ideals.
As the society at Animal Farm develops, its ideological underpinnings are
abandoned by the porcine vanguard party for the sake of utility and power consolidation. By manipulating the philosophy of animalism to suit their needs, the pigs assert absolute control over the farm and its subjects. As illustrated by the farm’s revised mantra, they make particular use of the philosophy of immutable incompatibility that governs humananimal relations. The threat of human encroachment or reconquest serves as justification for many of their actions: “Bravery is not enough… Loyalty and obedience are more important… One false step, and our enemies would be upon us. Surely, comrades, you do not want [the farmer] back?”(56). The animals over whom the pigs rule are essentially being presented with a choice between two options, absolute loyalty or slavery. Ironically, their freedom can only be guaranteed by the sacrifice of personal autonomy for the good of the state. As rhetorically fallacious as this piggish propaganda may be, it serves to convince nearly all of the farm’s inhabitants. History and policy are fluid in the pigs’ hands, freely revised to suit their agenda. The pigs’ absolute despotism in the name of liberty comes to a
Bowers 39 head when they overtly execute dissenters and alleged rebels: “And so the tale of confessions and executions went on, until there was a pile of corpses lying before Napoleon’s feet and the air was heavy with the smell of blood, which had been unknown there since the expulsion of Jones”(84). Ironically, the pigs have committed an atrocity in the name of prosperity. They are clearly equated with Jones, raising questions as to the revolution’s actual efficacy. Amongst the original commandments of animalism is “No animal shall kill any other animal”(24). If the pigs must make use of human methods to protect animalism, directly contradicting the philosophy itself, then has actual progress been made? The conflation of the vanguard party with the human influences it claims to be staving off deepens as the novella progresses. Napoleon, the pig analogue for Stalin, engages in commerce with the farm’s human neighbors. While this warming of relations— entirely contrary to animalism’s core tenants—is initially presented solely as a means to acquire materials necessary to improve the farm, the relationship between pigs and humans quickly expands. The pigs begin drinking alcohol, sleeping in beds, and, finally, even walking on their hind legs. These changes are accompanied by revisions to Animal Farm’s code and animalism itself. The commandment “no animal shall drink alcohol”(24), for example, is revised to “no animal shall drink alcohol to excess” (109). Given the pigs’ new reliance on humans for luxury goods and even company, the “four legs good, two legs bad” doctrine is revised to accommodate selected trading partners. Finally, when the pigs become entirely bipedal in emulation of humankind, the motto is outright changed to “Four legs good, two legs better”(134). The principles of equality and mutual benefit that ostensibly formed the backbone of Animal Farm’s revolutionary ideology have been
Bowers 40 entirely subverted in favor of a select minority. The situation is summed up by the pigs’ final addendum to the code of animalism: “All animals are equal/But some animals are more equal than others”(134). Orwell brilliantly distills the essential truths of ideological manipulation into one absurd little phrase. The same sentiments that once comprised a platform of ideological purity have been transmuted into a dictatorial control as ridiculous and illogical as it is effective. The clause makes no sense on a denotative level, but it perfectly encapsulates the pigs’ stratagem. The confluence of men and pigs is completed in the books final pages as the farm’s residents peek through a farmhouse window to observe a falling out between the two groups: “Twelve voices were shouting in anger, and they were all alike. No question, now, what had happened to the faces of the pigs. The creatures outside looked from pig to man, and from man to pig, and from pig to man again; but already it was impossible to say which was which”(141). Just as in Vonnegut’s confusing web of clashing hegemonies, Orwell’s men and pigs have melded into one oppressive force. The animals outside the center of power look on in fear as they fluctuate back and forth between cooperation and mutual hatred, volatile and dangerous to all those around them. In the end, neither the human power structure nor the new, corrupt vanguard of pigs offers true freedom or safety to the innocent. The animals of the farm are hardworking, dedicated, and relentlessly idealistic, but the easily manipulated philosophy of hostility and absolutism on which their revolution was based ultimately serves only to reinstitute their oppression. In constructing Animal Farm in this manner, Orwell offers a powerful warning on devastating ideological hegemonies of the sort that defined the Cold War. He presents the reader with a society of beings facing a terrible threat—the entrenched human order—
Bowers 41 against which they have every right to rebel. However, as the rebellion progresses it also radicalizes. The constructive principles that were supposed to form the basis of new prosperity are suppressed due to the persistence of a “siege mentality.” The realization of equality and peace is forestalled by a perceived need to utterly eradicate opposing ideological forces. This situation was reflected in the relationship between the US and the USSR during the Cold War. The two powers considered themselves mutually exclusive, each an existential threat to the other. Though periods of détente and de-escalation did occasionally ease their mutual ire, the era was largely defined by an ideologically based struggle for uncompromising superiority. The policy of containment, for example, was an aggressive one despite its ostensibly defensive nature. It was predicated not on constructing democratic ideals, but rather on deconstructing communist ones. Like the animals on their liberated patch of land, both powers saw themselves as targets of an ideological siege. Furthermore, Orwell warns, this sort of mentality lends itself to manipulation by despotic or disconnected leaders. The pigs make deals and engage in all manners of subterfuge behind the scenes, just as the Cold War powers themselves operated behind opaque walls of bureaucracy justified by national security. The acts of posturing, coercion, and outright endangerment through which the era’s hegemonies operated were all justified by fear and antagonism founded, once again, in ideological absolutism. If there can be no compromise, then there can be no peace until one belligerent has fallen. In such a clash between two mighty institutions, desperate measures start to seem very attractive to those at the top. In the end, however, the costs of such measures are forced on the very individuals they claim to protect.
Bowers 42 A thematically similar conflict can be seen in Orwell’s 1984, a book widely considered to be his masterpiece. 1984 follows the plight of Winston Smith as he fights a desperate battle against his incredibly powerful and oppressive government. Winston’s world is one entirely devoid of privacy yet fraught with danger. The world’s political boundaries have broken down and reformed to the point that there are now only 3 superpowers ruling over all inhabitable land. One of these powers is Oceania, which rules over Winston’s native London. Oceania is allied with Eastasia and together they are waging a war against Eurasia, though it is implied that the configuration of these alliances changes fairly frequently. Oceania is an absolute dictator state, employing surveillance technology and a massive propaganda force—termed the “Ministry of Truth”—to utterly control its people. As is the case in Animal Farm, the absolute moral and ideological authority of Oceania’s ruling inner party facilitates this large scale manipulation. The omniscience and omnipotence of the party is reflected symbolically in an almost mythological figure known only as “Big Brother.” As Oceania’s enigmatic dictator, Big Brother is an embodiment of the government’s oppressive and deceitful tendencies. In the name of national security and, as usual, jingoistic pride, all of Oceania’s residents are required to submit entirely to the party’s whims. As an Oceanian leader explains to Winston at the novel’s end, “Power is in tearing human minds to shreds and putting them together again in new shapes of your own choosing”(1984, 238). Among the most direct manifestations of Big Brother (used hereafter as a metonymy for Oceania’s government as a whole) are the concepts of “newspeak” and “thoughtcrime.” Thoughtcrime is exactly what it sounds like, the idea that a citizen of Oceania can commit treason or an equally serious offense simply by considering it. Big Brother constantly
Bowers 43 monitors individuals for signs of such transgressions, even using spies and sophisticated traps to ensnare those who might not otherwise make their beliefs apparent. In effect, thoughtcrime allows Big Brother to deprive individuals of all personal autonomy and divergent beliefs. The party line is backed by the force of law, and any deviation is an act of treachery and compliance with Oceania’s enemies. Newspeak is the gradual decomposition of language to the point where it no longer allows for free expression. In the words of one of the language’s leading theorists “the whole aim of newspeak is to narrow the range of thought… in the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it”(46). Big Brother does not only strip Oceania’s people of their legal freedoms and rights, but also of their capacity for critical thought. Once the process is complete—and Winston is assured that it is progressing rapidly—all directives will be handed down from above and complied with unthinkingly. A corollary to newspeak is a concept known as doublethink, which is the simultaneous acceptance of two contradictory ideas or principles. It works on the same principle as the Animal Farm passage in which some animals are proclaimed to be “more equal than others,” a statement which makes no logical sense but still clearly defines the pigs’ philosophy of governance. In conjunction with newspeak, doublethink completely destroys an individual’s capacity for critical, independent thought and validates the absurdity of Big Brother’s policies: “The primary aim of modern warfare (in accordance with the principles of doublethink, this aim is simultaneously recognized and not recognized by the directing brains of the inner party) is to use up the products of the machine without raising the general standard of living”(167). Not only does Big Brother separate the citizens of Oceania from the products of their labor, he actively acknowledges that a state of constant war is necessary and
Bowers 44 proper. His manipulation of fact, nationalism, and even cognitive function serves no higher purpose than to continue a futile and meaningless struggle. The world’s fragmentation and chaos has provided a platform on which true oppression may be built, accompanied by a revision of truth itself. The end result of all the torture, brutality, and deception is a willful waste of life and resources. The individual is not just caught in the crossfire between two powerful hegemonies, he or she is thrust there as a matter of course. Collateral damage is an integral element of Oceania’s governmental doctrine. In the end, even Winston himself caves to the never ending psychological onslaught: “But it was alright, everything was alright now. He had won the victory over himself. He loved Big Brother”(266).
Though Oceania, Eurasia, and Eastasia’s constant conflicts provide both justification
for Big Brother’s oppression and a way for him to destroy human life on a large scale, another much smaller ideological hegemony also exerts influence on Winston and the novel’s world. The Brotherhood, a rebel faction committed to the destruction of Big Brother and his government, actively agitates against the destructive forces of order via its own radical philosophy. Motivated and informed by a book called “The Theory and Practice of Oligarchical Collectivism” by a former inner party member, the Brotherhood is a collection of individuals united by a common cause: “The Brotherhood cannot be wiped out because it is not an organization in the traditional sense. Nothing holds it together except for an idea which is indestructible. You will never have anything to sustain you except the idea. You will get no comradeship and no encouragement. When finally you are caught you will get no help. We never help our members“(156). The Brotherhood is an entirely different type of hegemony than any of the world powers. It exists in tiny cells, and its only objective is to grow to the point that it might some day threaten the established order. In
Bowers 45 committing to the Brotherhood, an individual effectively accepts the fact that their efforts will be futile. There is no concrete progress or, indeed, even any real proof that the Brotherhood exists throughout the novel. In fact, the Brotherhood doesn’t even have a distinct platform or vision. Its objectives center entirely on the dissolution of the world order, offering no further contingency plan. Individuals such as Winston are left with an agonizing choice: embrace the futile rebellion of the Brotherhood and face certain destruction, or cave to the absurd doctrines of Big Brother and relinquish all personal autonomy and capacity for thought. The battle rages on, but no one individual is truly capable of making a difference. In a world so deeply impersonal and dismissive of human rights as 1984’s, slavery and death are the only fates one might hope for.
The world of 1984 might be even bleaker than that of Animal Farm, but it is still a
warning rather than a prophecy. Unlike the novels of Vonnegut and Heller which are typically set in the past or present, Orwell intentionally sets 1984 far in the future—it was originally published in 1949. In doing so, he is effectively offering the reader a possible course of events instead of an imminent reality. Rather than heralding humanity’s doom or bemoaning the collapse of global stability, Orwell is providing the reader with food for thought, a hypothetical worse case scenario that might encourage caution towards ideological absolutes. Like those of many other satires, his worlds are full of idiosyncrasies and ironies that ultimately pull the reader towards truth, but in this case they also serve to provide some distance between reality and his hypotheticals. Unlike the nihilistic oeuvre of Vonnegut, the boundaries between fact and fiction are made very clear in Orwell’s works. He points to the possible means by which an ideologically entrenched government might manipulate its people or become locked in a constant state of war, but always with the
Bowers 46 understanding that humanity remains in control of its own fate for the time being. Individual characters might be lost and helpless within the novel, but they are ultimately granting those reading the novel a chance to avoid the same fate. In this, Orwell offers a highly optimistic lens through which the Cold War world might be viewed. From his perspective, the world is not yet consumed by chaos, though the potential for such chaos does indeed exist. Rather than asking the reader to recognize how devastatingly close to oblivion or utter dehumanization individuals truly are, it asks that a conscious effort be made to assert control before such a precarious position is reached. Perhaps this is a function of the fact that Orwell’s writings came more than a decade before those of Vonnegut or Heller, but his manner of presentation is valuable and deeply telling nonetheless. The world is not yet a place of utter absurdity or evil, so the human race has the opportunity to maintain its liberty and dignity. Hulking hegemonies offer a problem but, with knowledge and motivation, humanity is still within reach of its solution. Conclusion: Lenses on the Chaos of Order
To dissect a paradigm so complex and darkly compelling as that of the Cold War is
no easy task. While the period is often described as “bipolar” in nature, divided in two along ideological lines, any such definition is inherently reductionist. A world is composed of nations, blocs, ideologies, religions, cultures, races, and an infinity of other subgroups which are, in turn composed of individuals. These groupings constantly shift, expand, and contract transcending political boundaries and intellectuals’ best efforts at distilment. To claim that such an ever-more-complex web can truly be bifurcated is absurd.
Bowers 47
Unfortunately, politics, governance, and sociology are all necessarily exercises in
this sort of reductionism. It is impossible to account for every outlier, to shape communities, nations, and alliances to the exact dimensions of those who comprise them. As such, administrative bodies possessed of some degree of power must apply it according to a generalized philosophy. This philosophy must be reasonably rigid to provide any sort of structure and, therefore, cannot ever fully accommodate all those whom it attempts to serve. Any government or bureaucracy is therefore—to one extent or another—inhuman and imperfect. With this reservation in mind, the central tragedy of the Cold War era becomes abundantly clear: both powers were willing to risk human life in great quantity in order to ensure the survival of their respective philosophies of governance which, almost by definition, they considered necessary to the protection of the very lives put at risk. Their ordered approach to ideological supremacy is ultimately what begets global chaos. It is this fundamental disconnect between a government agenda claiming to protect the people and the security of the people themselves that Vonnegut, Heller, and Orwell sought to explore through their satires. The issue becomes one of justification; does a government have the right to sacrifice its people for some sort of common good? By offering us a variety of lenses through which to ask and, sometimes, answer this question, the three authors allow us to form a fuller picture of the Cold War world. Vonnegut’s answer is a rejection of the question itself. An unflinching nihilist, he mourns the universe’s randomness and chaos but nonetheless admits that individuals have little say in their ultimate fates. The powers that be can pull, tear, and otherwise manipulate until the individual is utterly broken. Who cares if a government has the right to sacrifice the lives of its people? Nothing is stable or absolute in the first place. Heller, on
Bowers 48 the other hand, has no trouble answering directly in the negative. In his world, individuals have both the capacity and the right to claim stewardship over their own existence. The existential hero of Catch-22 refuses to be sacrificed for something that he doesn’t place above himself—what can, after all, be placed above the self? Lacking a soul, man is matter—and totally rejects his government’s control over him in the process. If a government doesn’t protect the existential rights of every constituent individual, what good is it? Orwell’s answer is more provisional and arguably more complex. In his vision, the world order is still very much receptive to change. Individuals can render the question moot by living for their nations, treading with caution and avoiding or deconstructing the ideologically entrenched hegemonies that so threaten them. The sacrifice of life might be warranted as a last resort, but, in his optimism, he sees such waste as unnecessary. None of these lenses can truly be labeled as right or wrong. There is not and never will be one definitive objective account or distillation of the Cold War paradigm, it is simply too complex or multifaceted. There are too many unanswerable questions. In considering the period from a range of subjective viewpoints, one can arrive at a conception that is valuable in its imperfection. By overlaying individuals’ impressions and arguments, a careful and creative observer can perhaps grasp—if only through a narrow window—the Cold War’s psychological zeitgeist. So it goes.
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Works Cited Heller, Joseph. Catch-22. New York, NY: Simon & Schuster/Scribner Paperback Fiction, 1996. Print. Hook, Sidney. Knowing the Soviet Union: The Ideological Dimension. Thesis. Boston University, 1989. Boston: Boston University, 1989. Boston University PubSeries. Boston University. Web. 10 Mar. 2014. <https://www.bu.edu/iscip/pubseries/PubSeries1hook.pdf>. Lenin, Vladimir. "What Is To Be Done?: The Spontaneity of the Masses and the Consciousness of the Social-Democrats." Lenin's What Is To Be Done?: The Spontaneity of the Masses and the Consciousness of the Social-Democrats. Marxists Archive, n.d. Web. 06 Apr. 2014. <http://www.marxists.org/archive/lenin/works/1901/witbd/ii.htm>. "NRDC: Nuclear Data - Table of USSR/Russian Nuclear Warheads, 1949-2002." NRDC: Nuclear Data - Table of USSR/Russian Nuclear Warheads, 1949-2002. Natural Resources Defense Council, n.d. Web. 06 Apr. 2014. <http://www.nrdc.org/nuclear/nudb/datab10.asp>. Orwell, George. Animal Farm: A Fairy Story. New York, NY: Signet Classic, 1996. Print. Orwell, George. Nineteen Eighty-four: A Novel. New York: Plume, 2003. Print. "The Sources of Soviet Conduct."Foreign Affairs. 1 July 1947. Web. 6 Apr. 2014. <http://www.foreignaffairs.com/articles/23331/x/the-sources-of-soviet-conduct>. US National Security Council. “NSC 68: United States Objectives and Programs for National Security.” April 14, 1950. <www.fas.org/irp/offdocs/nsc-hst/nsc-68.htm> (accessed March 12, 2014). Vonnegut, Kurt. Cat's Cradle. New York: Dial, 2006. Print. Vonnegut, Kurt. Slaughterhouse-five, Or, the Children's Crusade: A Duty-dance with Death. New York, NY: Dell, 1991. Print. Watterson, Bill. "Calvin and Hobbes." GoComics. N.p., n.d. Web. 6 Apr. 2014. <http://www.gocomics.com/calvinandhobbes/2011/06/26>.
The Influences of Historical and Economic Factors on the Inequality Between the Haitian and Danish Health Care Delivery Systems
By: Kerstin Peterleitner
Peterleitner 2 Table of Contents Introduction ……………………………………………………………………………….2 History of the Governmental & Economic Factors That Affect and Influence the Integrity of Haitian Healthcare ……………………………………………………………………4 The Issue at Hand in Haiti ………………………………………………………………13 Haiti Post Earthquake: Short Term and Long Term Impact ……………………………16 What was actually lost?........................................................................................16 The Plan of Action ……………………………………………………………...21 How is Haiti doing now? How are they moving forward?..................................26 History of Governmental and Economics Influences on Healthcare Delivery in Denmark ………………………………………..28 Why is Denmark so happy? ……………………………………………………………39 Actual Logistics of the System ………………………………………………………...43 How Denmark is Handling Their Issues ……………………………………………… 44 Conclusion ……………………………………………………………………………..46
Peterleitner 3 Introduction: Choosing a Capstone Project was not difficult. I have always had an interest in helping others and being aware of issues associated with overall health and well-being while planning to pursue a career supporting these personal goals. Why did I choose to research Global Healthcare Equity, or the lack thereof? As I plan to pursue a career in medicine, I have become aware of how different healthcare systems operate, especially in both the United States and Austria as I have dual citizenship. Through exploration, I have extended this interest and awareness to other healthcare systems, and I am keenly interested in the work of Dr. Paul Farmer, who supports healthcare delivery in those countries needing more sophisticated and stable distribution of comprehensive healthcare. My interest in his work, especially in Haiti, acted as a catalyst for my research. I believe with conviction that every human being should have the right to access medical services, and I am committed to dedicating my life working to this end. Additionally, in 2012 I traveled to Denmark with Worcester Academy and my host family was employed in the healthcare field; It was then that I learned how successful the Danish healthcare system was by focusing on valuing and preserving the quality of life of each human being. Together with the government’s commitment to supporting universal access for all, Denmark maintains one of the world’s preeminent healthcare systems. It was fascinating to see and discuss firsthand the differences between my own healthcare–– an HMO (health maintenance organization) –– and the Danish system. The Danish people live healthfully because health is a priority; even young children in school are required to participate in educational programs promoting health, exercise, and sports training. I was inspired by the positive energy that emanated from the wholesome and beneficial lifestyle
Peterleitner 4 of the Danish system and saddened by its antithesis, that of Haiti. My research is centered on the reasons for the contrasting healthcare systems in both Haiti and Denmark and my impressions of each – namely, their history, their leadership, and their attitudes regarding basic human rights. This paper will discuss and present the robust Danish healthcare system with respect to the backdrop of the healing Haitian system. It was concluded by Thomas Pogge in 2005 that more than 18 million premature and preventable deaths were directly related to the issue of global poverty, a pandemic that one would assume would be on the decline in the twenty-first century; however, this is clearly not the case (Pogge, Thomas 2005). In addition to global poverty, global healthcare and its system of delivery continue to be major issues in need of attention and analysis. It is tempting to assume that a country’s wealth and financial capacity are the limiting factors for its population’s overall state of health and process of healthcare. However, could it be that a country’s misallocation of national funding and governmental resources actually result in the comprehensive inequities in the distribution of the determinants of healthcare? (International Health Inequalities and Global Justice). Could this be the reason why Haiti’s healthcare system is inadequate, while Denmark’s healthcare is considered one of the best worldwide, reputed to be both effective and progressive? To fully understand these differences is to understand the attitudes and priorities of each government, and the willingness to collaborate for the sake of basic human rights. According to Dr. Paul Farmer of the Harvard School of Global Health and the founder of Partners in Health, “healthcare is a basic human right” (Farmer, Paul). Dr. Farmer, who is well known for his medical teaching in Haiti supporting the development
Peterleitner 5 of healthcare delivery systems, believes that “the idea that some lives matter less is the root of all that is wrong with the world” (Chavez for Charity). The concept of some lives mattering less than others perpetuates domestic injustice at the hand of the Haitian government and is the root cause of the ongoing healthcare crisis in Haiti; regulation of the socially controllable factors that govern population health and its delivery define the quality of healthcare. The foil to the Haitian crisis is the robust and stable Danish healthcare system. The Danish health system is totally financed through income tax, so all Danish state medical treatment is available to all Danish citizens (The Danish Healthcare System). Unlike the situation in Haiti, the equity in the Danish system is a direct result of the government’s stability and willingness to support the access for all: all lives do matter.
History of the Governmental & Economic Factors That Affect and Influence the Integrity of Haitian Healthcare Haiti has been struggling to find the foundation to sustain its ability to offer superior medical care for its people. It is a well-known fact that Haiti’s healthcare disparities directly result from the lack of governmental assistance and support, causing economic instability as well as the incapacity to support the programs needed to provide equal healthcare to all Haitians. The Haitian government is reputed to be one of the most corrupt and dysfunctional organizations in the Western Hemisphere (To Recover Haiti Needs Leaders). With the continued lack of improvement from a governmental and economic standpoint, Haiti’s healthcare distribution has never been well maintained, nor able to make significant gains and progress since its colonization in 1670. The disparity
Peterleitner 6 between the government’s attitude and economic instability have been responsible for the misdistribution of the country’s resources, namely its healthcare and ability to sustain the well-being of its citizens. For example, in 2011 Haiti was ranked 155th out of 196 countries for health expenditure per capita, and was spending $58 per person, while Denmark was ranked 6th and was spending $6,647 per person, which is 115 times more than Haiti was spending (Denmark and Haiti Compared by Health). The backdrop of this drastic difference in government funding between the two countries, in addition to their polarity of effective healthcare delivery, highlights Haiti’s continued potential for improvement. However, it is only with the help from outside forces that the Haitian healthcare system can become self-sufficient, sustainable, and put improving the quality of life as the first priority of the country. Haiti’s history of trials and tribulations affects the country’s ability to sustain autonomy in healthcare. The challenges posed to the country are numerous and are not only from recent natural disasters (ie. the earthquake of 2010); there is significant evidence that much of the country’s internal conflicts have stemmed from a long, laborious past of corrupt leaders and a precarious economy. Haiti has always experienced growing pains and has struggled since the beginning of colonization in 1670. Past pivotal events have contributed to the present day Haitian mindset, and are deeply rooted in the attitude of mistrust, mismanagement, and misguidance. Colonized in 1670 by the French, Haiti did not have an “easy upbringing.” Plagued by slavery and continuous wars with other countries over land (namely between Spain and France for Haiti), it was hard for Haiti to fully develop structurally, much less economically. In the late 1700s, the French overran the island and began to export goods
Peterleitner 7 to Europe, making Haiti one of the world’s largest supplier of sugar and coffee, producing and exporting about 60% of the world’s coffee (History of Haiti). As the indigenous population struggled to survive, many slaves from Africa were imported and incorporated into the Haitian society to work due to the booming exportation business (History of Haiti). This mass arrival of slaves increased the ratio of slaves to Europeans to 9:1, leading to a revolt (Reimagining Global Health). The slaves continuously escaped from the plantations and began their own communities, leading to more violence between the slaves and the French. However, in the late eighteenth century the French prominence in Haiti began to dissolve due to military intervention by the British and the Spanish. Due to the war in Europe, the French departed from Haiti in 1803, and the country became independent in1804. Haiti’s independence quickly created a power vacuum, thus causing a long line of dictatorships and corrupt presidents who bent the laws in their favor. As a result, an ineffective government incapable of stability and leadership strength has historical precedent in Haiti (History of Haiti). Shortly after gaining independence the first Haitian emperor, Jean-Jacques Dessalines, established a system based on “export-led plantation agriculture,” and dependent on the inexpensive and strenuous work of the slaves in the fields (Reimagining Global Health). Over time, several emperors who only seemed to damage the Haitian economy rather than restore came to power, perpetuating mismanagement of the country. In 1820, Jean-Pierre Boyer assumed office and held that position for two decades. In 1825, the French demanded that Haiti pay 150 million francs, which is equivalent to 21 billion US dollars today, in order to repay them for all of the damage done to the French
Peterleitner 8 farmers during the revolt; Haiti was not able to completely settle this debt until 1922 (Reimagining Global health). This payment to the French economically impaired Haiti and caused future generations to consequently suffer. During the reign of the last emperor, Faustin Soulouque, from 1849 through 1859, the Republic of Haiti continually struggled to find a balance between power and corruption. However, the situation began to change during Florvil Hyppoliteâ&#x20AC;&#x2122;s Presidency (1889 to 1896), because he was able to effectively lead the country towards what appeared to be a more balanced and stable government. For instance, he founded the Ministry of Public Works, the organization responsible for building bridges and buildings throughout the country and which, even today, is still a prominent aspect in the Haitian culture (History of Haiti). As time progressed, there was an increase in the number of small landowners throughout the country, and by the late nineteenth century many of these landowners favored independent farming. The independent farming gave the Haitian landowners more control over their labor and output of products, but eventually caused these farmers to lose their political position and economic status due to the rapid decline of productivity in Haiti. During this time, violence towards the administration escalated and several presidents were killed in the process, leaving the country distraught and without a leader fit for ruling the fragile nation (History of Haiti). By 1915, the United States Marine Corps occupied Haiti and remained involved until 1934, ultimately establishing a respectable long-term relationship between the two countries. Due to the rising danger of strikes and uprisings from the Haitian citizens and after the assassination of President Vilbrun Guillaume Sam in 1915, the Marines were ordered to protect any USA citizens and financial subventions. During this intervention,
Peterleitner 9 the United States rewrote the Haitian constitution, agreeing to foreign ownership of the country and to expose the markets to many United States investors (Reimagining Global health). After the revision of the constitution, the USA allowed the Haitians to once again participate in free elections. Even though the United States was able to intervene, Haiti was still not making economic progress or stabilizing the government, thus the Haitians were unable to develop an education plan or a stable healthcare system. In 1930 after the first free election Sténio Vincent became the new president for the next decade. During his reign, Vincent attempted to remove the Marines who had been occupying Haiti and resort back to the “old ways” of many of the preceding presidents: regimes of corruption. In 1935, he vouched for a new constitution that would ultimately allow him to fill the court with associates who shared his views and ideals (History of Haiti). With this relapse in leadership, Haiti once again reverted back to a corrupt government with little integrity and direction. Unfortunately, Haiti was unable to progress forward as an economically strong and governmentally stable country that supported its cultural and societal roots. Many saw the post-World War II era as an opportunity for countries to expand and invest in the growth of underdeveloped countries; however, Haiti was not so fortunate. Despite the creation of a few schools and hospitals, Haiti suffered from underdevelopment and lack of government support in the volatile economy. By 1957, President François Duvalier, also known as “Papa Doc,” was elected and served in this capacity until 1971; he was widely known for his totalitarianism and “harsh” rulings against the Haitian people (History of Haiti). Duvalier’s focus was to aid the wealthy rather than the poor majority. Duvalier would constantly change the members of his
Peterleitner 10 administration, suggesting that he had no faith in his followers. He would also eradicate members of the military if he felt threatened by their presence, ultimately securing his presidency; he established the Presidential Guard and the Volunteers for National Security in order to prevent any future coup d'états (History of Haiti). The reign of François Duvalier further widened the gap between the deprived and the state, ultimately restricting the government’s ability to provide healthcare services to its citizens (Reimagining Global Health). By the end of Duvalier’s reign, it was noted that 80% of the government’s budget was used by Port au Prince, despite the fact that the capital represents less than 20% of the entire Haitian population (Reimaging Health). Duvalier’s successor was his son, Jean-Claude Duvalier, who did not support reform for Haiti’s dire situation. His influence and leadership only perpetuated the poor conditions, if not made them worse (Reimagining Global Health). Jean Claude Duvalier, also known as “Baby Doc,” continued to follow in his father’s footsteps and maintained the corruption plaguing Haiti’s government. Baby Doc continued the tradition of usurping the role of the military to sustain his power over the Haitian people and exploit his administration. Young Duvalier claimed that he would fight for universal parity and human rights, yet these were empty promises. “Baby Doc” lacked character and integrity; his leadership skills lacked tenacity and did not live up to the expectations of the Haitian people due to his discrimination towards the Haitians. His administration caused “curtailment of civil and political rights (ie. freedom of press and political opposition), arbitrary detention, exile, forced disappearance torture, and extrajudicial killing of opponents of the regime” (Institute for Justice and Democracy in Haiti). The Haitians continued to suffer at the hand of human ignorance and greed. Furthermore, during this
Peterleitner 11 time Haiti suffered from deforestation, thus diminishing the crop yield and leading the country into a state of hunger. In 1986, Duvalier was exiled as a result of his corrupt administration and inability to gain the trust of the Haitians. In 1990, Jean Bertrand Aristide won Haiti’s first democratic presidential election and assumed office in February 1991. Aristide’s goal was to disassemble the country’s economic and ethnic hierarchy that was deeply rooted in the leadership mismanagement of the country for years. Early in his term, Aristide effectively diminished the power of the military by creating a separate branch for the presidential security force and reduced the military budget; Aristide was soon seen as a threat by the Haitian military and in September 1991, was removed from office, leaving the Haitian military general, Raoul Cedras, in control of the government (Library of Congress Federal Research Division). Over the next two years, Haiti once again suffered from repression and many tried to escape from the life of inequity, indifference, and hardships; it was noted that the United States Coast Guard rescued more than 40,000 Haitians who were trying to travel to Florida to escape the tyranny that they faced while in Haiti (History of Haiti). There was no consistent medical care offered, causing many Haitians to suffer from untreatable illnesses, and many died because even the most basic care was not commonly offered to all, especially those with little means. Comprehensive healthcare was not a priority of the government or its leaders. The Haitian people were stripped of their basic human rights at the hands of greed and blatant neglect; distrust in the government rose as the populace lost trust in authority figures’ ability to successfully break this cycle of oppression and indifference. Finally, in 1994, the United Nations worked with President Clinton to
Peterleitner 12 approve the US troops to enter Haiti in order to help eradicate the power of the Haitian military and reinstall president Aristide to finish off the last year of his term. After yet another disappointing leader who was unable to help improve the healthcare delivery system in Haiti, President Aristide chose democrat Rene Preval to be his successor. Preval was officially voted into office in 1996 and became the first Haitian president to serve out his entire term (Who Removed Aristide?). However, due to cases of fraud in the senate, the Preval administration was unable to hold local and parliamentary elections in 1998; without these elections, Preval was forced to dismiss many of the legislators whose terms had expired (Library of Congress Federal Research Division). Finally, in May of 2000, the legislative, local, and municipal elections were held. However, during this election, Aristide used unjust practice in order to gain his second term as president. Aristide solicited the Provisional Electoral Council to withdraw a quarter of the votes that were cast for Aristideâ&#x20AC;&#x2122;s opponent during the election. This election fraud cast a bad light on the Haitian government and caused many of countries that had chosen to aid Haiti to suspend their funds; The Inter American Development Bank (IDB) had just approved four major loans in order to help Haiti improve their health, education, drinking water, and roads. However, as reported by Dr. Paul Farmer, the United States asked the IDB to freeze these loans until the situation was worked out (Who Removed Aristide?). Once again, due to the inappropriate and passive response of the Haitian leaders, the Haitian citizens were forced to suffer, not having the ability to address the healthcare problems and lack of adequate healthcare delivery that are so prevalent in their country. Not only did the scandal hurt Haitiâ&#x20AC;&#x2122;s ability to strengthen its healthcare systems and ability to service its citizens, but it ultimately
Peterleitner 13 prohibited the government from proceeding towards its goal to form an unwavering democracy, which in the end is one of the reasons for most of Haiti’s poor conditions (Building 'Low-Intensity' Democracy in Haiti). During Aristide’s second term, Haiti experienced a drastic escalation of political violence and economic recession (Library of Congress Federal Research Division). Due to the suspension of foreign aid–– namely from the United States–– Haiti’s economy struggled to stay afloat; it was reported that in early 2001, the gross domestic product (GDP) dropped to -1% averaging about $402 GDP per capita (GDP per Capita – World Bank). Throughout Aristide’s reign, the political violence increased, resulting in gang violence: anti-Aristide against the pro-Aristide gangs. This violence heightened and peaked in a nationwide rebellion. By 2004, rebels controlled most of the surrounding cities and towns and were getting closer to Port au Prince. The rebel groups threatened Aristide, causing him to resign as President and be airlifted out of the country, thus leaving the fate of Haiti in the hands of Haiti’s president of the Supreme Court, Boniface Alexandre (Library of Congress Federal Research Division). By the end of Aristide’s term in 2004, the country’s debt had increased to 1.134 billion dollars and continued to rise. The Boston Globe reported on March 7, 2004: Today, Haiti’s government, which serves eight million people, has an annual budget of about $300 million – less than that of Cambridge, a city of just over 100,000. And as Haitians attempt to form a new government, many say its success will largely depend on how much and how soon aid will flow to the country . . . Many of Aristide’s supporters, in Haiti and abroad, angrily contend that the international community, particularly the United States, abandoned the fledgling democracy when it needed aid the most. Many believe that Aristide himself was the target of the de facto economic
Peterleitner 14 sanctions, just as Haiti was beginning to put its finances back in order (Who Removed Aristide?). As stated, many blamed President Aristide as the root cause of this “sanction,” making it even more difficult for the Haitian economy to develop. Haiti’s government constantly struggled to gain stability and, due to massive rebellion, it is clear that more than intervention from foreign countries is required to support Haiti’s reform, revitalization, and regeneration of its people. The Issue at Hand in Haiti: Wouldn’t it be critical for the preservation and pride of the Haitian culture to know that they as a people do matter? The Haitians perhaps could begin to heal and find “a reason to believe” if they felt as if their voices were heard, if their basic human needs were addressed, and if their pride and dignity were respected. Just maybe in their world of despair, egocentric leadership and a self-indulgent government, knowing that there was a glimmer of hope to have access to the basic needs for survival might provide momentum towards independence, strength, and fortitude in their own capacity to stabilize. The financial crisis has always dominated and continues to affect the rate of Haiti’s progress and inability to become self-sustaining. How can this country develop and progress if the future generations are not promised support, guaranteed access to the gateways of education and healthcare, and hopeful for “a better way?” The constant volatility, greed, and mismanagement within the hierarchy of the Haitian government perpetuates the country’s debt, forcing budget cuts in existing and specific funds–– namely the most critical and essential elements that would ensure longevity and a future vision for its people: healthcare and education. The World Bank has made every effort to support Haiti’s financial goals, especially making the provisions for healthcare and
Peterleitner 15 education, yet the government does not prioritize the future of Haiti and continues to mismanage this opportunity for funding; the result of this misuse disseminates the prospects of growth and effective gains and is a recurring cycle. Evidence of this travesty was discussed during an interview conducted on March 5, 2014 to include anecdotal evidence of these issues; the interview was with an associate from PIH (Partners in Health) who spoke on Dr. Paul Farmerâ&#x20AC;&#x2122;s behalf. Mr. Sahil Angelo of PIH provided an overview regarding his beliefs and observations specific to the Haitian crisis: â&#x20AC;&#x153; Haiti does not have the ability to implement the goals set by the World Bank because they can not repay loans without cutting a portion of the healthcare funding. Healthcare is secondary to moneyâ&#x20AC;? (Sahil Interview) As a result of widespread government corruption and volatile economic system, healthcare in Haiti has ultimately suffered; it is unable to independently overcome its own obstacles of inequity and mismanagement. And with the continuously fragmented government, it will be next to impossible for the country to obtain a system of healthcare delivery that is fair and equitable for all of its citizens. With the prolonged nationwide rebellion still going strong, several countries (ie. United States, Canada, France and Chile) have sent troops to Haiti for direct support to the Haitians. These troops have attempted to minimize further impairments, tried to restore peace, and secure food and medical supplies that were in short supply due to the closing of the ports. And in April 2004, the United Nations Security Council instilled Resolution 1542, which led to the creation of the UN Stability Mission in Haiti (MINUSTAH), which authorized the presence of 6,700 UN soldiers and 1,622 civilian police (Library of Congress). This resolution stated that the MINUSTAH had the
Peterleitner 16 mandate to involve themselves in “helping to create a secure and stable environment for Haitian citizens, assisting the government in helping to create a stable political process, and helping to improve the rights of the citizen, especially the access to healthcare for all” (Resolution 1542). Despite the efforts of the United Nations to try and restore the country, the MINUSTAH struggled to instate new laws that would help the country to move forward, but, as they say, “success doesn’t happen overnight.” The election process for president resumed in February of 2006, and the former president Rene Preval won with 51% of the votes. However, in his second term as President he faced new challenges including: gang violence, public services, and the rapid increase of poverty (Library of Congress Federal Research Division). In 2007 the Preval administration established the Poverty Reduction Strategy for 2007-2009. This strategy included three main goals, which were: “maintain macroeconomic stability, target actions to reduce poverty, and create conditions conducive to continuous and sustainable growth driven by private initiative” (Haiti’s Development Needs). With this plan in place, Haiti would have the potential to become more stable and gain some of its economic independence, thus allowing the Haitian government to focus on its weak healthcare system and take the initiative for universal access, thus supporting every citizen. Although the conditions in Haiti were extremely fragile during Preval’s second term, overall the country was beginning to make substantial progress towards a healthy and stable government (Haiti Under President Martelly). There was a sense of renewed hope – until the 2010 earthquake was a major setback for the country and caused a relapse in all of the progress that had been made towards a renewed Haitian perspective
Peterleitner 17 and future. The earthquake effectively destroyed all development in government stability and public services. The persistent and constant volatility of the Haitian government continues to restrict Haiti’s economic growth and in turn further restricts the potential growth of an independent system of quality healthcare delivery. Even though measures –– such as the Poverty Reduction Strategy suggested by the Preval administration––have been taken to improve lifestyle conditions in Haiti, the island will likely not be able to escape the harsh conditions of poverty unless the government commits to an implementation plan and ensures access to educate the Haitian citizens. Without a comprehensive education plan, the Haitians will neither be competitive in the worldwide marketplace nor be able to implement or obtain more sophisticated jobs that would stimulate Haiti’s economy and allow the government to provide aid to its people and increase the amount of healthcare systems available to its citizens (Haiti’s Development Needs).
Haiti Post Earthquake: Short Term and Long Term Impact What was actually lost? In 2010, Haiti was devastated by a 7.0 magnitude earthquake, the epicenter near Port au Prince. A major setback for the island in regard to their government infrastructure and precarious economic state, this destruction drastically affected both the natural environment and virtually all buildings and facilities, ultimately paralyzing the overall healthcare delivery system. Statistics show that the earthquake affected nearly 3.5 million Haitians both directly or indirectly, representing about a third of the total population. It was estimated that 223,000 people were killed, while 301,000 were
Peterleitner 18 severely injured. Despite the tragically high death toll, it was the loss of access to facilities and emergency life support equipment that became the limiting factor in the delivery of critical healthcare to the Haitians. In the aftermath of the earthquake, it was estimated that over 180,000 homes were either destroyed completely or damaged, causing many to become homeless (Key Statistics). In addition to the medical emergencies, the overabundance of homeless Haitians created another layer of incapacity only resulting in more inconsistencies in the delivery of necessary human services. Out of the 1,241 shelters for the homeless, only about 200 were officially recognized by the UN Office for the Coordination of
Figure 1 Haiti earthquake victims sleep in the streets of Port au Humanitarian Affairs (OCHA), suggesting that the Prince. other shelters were not safe (Still Homeless from Haiti Earthquake). In addition to the excessive number of single-family homes destroyed was the destruction of both government buildings and health facilities. About 60% of the government buildings were destroyed or significantly damaged, making it hard for government officials to collaborate and devise an emergency implementation plan in response to all of the destruction (Key Statistics). About 60 percent of the existing healthcare facilities were destroyed and approximately 10 percent of the existing professionally trained medical staff were either killed or left the island to escape the tragedy. With this drastic decrease in medical aid and access to healthcare services and facilities, disease rapidly spread both through human contact and the infected water
Peterleitner 19 supplies, thus intensifying the death toll (Emergency Response After the Haiti Earthquake). Cholera was one disease that was rampant in post-earthquake Haiti and was transmitted through the infected water supply. Ingesting this fast-acting microbe results in a bacterial infection that affects the small intestine, causing a severe case of diarrhea and vomiting; this disease can be fatal if not treated for it causes severe dehydration and immune deficiency. According to Sahil, United Nation workers from Nepal were the origin of this epidemic and somehow contaminated the Haitian water systems. Since the Haitians had never been exposed to the disease, the effects of its presence were abysmal. Before the earthquake, about 63% of the Haitian population had access to “clean” water; with the outbreak of this communicable disease, that number drastically declined (Lessons Learned during Public Health Response to Cholera). The contamination of the water system quickly spread and affected thousands. Table 5 shows the affects of the disease in each Haitian district (Haiti). As indicated in Table 1, this disease claimed Table 1 Cumulative cholera cases and deaths, by department, Haiti 2010-2012
about 7,000 lives by 2012, and it was estimated that by 2013, cholera had infected several thousands of Haitians and had claimed more than 8,000 lives total (As Cholera Death Toll Climbs in Post-Earthquake). Joan Arnan–– Medicins Sans Frontiers’s (MSF; Subunit of Doctors without Borders) head of mission in
Peterleitner 20 Haiti–– commented that, “the majority of the population lacks access to drinking water and proper sanitation, but cholera treatment has still not been properly integrated into the few existing public health facilities” (Healthcare Lags In Haiti's Post-Earthquake). Since Haiti’s healthcare facilities were not able to sustain the number of people that were affected by the outbreak of these communicable diseases and provide the proper treatment to their patients. With the help of NGOs (ie. such as MSF) and aid from foreign countries, the Haitian citizens were able to receive better healthcare and treatment than what the Haitian government had ever before provided. It is a travesty to note that the outsourcing of healthcare support in a time of crisis was still significantly better that what these people typically had access to within their own country under normal circumstances. With a catastrophe of this magnitude, it was nearly impossible for President Rene Preval and the government to sufficiently respond to the breadth of emergency response for the Haitians. How could they even begin to respond? The country’s leadership had never been financially committed to developing a well-organized and systematic strategy for implementation of an emergency response, let alone one of this degree and magnitude. Despite Preval’s “apparent efforts”, their level of emergency response, or lack thereof, was openly criticized by the Haitians, who had had enough; they could only see what was not being done from their “disaster frame of Figure 2 Hand made banner made by the people of Port au Prince. January 16, 2010
reference.” The government’s response
Peterleitner 21 lacked adequate emergency shelter, provisions for sustenance and clothing, and medication and clean water to avoid serious health risks. The rich had emergency provisions and the capacity to escape the island while Haiti’s poor were forced to live in the crowded streets without medical services or water. It was a travesty. When asked to describe the details of the government’s emergency response to the 2010 disaster, Enouk Anglade, a woman from Port-au-Prince, described the reality of the Haitian’s situation: “it is either international groups, or personal efforts – individuals looking for their family members or depending on one another. In Haiti we do not know how to deal with disasters” (Haiti Earthquake: Angry Crowds). Even governmental officials were uncertain as how to cope in the “emergency stage.” In an interview with Prime Minister Jean-Max Bellerive, he said, "clearly, we have not spent enough time with the people. But we are overwhelmed. We just can't step back and have a vision for this country. Soon, we hope, the operations will be matched with a strategy for the future” (Haitian President Préval Largely Absent). It was clear to Haiti’s poor that the government had no plan of action in place to respond to such widespread decimation. It had never become a priority even after having experiencing other crisis conditions resulting from other natural disasters to this fragile nation. The Plan of Action The lack of Haiti’s government strength and collaboration was well-known worldwide and forced many other countries to pro-actively “take matters into their own hands.” Without this international response offering aid and relief to the struggling country, Haiti would have deteriorated to a state of total disrepair. Sarah Miller Llana reported in the Christian Science Monitor (January 17, 2010) that the Haitians had little
Peterleitner 22 to no belief in their government’s capacity to support its people; one Haitian man who desired to remain anonymous stated, “you are on your own here. Every year there is a disaster in Haiti, and we have no rescue teams or plan” (Haiti Earthquake: Angry Crowds). In May 2010, Lizzette Robleto, a reporter for Progressio in the United Kingdom, visited Haiti and interviewed Gonzalez Collette Lespinasse, a worker from the Support Group for Refugees and Returnees in Port au Prince stated, “We want to see the Haitian government assuming this challenge supported by its civil society, and backed by the international community. But if they don’t listen to us how can we participate and engage constructively? We call for real time and real effort given to develop dialogue in order to build genuine conclusion” (Haiti After the Earthquake). With the lack of government intervention, many foreign countries provided a significant amount of relief aid to Haiti, allowing many of the non-government organizations (NGOs) to directly administer healthcare, sustenance, and assistance to the Haitians. As noted in figure 3, (Haiti Earthquake Facts), directly after the earthquake struck numerous countries contributed financially to
Figure 3 Public aid disbursed to Haiti, 2010 (million$)
Peterleitner 23 the Haitian relief; one of the main contributors offering public aid was the United States of America (Figure 3). The major support of the United States came in the form of a continuous effort throughout the post-earthquake years and was a result of massive government collaboration. For example, in 2011 United States President Barack Obama asked former Presidents Clinton and Bush to collaborate and respond to this disaster by establishing a relief fund for the Haitians; this was known as the Clinton-Bush Haiti fund. To date, this $55 million dollars has been generated through the generous donations of 200,000 people. According to Joshua Bolten and Lauren Graham, the Co-Chairs of the fund: We have used these generous donations to help Haitians transform their own country. In the immediate aftermath of the earthquake, the Fund supported emergency needs. We then transitioned to promoting smart, sustainable economic development. Now, having served as a bridge from immediate post-disaster relief to longer-term reconstruction, we have distributed our remaining funds to organizations that will continue to put them to work in Haiti. Going forward, the Multilateral Investment Fund, a member of the Inter-American Development Bank Group, will manage programs that have not yet been fully completed, and will receive funds from remaining loans. These repayments will be invested into programs consistent with the Fundâ&#x20AC;&#x2122;s mission to promote economic opportunity in Haiti. Together with the entire board and staff of the Clinton-Bush Haiti Fund, we are proud to have directed our donorsâ&#x20AC;&#x2122; generosity toward helping Haiti move from its aiddependent past to a more hopeful, private sector-driven future, empowering the Haitian people to chart their own course. (Clinton Bush Haiti Fund). Only with this substantial support from other countries was Haiti able to provide healthcare to its citizens and afford the medical supplies necessary for clinics run by the NGOs. NGOs were considered the main providers of comprehensive healthcare to the Haitians; these organizations gave hope to a people who had none and honored the needs
Peterleitner 24 of the poor with dignity and respect. For example, it was reported in November 2010 that there were 59 identified hospitals in Haiti, 34 of which were run by NGOs and had delivered free healthcare (Haiti Earthquake Health Q&As). In order for these NGOs to continuously and effectively deliver these services throughout Haiti, more than 37 million dollars was provided over the course of 2010 to 2012 for the NGOs; these funds were provided by foreign donations and gave the NGOs the ability to provide a level of equity in the care of all the Haitians who needed medical attention (Key Statistics). In 2010, the Ministry of Health also created a National Health Commission (NHC) consisting of several health groups and NGOs for the purpose of organizing local and international responses to health crises. The main focuses of the NHC are effective coordination of the health sector response, ensuring outbreak control and disease surveillance activities. They also promote ensuring adequate water supply and environmental health, re-activation of basic healthcare services, effective treatment and rehabilitation of injured patients, and ensuring the availability of essential drugs and medical supplies (Haiti Earthquake Health Response). Partners in Health (PIH) was one of the most reputable NGOs most prevalent in the recovery of Haiti and was also apart of the NHC. This NGO was co-founded by Paul Farmer and Ophelia Daul during the 1980s and has become an integral part of the Haitian support team. According to Mr. Sahil Angelo, “One of the main goals of Partners in Health is to continue to work effectually with the Haitian government and its citizens to create a long-term sustainable solution for comprehensive equitable health and acting as if all lives matter” (Sahil Interview); the PIH mission statement is “we’re on a mission to transform global health, one patient at a time” (Haiti, Three Years after the Earthquake). The dedication and immeasurable progress made by the NGOs over the
Peterleitner 25 years has supported the Haitians in crafting a renewed hope for a future; the NGOs in Haiti post-earthquake formed the critical mass of short and long-term support and supported personal pride, vision, and independence. These organizations believed in the power of faith and treated the poor as human being first with respect and dignity. The NGOs acknowledged that Haiti needed to have an all-inclusive plan to develop its ability to be self-reliant. This plan depended upon the need to access educational opportunities and professional training, especially in the healthcare field. One aspect of this inclusive plan in which PIH has maintained an active role is to address the need for professional medical training for every level of healthcare workers; this must include the entire support staff, doctors, surgeons, and nursing
Figure 4 Hopital Universitaire de Mirebalais
assistants. To prove their dedication to the Haitian people, PIH was able to gather sufficient resources in order to build HĂ´pital Universitaire de Mirebalais, in Mirebalais. This 300-bed facility is a place to provide a quality education for future generations of Haitian nurses, medical students, and resident physicians (Lâ&#x20AC;&#x2122;HĂ´pital Universitaire De Mirebalais). The commitment of PIH is to teach the Haitians emergency response strategies in addition to preventative medical procedures. Then, once Haitian doctors and nurses have acquired basic and effective skills, they could in turn train other Haitians who potentially could aspire to a medical career. PIH continually tries to establish a baseline for sustainable medical training and a system for independent healthcare so that
Peterleitner 26 one-day Haiti will be able to provide medical assistance to the Haitian citizens without help from foreign countries. However, despite the good intentions of PIH to support the development of skills so that the Haitians can develop their own sustainable healthcare, there are cultural barriers that the PIH doctors face, interfering with their attempt to support that Haitian healthcare system. For example, a Haitian patient would rather not discuss medical issues with a foreign doctor who is unaware of the cultural norms. As is human nature, a Haitian patient would much rather interact with a Haitian doctor or nurse who is aware of the patient’s culture and understands the nuances of the Creole language. Most Haitians would choose the latter if given the option for healthcare delivery, thus creating another obstacle for those doctors and nurses involved in PIH and other NGOs. However, since these organizations are resilient and tenacious, and never lose sight of the fact that all lives do matter; therefore, finding a way around “the barrier” was the only option. As a result of this pledge, PIH has identified a solution to the difficulty associated with the cultural barriers and has begun to train community health workers. These community health workers assist in the process of bridging the gap between proper healthcare delivery and the Haitians. The “Haitian to Haitian” interaction is important in establishing a trusting relationship between the community healthcare workers and the patients, thus allowing the doctors to offer their professional expertise to their patients through these community healthcare workers. For example, the community healthcare workers take part in monitoring needs for food, housing, safe water, and even accompanying patients through their treatment, ultimately they provide the Haitians with a safe and comfortable environment in which they can receive the necessary treatment.
Peterleitner 27 In doing this, Haitians will be more apt to feel that their lives matter (Community Health Workers). How is Haiti doing now? How are they moving forward? Despite the tragedy of the 2010 earthquake, overall Haiti has made visible strides towards a better system of healthcare; however, the country needs to continue its effort to do more in order to create an environment where there is tangible evidence that all lives matter. However, the million-dollar question in all of this is: what goals does the country need to achieve/obtain in order to make healthcare concrete, reliable, and accessible to each Haitian citizen? In a country as deprived and demoralized as Haiti, there needs to be cooperation on an international level rather than relations strictly between factions in the Haitian government. According to Mr. Sahil Angelo, the first crucial step to gaining first-rate, accessible healthcare in Haiti is to have an international shift in recognizing that global health equity in Haiti is both achievable and necessary so that developed countries will contribute their resources in order to help mend the inefficient Haitian healthcare system. Despite the efforts and contributions from countries after the earthquake, Haiti needs more assistance from developed countries that are willing to donate funds; without these donations from foreign countries, Haiti will continue to struggle to launch their programs that will help the damaged country become self-sufficient. The reason for many countriesâ&#x20AC;&#x2122; opposition to lending money is that they do not wish to fund this issue. For the most part, many countries are wary of donating money because the corruption in the Haitian government means that a misallocation of funds is imminent if donated to the wrong hands. As a result, another facet in creating sustainable healthcare is to rid the government of corruption and fraud. As seen in the delineated history of Haiti (refer to
Peterleitner 28 part 1), it was the constant corruption of government officials that restricted the country from making progress towards a reliant system that would help provide services–– such as equitable healthcare–– to all Haitians. Another crucial aspect that needs to be taken into consideration is the Haitian education system. With an increase in schools and access to basic education, Haiti will have more people who can contribute to creating a solution for all of its structural issues. Also, the increase in education is necessary to inspire collaboration in the medical field, thus increasing the number of doctors, nurses, and community health workers who are willing to serve all lives in Haiti. These professionals continue to be scarce in Haiti (Sahil interview), limiting the amount of healthcare that can be provided by Haitians to Haitians. History of Governmental and Economics Influences on Healthcare Delivery in Denmark Attention to the state of Denmark’s overall public health care system stems back to the 1800s, resulting from the government’s reliance upon its own productive workforce to support Denmark’s growth, wealth, and independence. The government believes that there is a direct correlation between the workforce productivity and the healthfulness of its workers. Because the government realized the critical nature of this relationship, it began to support numerous initiatives to maintain, as well as improve the overall state of national public health. These initiatives supported the development of essential programs, specifically to better train medical personnel, doctors, private practitioners, surgeons, and nurses, to implement systematic immunizations, to expand
Peterleitner 29 opportunities supporting medical access for the poor, and to engineer programs supporting improved quality of water and food (Denmark Health System Review). The increase in the number of private practitioners began to increase during the late 19th century as a result of the government’s proactive approach to support a high level of medical competency. This national initiative promoted a robust wellness program creating access points to all facets of the Danish Healthcare system. Everyone who could afford the private medical care had the option to be treated by doctors in their own homes, and even some had extensive surgery that was performed at home, as well. Trained midwives were also employed throughout Denmark to support the poor, free of charge. Also, Public health measures were taken to promote nutrition, sanitation, and educational opportunities (Denmark Health System Review).
Progressing from the late 18th century into the early 19th century, Denmark was caught “in the middle” of the Napoleonic war against Great Britain. Despite the efforts of the Danes to remain neutral amidst this conflict, in 1801 a British fleet led by Admiral Nelson attacked a Danish fleet that was peacefully docked in the Copenhagen Harbor; the reason for this raid was that the British feared that the French would overpower the Danish fleet and use it against England. They took matters into their own hands and destroyed the fleet (A Short History Of Denmark). Even though the Danes were amidst hard times with war and conflict, to maintain the well being and health of its people emerged as a governmental priority; in 1803, the predecessor of the National Board of Health was established and oversaw the safety of the patients and monitored disease prevention etc. (Denmark Health System Review). Then in 1814, the Swedes raided
Peterleitner 30 Denmark, forcing the Danes to relinquish Norway to them, and decreasing the Danish empire to only Denmark and the German duchies (Danish History). Despite the tragedies associated with the wars, Denmark was able to support its future generations and to prosper and develop in other aspects of the country, such as strengthening their education systems. For instance, in 1814 Folkeskole – which is equivalent to a modern-day public school – was created and offered to all children from the ages of six to sixteen. These schools offered four basic subjects: religion, reading, writing, and math (The Folkeskole). Despite the conflict and constant struggle for power, Denmark was able to provide its citizens with opportunities and promise for a stronger future, such as a basic education, which was never evident in Haiti. Denmark’s consistent commitment to provide all children with educational opportunities is definitely a contributing factor to their future success and ultimately supporting Denmark’s future capacity to train professionals who could provide equitable healthcare to all Danes. Throughout the 19th century, absolutism began to weaken and four assemblies were created and included the islands, Jutland, Slesvig, and Holstein. These assemblies were designed to advise the king, but only the men who possessed a significant amount of land were able to vote and have a say in what was being advised (A Short History of Denmark). As the new governmental powers were being created, the German duchies’ searched to gain some of this power. Approximately one third of the nation’s population was German; Holstein and Lauenburg consisted of mostly Germans, while Slesvig consisted of mostly Danes. Between 1837 and 1841, more local governments were created, thus distributing more of the nation’s power to the people. However, despite the efforts of the government to disperse power, most of the German population felt that this
Peterleitner 31 was still inadequate. Beginning in 1838, it was determined that medical personnel should be empowered, inspiring, and influential. This position of guidance would empower all medical personnel and to therefore the initiative for all Danish doctors to be educated in both surgery and medicine became commonplace; prior to this plan these two specialties previously had been considered separate entities. This compilation of training promotes all doctors, especially those underwent extensive training in both disciplines and were all educated at the University of Copenhagen (Denmark Health System Review). Therefore, in 1849 King Frederick VII created and signed the Constitutional Act of the Danish Realm, which completely abolished the idea of absolutism and introduced democracy as the new way of ruling (Danish History and Culture). This new democracy led to the formation of an assembly that was comprised of two houses: the Folketing and Landsting (A Short History of Denmark). In 1857, the Danish Medical Association was founded, and the proportion of doctors enrolled soon increased (Denmark Health System Review). In 1863, the Danish Parliament passed a constitutional ruling stating that Holstein and Lauenburg would be officially removed from the Danish kingdom, but Slesvig would remain intact. In response to this violation of the great-power agreement, Otto Von Bismark, chancellor of Prussia, declared war on Denmark (Danish History). In early 1864, the Austrian and Prussian armies attacked, and although Denmark fought nobly, they lost in a humiliating defeat; once again, this loss cost Denmark almost a third of its total land under the conditions of the Treaty of Vienna (A Short History of Denmark). Despite the tragic losses during this battle, the country was surprisingly resilient and used these losses to their advantage, thus allowing them to regain their power and flourish.
Peterleitner 32 The economy increased and expanded swiftly during this time due to an increase in agricultural production and also industrialization, which created a stable and efficient working class; some of the industries that flourished were the brewing and sugar beet industries, along with engineering and ship building (A Short History of Denmark).
The economy was not the only aspect of Denmark that indicated things were shifting; the first group of social democrats was elected into the Danish Parliament during 1884, leading to the increase of seats in the party for many years after (Danish History). Many doctors working on the National Board of Health also held posts within the Association, thus strengthening the link between the Association and the Government. Nurses have been an organized entity since 1899 and have often been represented in committees, too. The Danish medical profession has been a part of the State, rather than a policy-making body outside of it. Several measures developed by the profession have since been taken over by the State, such as the system of approving medical specialties. The Social Liberal Party would lead Danish politics from 1905 until the 1970s (Danish History). Also during this time, cities began to form and Copenhagen, the nationâ&#x20AC;&#x2122;s capital, grew very rapidly. By the end of 1911, there was a total population of 560,000. With this rapid growth, Denmark was determined to provide equitable services for the Danish citizens. During World War I, Denmark remained impartial, allowing the Danish trading systems to flourish. Additionally, in 1915, Danish women were granted the right to vote, making the equity of the citizens even more substantial. Despite Denmarkâ&#x20AC;&#x2122;s progress as a nation, the Danes suffered in the 1930s due to the depression, and unemployment rates
Peterleitner 33 rose, reaching an all-time high at 32% from the years 1932 to 1933. However, instead of letting this issue of high unemployment press on, the Danish government quickly responded to this crisis and created public work projects in order to reduce the unemployment rate and stimulate the economy. Also, the government worked hard to pass laws to provide welfare support to its citizens to help them get on their feet and regain their status within the Danish society (A Short History Of Denmark). Unlike Haiti, Denmarkâ&#x20AC;&#x2122;s government was able to support its citizens in times of need, which gave the people faith in the government to provide and supply them with services in order to create an equitable society and, ultimately, nationwide healthcare.
When World War II began, Denmark tried to stay neutral as they did during the first World War; unfortunately, this tactic of neutrality was not successful the second time. In 1940, the German troops entered Denmark and threatened to destroy Copenhagen if the Danish officials did not comply with their demands (A Short History Of Denmark). Thorvald Stauning, the social democratic leader at the time, surrendered the nation to this German occupation. However, resistance to foreign occupation quickly arose and in 1943, the Germans were forced to take action; they deemed Denmark to be in a state of emergency (A Short History of Denmark). The Germans proceeded to take control of the Danish fleet and the Danish government was forced to resign (Danish History). However, the Danish people did manage some resistance to the Nazis. Before the Germans took over the country, many Danish citizens managed to evacuate thousands of Jews from the country, saving them from concentration camps.
After the surrender of Germany in 1945, Denmark was able to benefit from some
Peterleitner 34 of the aid provided by the United States’ Marshall Plan from 1948 until 1951, providing the European nations with approximately 13 billion dollars of aid (The Marshall Plan). This financial relief aid initiated a new start for Denmark and promoted the continuation of the Danish farming system and allowed for the establishment of a strong industrialized economy in the 1950s (Danish History). Then, in 1949, Denmark was asked to join the North American Treaty Organization (NATO); when Denmark joined NATO, it had to abandon its long-standing tradition of being a neutral country (Danish History).
Despite the recent tragedies of the Depression and wars, Denmark proved its resiliency by being able to recover from its hardships. During the 1960s, the country prospered and decided to enter the European Free Trade Association (EFTA) with Great Britain, which was the main export market for the country (Danish History). Also during this time, the employment rate was 100% and industry grew (A Short History of Denmark). These were the times in Denmark known for political stability, which was affixed by the four main parties: the Social Democrats, the Liberals, the Conservatives and the Social Liberals (Danish History). Over the next several years, the Danish economy fluctuated but their infrastructure of social services was well established and firmly rooted in the culture. Despite this fluctuating economy, the health care expenditure still continued to rise since the 1990s as the spotlight continued to focus on ways to develop more efficient means for delivering the highest quality health care possible to all Danish citizens. For example, in 1993 “free of choice of hospital” was introduced and it was decided in 1998 that hospitals should be reimbursed according to diagnosis- related groups for patients living in other
Peterleitner 35 counties. Such governmental initiatives demonstrated how the gradual increase of economic factors promoted ways for the Danish healthcare system to flourish (Denmark Health System Review). Due to Denmark’s long history of governmental support and ability to provide services to the Danes (ie. welfare), along with the strong support of the people, Denmark’s healthcare system has come to be known as one of the most reputable systems in the world. It was reported in the Organization for Economic Co-operation and Development (OECD) 2013 review of healthcare quality that “health equity” is one of Denmark’s main priorities and that the Danes have done a satisfactory job in living up to the standards of providing equal healthcare for all (OECD Reviews Healthcare Quality). Why are the Danes so happy? In an article reported by the BBC in 2007, “Danes are the happiest people in Europe, a survey suggests. But what is the secret of their contentedness?” In a series of interviews with several Danes, one man stated, "We have a lot of faith in government as an institution. The authorities are normally competent, uncorrupt and approachable" (Danes Are the Happiest People in Europe). Because of their stable and efficient government, the Danes are able to flourish in all aspects of their lives, one of the main facets being equitable healthcare thus leading to the second reason why they are considered one of the happiest groups of people. In Denmark, healthcare is expected and is deemed as “a basic human right; it is accessible to all (Denmark Is Considered The Happiest Country).
Peterleitner 36 Denmark’s uncorrupt and just government contrasts that of Haiti. This difference in government attitude and support, access to resources, and equal opportunity all contribute the notion that the lives of the Danes seem to matter more than the lives of the Haitians; according to Paul Farmer, this inequity in livelihood is the
Figure 5 Government Share of Total Health Spending vs. Time
“root of all that is wrong with the world” (Paul Farmer). As seen in chart 1.1 (Share Graph) it is evident that the Danish government is able to provide sufficient funds to support the expansion and growth of healthcare; whereas the government spending towards healthcare in Haiti was significantly lower than that of Denmark. This extreme difference in governmental support demonstrates that the strong stability and influence of the Danish government is a prominent factor to the country’s success in providing equitable healthcare, while Haiti suffers from lack of support from their government, reflecting the Haitians’ poor healthcare systems and inability to provide equitable healthcare to all. This genial relationship and cooperation between the government and the citizens is what allows for the country to function efficiently, thus giving the nation the ability to
Peterleitner 37 provide equitable healthcare to all. It was noted in 2002 that the major “cornerstones” of the Danish healthcare system were that free, universal services should be provided for all Danes, insuring effectual first-rate service to all citizens (Background Briefing Healthcare Lessons from Denmark). Although Danish healthcare service is financed through the income tax regulated by the national government (GET%), the counties have a major say in the healthcare delivery system. Since 1970, most decisions regarding the form and content of healthcare activity have been made at county and municipal levels, thus giving the Danes the ability to have a say and to be heard about what they deem fit for their healthcare services. Denmark is divided into 14 counties, 275 municipalities and the metropolitan areas of Copenhagen and Frederiksberg, which have both county and municipality status. The counties play a dominant role in health policy and administration as they are responsible for financing and delivering both primary and secondary health services (Healthcare Systems in Transition). These smaller sectors of local governments give the Danes the ability to work efficiently to target their specific healthcare needs and gain the power to make the changes that they see fit that would benefit the Danish healthcare system. Working in close cooperation with the government and municipalities, the five regions of Denmark (ie. Hovedstaden, Midtjylland, Nordjylland, Sjælland, Syddanmark) are responsible for maintaining the governmental interests within the healthcare system: hospitals, special education, and regional development (Danish Regions). The regions have wide powers to organize health services for their citizens, according to regional wishes and possibilities, and can adjust services and staff, etc., to fit the needs at the different levels (The Danish Healthcare System). The Ministry of Health – which is an
Peterleitner 38 organization distributed around the world that had dedicated its work to promoting equitable healthcare – has a coordinating and supervisory role, but no operational responsibilities for health services. The system can be split into two parts: the public and the private aspects of the overall healthcare system. The whole idea of universal healthcare can sometimes seem too good to be true and many often wonder how much money it actually costs to establish this type of system. Before 2007, the regions of Denmark were accountable for administering money to the healthcare systems through taxes and block grants from the state; however, in 2007 the main frame of public health switched from the power of the regions to that of the national government (International Profiles of Healthcare Systems). With this switch in power the government became responsible for financing the healthcare system, which is funded strictly by a federal “health tax”; in 2013, it was set at 8% of the Danes’ taxable income (International Profiles of Healthcare Systems). Once the total health tax is collected by the national government, it is then distributed to the regions and municipalities who then decide what the money will be used for in order to improve their healthcare. Of these grants, about 80% of the spending for regional health are sponsored through block grants – “a grant from a central government that a local authority can allocate to a wide range of services” (Oxford Dictionary). A minor portion of state funding for regional and municipal activities is activity-based or tied to specific political priority areas, which are often defined in the annual “economic agreements” entered between the government and the municipalities/regions. Around 20 percent of regional hospital services are financed by a municipal activity-based copayment introduced in 2007.
Peterleitner 39 Due to the multi-faceted aspects of the healthcare system, many ask what is actually included in the Danish healthcare policy and how much of the services offered are paid for by the government versus individual contributions? The public portion of the system covers all primary, specialist and hospital services, along with preventive services, mental health services and long term care (International Profiles of Healthcare Systems). Some aspects, such as home care, are regulated by the municipalities and are “need based.” How are all of these individual features financed and organized? In primary healthcare, all of the general practitioners (GP) are “self-employed” and are paid by the funds from the regions consisting of capitation and fee for service (FFS). As for nurses, they are paid by the practice. Actual Logistics of the System Danish Healthcare providers are exceptionally well trained and this contributes to the success of the healthcare delivery system. Public health issues came to the forefront in Denmark as early as the eighteenth century with support for curing the sick as well as the initiatives for preventative medicine. The education and training of doctors and midwives, support for the healthcare of the poor, and improvement of Denmark’s water supply were all evident of the national commitment to the health and wellbeing of the Danish people (Denmark WHO Europe). Another difference that sets Denmark apart from Haiti is its system of Healthcare decentralization. In 1970, Denmark underwent a major national reform to reduce the numbers of administrative units, leaving counties and municipalities responsible to manage their own healthcare delivery system. This approach gave these local government units “a voice” in the provisions and level of quality healthcare. This process of decentralization was actually a vote of confidence for
Peterleitner 40 the counties and municipalities (Decentralization in Healthcare). The Danish Ministry of Health in conjunction with the European Commission conducted surveys as early as 1998 regarding Danish Healthcare services’ satisfaction; consistently 90% of all Danes are satisfied with their Healthcare services, more than any other European country (Decentralization in Healthcare). The organizational structure of the Danish healthcare system does still rely upon the Ministry of Health and the Ministry of Finance together with the National Associations of County Councils, Local Authorities, and National Board of Health to advise and make recommendations for health issues. These can all serve to advise each county and municipality. This infrastructure of the Danish healthcare system is notably collaborative and visionary (The Danish Healthcare System). A number of post-communist countries sought to decentralize the financing of their health systems in addition to the provision of services. Along with economic difficulties, poor planning of decentralization resulted in negative outcomes in some countries (The Danish Healthcare System). How Denmark is Handling Their Issues However, despite its strong economy, in recent years the increasing cost of Denmark’s healthcare has been met with growing concern that has resulted in active political focus and initiatives to address this problem. Because of the healthcare system’s effectiveness, one issue that raises concern is increased life expectancy; there is a drastic increase in the number of healthy seniors, resulting in an increase in government expenditures. This is projected to continue as a growing concern for the future. Can Denmark be fiscally sustainable with this skewed population pattern? The number of healthy aging seniors is significant. As seen in graph 2.2, it is predicted that the size of
Peterleitner 41 the elderly population will drastically rise (The Danish Healthcare System). This increase in the number of the elderly will call for a need for more “treatment, nursing, and support” (The Danish
Figure 6 Development 1992-2060 for three age groups: 0-14 (blue), 80+ (green) and +65 (red)
Healthcare System). Denmark’s need to effectively control healthcare costs as a result of healthy aging continues to encourage a greater degree of formal and continued co-operation at all levels of government. Unlike Haiti, economic management of the Danish healthcare system takes place within the framework of negotiation at different political and government administrative levels. One aspect that is a contributing factor to all of this inequity is the drastic difference in space and population size. For example, Haiti’s landmass consists of 27,560 square kilometers of land with a total population of 9.89 million people to date, while Denmark consists of 42,394 square miles of (54% more land than Haiti) with a population of 5.56 million people (Nation Master). Haiti’s large population and smaller landmass could be a reason as to why Denmark is able to provide more care for its citizens than Haiti. Due to Haiti’s population-to-land ratio, there could be overcrowding in the cities and towns making it harder to tend to the needs of the people. Also, with a greater population, the Haitian government is forced to provide for about 4 million people
Peterleitner 42 more than that of the Danish government, further widening the gap of inequity between the two countries. As a result of Denmark’s economic concern relative to support of healthcare, this comprehensive system was highlighted and profiled in 2001 as a “Healthcare System in Transition” (HiT). These findings were delineated in the European Observatory’s Healthcare Systems in Transition (HiT) profile; a comprehensive country-based report presenting analytical descriptions of notable European healthcare systems. Additionally, Denmark’s report describes the healthcare reform initiatives in progress or under development in response to the increasing overall costs of healthcare access and delivery. The HiTs are a key element to the work of the European Observatory on Healthcare Systems (Healthcare Systems in Transition). It is evident that the Danish government is willing to work to create a sustainable and equitable healthcare system for its citizens; this is not the case in Haiti. Dr. Paul Farmer once said that, "the poorest parts of the world are by and large the places in which one can best view the worst of medicine and not because doctors in these countries have different ideas about what constitutes modern medicine. It is the system and its limitations that are to blame” (Hospital & Clinic Support). So, it is not that some lives matter more than others, but it is the “limitations” set by the government that are based on the “idea that some lives matter less.”
Peterleitner 43 Conclusion: As stated initially, this research has evaluated the historical basis for the distinction between the process and access to the healthcare systems of Haiti and Denmark; the two countries are extreme regarding healthful attitudes associated with basic human rights, government leadership, and sustainability. Despite the evident disparity between the two countries, the issues at hand can be simplified to one essential and fundamental question. Because the Danes have better access to all phases of comprehensive healthcare–– resulting in longevity and sustainability–– and have an abundance of well-trained medical professionals with state of the art facilities for healthcare, does this mean that they are considered superior to the Haitians who have very little access to any of these healthcare opportunities? Therefore, one must wonder: do “the citizens of Denmark matter more than the Haitian citizens?” Unequivocally, the answer is no. Although it might appear that this is the case based on the history and research gathered in this paper, however, it is the greed and gross mismanagement of the Haitian government that create the illusion of apathy and greed. It is clear from my research that it was at the hand of the government that the Haitians lost their dignity and pride during the perpetual healthcare crisis. On the other hand, the historical competence of the Danish government has created a system of healthcare that accounts for all of its citizens. As a result, it is obvious that when it comes to the distribution of healthcare, the historical basis of governmental capability is essential in determining the future trajectory of citizen health. The goal of providing access to healthcare and basic medical services should be a priority of every country, and it is only with the assistance of the international community that disadvantaged countries can hope to better the lives of their citizens.
China’s Continuing Future Economic Success
China’s Continuing Future Economic Success Sudeep Jandyam Advisor: Mr. Upton Worcester Academy June 2, 2014
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China’s Continuing Future Economic Success
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Abstract China’s economy is growing at unprecedented rates. As a rapidly developing nation, China serves as a fundamental piece and stabilizing block for international commerce. There are countless factors, internal and external, which contribute to a nation’s potential for economic growth and expansion. With the variability of which factors play the most vital roles in influencing the trajectory of a country’s economy, it is quite the arduous task to anticipate a nation’s future economic potential. In my paper, I analyze numerous principal economic indicators to determine whether or not China will be capable of maintaining their growth trajectory into the future. As one of the most important crucial countries to global commerce, it is imperative that we project proper outlook of the future of China’s economy. I hope to analyze a myriad of indicators that would or would not contribute to China’s continued success. Additionally, I hope to formulate a corroborating stance on the economic future of China. After analyzing and interpreting economic conditions from a plethora of sources, it can be prognosticated that the Chinese economy will continue to economic expansion and development at exceptional rates in the future. The process of arriving to this viewpoint involved comparing and determining which factors take precedence over another. Even though China has certain economic limitations, the nation is still home to an adequate number of robust economic foundations. These foundations will provide China with the base to continue their rapid rates of economic growth and expansion into the future. This position is an important development not only for China, but also the rest of the world. Since China already plays a crucial role in the realm of international trade, with continued economic success, it has the potential to eclipse the United States economy and assert its dominance as the world’s largest and most efficient economy. This would mark a shift in connectivity dynamics in trade relations between countries.
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Table of Contents Introduction……………………………………………………………………………..…......4 Start of Paper….……………………………………………………………………….….…...5 Economic Structure and Reform………………………………………………………..……..6 Economic Freedom……………………………………………………………………..….....22 Global Commerce and Major Industries...….………………………………………….……..25 Worker Productivity…………………………………...……………………………….……..35 Education and Literacy Rates..…………………………….……………………….…..……..44 Innovation…………………………….……………….……………………………...…….....48 GDP Composition……………………………….…………………………………………….52 Unemployment and Inflation Rates……………………………..………..…………………...57 Consumer Confidence and Investment Spending………...…………...……..…………….….63 Trends in the Balance of Payment and International Debt Levels………………..…………...66 Saving Rates and National Savings..………………………………………….…..……….......68 Currency Exchange Rate….………………………………………………………..……….…69 Conclusion…………………………………………………………………………..…………72 Works Cited…………………………………………………………………………..……......74
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Introduction China has experienced a historic rise towards economic prominence. Spanning primarily over the past 10-20 years, China has experienced unprecedented economic growth. As a leading member of the BRIC nations (Brazil, Russia, India, China), China maintains an economy vital in the spectrum of international trade. The nation’s economy is growing at rates never previously documented in past history. It is almost impossible to comprehend the factors behind this astronomical economic expansion. Contributing to this enigma, that is the pattern of growth of the Chinese economy, is China’s unorthodox economic structure in past years into the present. China previously operated on a command economy under the premise that economic production and order was determined by a higher authority, and then imposed on the working people. As Milton Friedman shrewdly argues in his book, Capitalism and Freedom, economic freedom is connected with political freedom and social freedom. At the time, China was under a planned economy, and these freedoms were severely limited. As a result, China was not able to maximize its full potential for economic growth. This economic model deviates from traditional Keynesian economic models based on fiscal policy and Freidman economic models based on principles of monetary policy. Therefore, it is challenging to predict, model, and extrapolate the future years for China’s economy. So, the question arises; will China’s economy sustain this growth into the future or steeply decline? According to the Rule of 70, China should double in economic size in 9 years, but this calculation is futile without the certainty of steady growth rates due to the nation’s propensity for oscillating growth rates. In my paper, I analyze critical factors that contribute to affecting a country’s potential for economic growth, and corroborate why China will continue to sustain its current growth trajectory. As a nation, central to the world’s economy, anticipating the health of its economy in the future is essential.
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China’s Continuing Future Economic Success Although China is not without its flaws in essential economic foundations, the nation has successfully shifted towards a state of increasing economic freedom. Maintaining a market economy with ideals of capitalism over the past decades has fostered robust economic foundations in crucial sectors. These foundations are sufficient and capable of allowing China the ability to maintain their rates of unparalleled economic growth and expansion into the future. There are numerous indicators that frequently correlate with the sustainability of a nation’s economy. At times in past history, China did not always gravitate towards having economic factors conducive for economic growth and expansion, but the nation has taken significant strides to improving upon past flaws. For example, China previously regulated a planned and command economy in which the higher authority of the Communist regime mandated economic execution and orders. This severely inhibited China’s full potential for economic growth through limits in production and commerce. Now however, the country has undergone transitions and reform to a socialist market economy, which has allowed for limitless growth potential. As a result, China’s level of economic freedom has steadily increased, which lead to increased innovation, efficiency, and overall economic growth. This expansion of economic freedom has opened the capacity for drastic improvements in numerous economic components. For example, China developed a diversification of major industries, which also led to export dominance in the realm of global commerce. Due to the efficacy of reform movements, the Chinese economy has experienced consistent growth in worker productivity, which is essential for long-term economic growth. Fueling this increased productivity and efficiency is Chinese education. On a national level, China has experienced higher levels of completion, improved quality of education, and higher literacy rates. As a result, China is able to put more of an emphasis on innovation and
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research and development, which will bode well for the future of the nation’s economy. Due to effective reform movements in promoting capitalism, the economy’s GDP composition and growth sectors continue to show more balance and development, while the economy maintains expansion. Unemployment and inflation rates together have reached stabilizing levels. Upticks in consumer confidence have naturally followed, and investment spending has flourished in China, which has allowed for economic development. In other important economic sectors, such as general trends in international payment levels, China has increased its surplus as do its export dominance. While net cash inflows augment, the government’s savings rate increases, as the nation conserves capital in order to prepare to maintain economic into the future. On the contrary, it may appear that the fixed value of the Yuan currency will hinder the economy’s full capacity to experience growth and will limit true economic freedom. However, a fixed value brings economic stability, and it will continue to promote the nation’s export prominence. Some of these economic factors do have some detrimental flaws, but the positives of these factors surpass any underlying weaknesses. The Chinese economy is definitely not without its limitations and drawbacks, but the promising aspects and unlimited potential of the economy following increases in economic freedom will lend itself continuing economic growth and prominence for many years to come.
Economic Structure and Reform: The structure of the Chinese economy has undergone major transition and reform from a previous centrally planned economy to a socialist market economy. These series of reforms and transitions will prove to be supremely crucial and effective in facilitating the Chinese economy’s rise to prominence. Often in the past, it was widely believed and established that there was no connection between politics economics, as if they were separate entities. Individual freedom was
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associated as only a political problem, and political policies and economic policies could be blended in order to execute policy. There was a fatal flaw in this reasoning, however. Economic freedom is closely related, if not a major component of what constitutes true individual freedom. In his pioneering book, Capitalism and Freedom, world-renowned economist Milton Freidman astutely asserts that economic freedom, social freedom, and political freedom are truly connected and work hand in hand. They should not be considered as separate entities. He cleverly asks the question: “How could the freedom to advocate capitalism be preserved and protected in a socialist society” (Friedman, 16)? It really is no coincidence that history points to numerous circumstances in which limited political freedom showed consistent correlation with lack of economic freedom. The chart below describes the relationship between economic freedom and democratic governance:
Source: (“2011 Index of Economic Freedom”)
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This graphs depicts that even though there are exceptions, there seems to be a solid correlation between economic freedom and political freedom in governance. Some instances in history follow this trend. For example, the state of economic totalitarianism and political totalitarianism evident in Nazi Germany severely limited social and economic freedom. Similarly, in Tsarist Russia, under the rule of a Tsarist Russia, citizens had completely limited freedoms. How can a centrally planned economy provide any sort of freedom for people? The efficacy of a free market economy far surpasses that of a command economy, and China finally came to this realization in the past years. A free market economy allows for voluntary and mutually beneficial exchanges, innovation, and diversification of specializations and wide diversity of proportional representation of economic sectors. It allows for increased efficiency, long-term economic growth, and it negates any need for political coercion. It ultimately coincides with both social and economic freedom. Economic freedom truly shows strong correlation with potential for economic growth. The chart below depicts how nations with the most improvement in economic freedom scores experience the greatest growth rates in GDP per capita in a ten-year period.
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Source: (“2011 Index of Economic Freedom”) China’s journey to reaching a market economy is uncommon. For years, China deviated away from traditional economic models, such as the Keynesian model based on fiscal policy and the Friedman model based on manipulation of monetary policies. As a result, it is tricky to gauge and extrapolate the true potential of Chinese economic growth. For 30 years after the People’s Republic of China was founded, the Chinese government implemented a system of a planned economy, in which particular planning committees of the government set certain targets and quotas in different sectors for economic development. Under the leadership of Mao Zedong, the Communist Party of China implemented to lead the economic
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campaign of the Great Leap Forward. It was a plan aimed at transforming the current agrarian state of China to a communist state. The plans of state determined nearly every aspect of economic production throughout the country. Some implementations included, agricultural collectivization and swift industrialization. In terms of agricultural collectivization, private farming was prohibited, which led to persecutions and forced labor. Collectivization involved multiple farmers carrying out agricultural production as joint enterprises. These were considered state entities, and they put immense pressures on struggling farmers. They also severely limited the potential for growth and social mobility. Polar opposite to a free market economy, production and supply was not catered to consumers, which hindered the economy’s capacity to reach its full potential. According to state protocol, factories would manufacture goods and farmers planted certain quantities of demanded crops. Firms and commercial centers sold and bought stocks upon state plans, while the quantities, prices, and even quality of goods were all to be determined by planning committees. The combination of all these ineffective programs eventually led to the Great Chinese famine from 1958-1961. More than 30 million Chinese citizens died due to starvation, while millions of births failed to happen (“Economic System”). Even though drought and bad weather contributed to this disaster, it can prominently be attributed to the ineffective plans of the Great Leap Forward: “Not until 1960 was it finally realized that many peasants were starving and the whole economy had been thrown into shambles. China has slid into an economic morass, and Chairman Mao had been shown to have feet of clay. He even had to admit that he knew almost nothing of economics. It had played out as a Mao-made catastrophe” (Fairbank 372-3). This economic system attempted to provide China stability and steady development economically, but it completely limited growth and led to hardships. In response, towards the end of the 1970s, Chinese leaders made a decisive decision
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to reform China’s old economic system of a command economy to a social market economy in response to the massive gaps between economic growth rates in China versus other countries. This would prove to be one of the most important and effective decisions in the history of China’s economy. These reforms would propel China on its exception economic growth path. In 1978, Deng Xiaoping led revolutionary and effective economic reforms to galvanize the Chinese economy past its struggles and deficiencies. Deng’s premise was built upon the foundation of having aspects of “Socialism with Chinese characteristics”. These reforms introduced free market principles that facilitated drastic improvements. A central part of these reforms was an ending to agricultural collectivization, which is considered one of the main culprits of leading to the Great Chinese famine. Termination of agricultural collectivization significantly impacted rural areas throughout China, as it ended any responsibility over sharing crops and joint systems. Instead, Deng Xiaoping emphasized a household-responsibility system in which all these joint communes of land were divided into individual private properties. Under this revised system, farmers could start autonomous farming again by planning their own products and land. Any state monopolies of purchasing and selling agricultural products were removed. These eliminations of monopolies allowed for fluctuations of prices and removed any restrictions over certain quantities of a good. Farmers had the chance to diversify their commerce and gradually make their businesses more lucrative. They could manage their own land’s production output, and it improved the living conditions for many farmers in rural China. Most importantly, though, farmers now had a renowned enthusiasm to work hard for production and develop their enterprises with an increased sense of freedom. This marked a shift in the nation’s overall mindset in agriculture. Farmers increased their overall productivity levels, and thus, less time and effort was needed to produce the same number of crops. Increased agricultural
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productivity was fundamental for sustaining long-term economic growth and success, as now farmers could dedicate themselves to working in other industries and services as well. Previously, farmers placed a major emphasis on producing rice and grain. Now, production in vegetables and meat became more common for trade. After increased diversification and innovation, farmers began to cultivate cash crops and agricultural production skyrocketed. Trade for agriculture was also liberalized and China began exporting at increased quantities (“Reforms under Deng Xiaoping”). These increases in exports set the precedence for China’s current economy, as the nation is the world’s largest exporter. Deng took an essential step towards ramping up economic growth by implementing an Open Door policy in 1978. The Open Door Policy opened China’s economy to foreign businesses and investment. As evident in the current global economy, outsourcing and other forms of foreign investments are crucial for global commerce and maintaining efficient trade and specialization. Special Economic Zones (SEZs), such as Shenzhen (major city in China), were created in an attempt to modernize Chinese industry and stimulate economic growth. These zones were exempted from taxes and regulations in order to attract foreign capital. These zones were extremely successful and foreign investment in China rapidly multiplied. SEZs were at the heart of China’s rise to economic prominence. Just like the shift away from agricultural collectivization, the Open Door policy initiated China’s rise as “The World’s Factory” due to its relative dominance in manufacturing production and foreign investment. Relative to another country with a populous nation, such as India at the time, China demonstrated an unprecedented openness in relation to the size of the nation. Globalization and permitting of foreign investment led to the inflows of foreign goods in a myriad of economic sectors. These inflows of goods created massive competition. Competition is fundamentally vital for the health and potential for
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economic growth. It led to many more beneficial aspects for the Chinese economy. Quality and standards of goods improved tremendously, and more people sought to gain knowledge and enhance their skills due to the competition. Tariffs continued to gradually decrease into present day, while trade inversely increased. Overall, tariffs have decreased from 56% to 15%, while only less than 40% of imports are subjected to tariffs. Consequently, over the same time period, trade has transformed from only 10% of total GDP to now 64% of China’s GDP. China is also now considered the most open large country, as tariffs on industrial products were at 8.9%. On the contrary, for Argentina, Brazil, India, and Indonesia, their tariff percentages are 30.9%, 27.0%, 32.4%, and 36.9% (“Reforms under Deng Xiaoping”). These statistics shows China’s now willingness to undergo trade to improve efficiency and specialization in commerce. As a result, China has propelled its economy to prominence. In 2000, George Bush’s administration pursued protectionist policies by setting tariffs and quotas to put limits on the imports of Chinese goods. Bush’s cognizance of China’s rising prominence epitomizes the efficacy of Deng’s reforms on stimulating the Chinese economy. The Open Door policy was a crucial foundation that laid the roots for China’s rapid expansion in trade and future economic success. Deng Xiaoping’s economic reforms set the foundation for other reforms and developments to occur in the following years to come that would help propel China on a trajectory of unprecedented economic growth. Major changes happened in China’s economic industries. These reforms were primarily targeted in urban industries in attempts to increase worker productivity and diversification, and these reforms were supremely successful. In the 1980s, the dual price system was introduced, a system that allowed for greater autonomy. Now, state-owned industries had the capability of selling production above set quotas. These commodities were sold at planned prices and market prices now, and now the relationships and
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cycle of supply and demand could take place without fear of shortages that led to the Great Chinese Famine in the past years. Private businesses were allowed to run, while permission was given to entrepreneur to commence new ventures. These private enterprises began to represent a larger percentage composition of China’s industrial output (“Reforms under Deng Xiaoping”). Increased flexibility on prices was introduced, and natural price oscillations allowed for expansion of businesses and the overall service sector because prices were determined by supply and demand. However, at the time, most industry was still state-owned. To maximize full potential economic growth in a market economy, private industry and enterprises must be the most prevalent source of output. It will bypass any need for fixed prices and quotas, and it will allow individuals to expand businesses and investment spending, which in turn directly contributes to a larger GDP. As a result, an additional agenda of reform occurred in the 1990s. The next stage of reform involved privatization and allocating the majority of stateowned industry. This reform also involved removing and diminishing any price controls, protectionist policies (tariffs and quotas), and overall regulations. Although some state monopolies in the banking and petroleum sectors still existed, in the following years, these industries would be liberalized as well. By the 1990s, large-scale privatizations made their impact, as they competed with state-owned enterprises and increased their own market share. The private sector rapidly grew, and in 2005, it accounted for about 70% of China’s GDP. On the contrary, the state sector’s share on industrial output drastically dropped from 81% in 1980 to only 15% in 2005. This significant drop truly showcases the efficacy of these reforms. Now, the private sector plays a vital role in maximizing China’s economic growth, and it is fueled by inflow of foreign capital and investment. With the increased role of the private sector in conjunction with more flexibility for private enterprises, prices, and entrepreneurship, China’s
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economy experienced an increased diversification of industry sectors. China is now the world’s largest producer of concrete, steel, ships, and textiles, while maintaining the world’s largest market for automobiles. Steel output quadrupled from the beginning of these reforms in 1980 to 2000. Following this substantial growth, from 2000 to 2006, steel production rose from 128.5 to 418.8 million tons, and it represented 1/3 of total global production. Chinese labor productivity in terms of steel output increased dramatically and competed and even perhaps eclipsed, that of the United States. From 1975 to 1992, China's automobile production rose from 139,800 to 1.1 million, and it ended up rising to 9.35 million in 2008. Other industries such as textiles experienced even faster growth due to a lack of government interference and regulation. Chinese textile exports increased from representing 4.6% of world exports in 1980 to 24.1% in 2005. The number of Chinese industrial enterprises rose from 377,300 in 1980 to almost 8 million in 1996. The uniform increases in production can be primarily attributed to the removal of barriers to entry due to less government interference and increased foreign and domestic competition (“Deng’s China”). With increases in productivity, the overall economic sectors of China’s economy became more diversified. This diversification allowed for higher trade capacities and more advanced industries. Industries, such as Steel, were not usually associated with China, but with more competition and less government interference, China’s industrial sectors augmented. The size of China’s industrial and manufacturing sectors now rival that of the United States economy. These fundamental economic stables set the standard for China’s growing economy in the present and future economic expansion. These past reforms were extremely effective, and they did not stop there. Building upon past reforms, in the 1990s, reforms in other economic sectors, such as financial services also occurred to help China capitalize their growth trajectory. The financial
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sectors in China finally liberalized. After China joined the World Trade Organization (WTO) in 2001, the overall service sector immediately became more liberalized and freer for foreign investment with fewer restrictions in place. For example, restrictions on retail, whole, and general distribution ended. In the United States, restrictions were not set on these aspects of the economy for hundreds of years. Only recently, did China come to a revelation in which the nation can limit restrictions on individuals. Allowing more flexibility and economic freedom gives opportunity for increased innovation, more profits, and increased economic growth. In addition, banking, financial services, insurance, and telecommunications were opened up to foreign investment. Previously, Deng initiated the Open Door Policy that designated special economic zones for foreign capital and promoted overall Chinese foreign investment, but they were caveats on which sectors were open to foreign investment and influence. Now, all sectors were open to foreign investment, and this drastic shift depicts China’s transition into a Socialist Market Economy. This market economy is conducive to superior economic growth in the present and future. Even though the sector of financial services was liberalized, it is not without its flaws. Four large state-owned banks primarily dominate Chinese banking. The problem is that these banks are mostly inefficient, and they still employ monopolistic characteristics that China fought hard to combat against in previous years with the growth of the private sector and consequent decline in state-owned output. The financial sector is normally seen as an Achilles heel for the Chinese economy since the state is inefficient in management. Defaults on loans have hindered the ability for state-owned enterprises to turn any successful profits, and have also hurt the economy due to the political need to clean up these failures. In 2006, it was estimated that the total amount of unsuccessful loans was around $160 billion (“Economic System”). As a result, these banks have trouble raising capital, which inhibits the full potential for borrowing,
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investment spending, and growth. They are forced to acquire capital through Perhaps, China should adapt a policy of privatization of the banking system to help assuage this problem. Just as the nation did in years past with other economic industries, privatization is useful for improving the nation’s economic state and productivity. Although this can appear to be a flaw in China’s economic structure, steps have been taken towards enhancing the financial sector. The four major banks were floated on the stock market in conjunction with China’s financial markets: the Shanghai Stock Exchange and the Shenzhen Stock Exchange. Floating on the stock market will allow for an increased role of the public sectors to facilitate the bank’s liquidity to acquire an adequate amount of capital through Initial Public Offerings (IPOs). Even though Chinese economic reforms brought upon countless successes towards setting the economy on a path of substantial growth, some faults still persist within the nation. After decades of economic reform, economic and social inequality expanded drastically in China. Increases in inequality can be attributed to disparities between economic provinces, such as between the coast and the interior, in which economic demands and industries vary. Also varying is the percentage of state-owned industry in each region, which can hinder full potential for economic growth and lucrative business. China has different methods to alleviate this growing economic inequality. For one, China can attempt to revive a welfare state in which the government reinstitutes a distributive income tax system in order to relieve this growing disparity in inequality. This way, the wealthier citizens of China will have to pay an elevated rate of taxes. Another method China can pursue is privatize lingering state monopolies to redistribute these proceeds and profits to the general population in order to reduce inequality. Even though growing inequality should normally be viewed as a negative aspect of a nation’s economy, in China’s situation, it really should not be. Due to economic reforms, China experienced and
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continues to undergo rapid economic growth. As a result of this growth, poverty was significantly reduced in urban China and even in rural regions. This reduction in poverty has happened while China’s living standards in all regions uniformly increased in comparison to the era before reform (“Deng’s China”). These improvements indicate that economic inequality is not necessarily between the polarized wealthy and impoverished. Rather, it showcases an inequality between upper and middle class. The Gini Index measures the extent to which the distribution of household income in an economy deviates from a perfectly uniform distribution. The scale is from 0-100 in which 0 represents perfect equality, while 100 represents perfect inequality. On this scaling system, China’s Gini coefficient is estimated to be above 45, which is comparable to the United States and other Latin American countries (“GINI Index”). As a result, the statistics shows that the relative quantity of deviation from perfect equality is lower than actually perceived. The population below poverty line is at 13.4%, which is still relatively high, but the statistic is drastically improving, as it continues to decrease. Ultimately, economic inequality is an inevitable consequence of a market economy in which capitalist ideals are carried out. Inequality has its benefits also in promoting competition, innovation, and increased productivity. China’s growing inequality should not be viewed as a potential deterrent for the country’s future economic growth, but as a catalyst that increase capacity of economic growth. China’s transition from a planned economy to a socialist market economy has often been compared other economies that also experienced a significant economic transition period. However, when compared to the effectiveness of these other developing countries’ economies, China’s economy surpasses them all for a myriad of reasons. Unlike the other countries, China was able to avoid any major downfalls and severe inflation that plagued Eastern European countries. Eastern European countries experienced declines ranging from 13 to 65% in GDP at
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the start of their reforms. On the contrary, China continually expanded their economy and GDP levels since the inception of the nation’s reform policies. China also successfully avoided hyperinflation, which can be a common consequence of exceptional growth. Eastern European countries fell victim to a hyperinflation rate ranging that reached dangerous levels of 200%. The success of the Chinese economy to avoid these critical pitfalls can be traced back to the gradual approach to decentralize the Chinese government and state-owned enterprises. China’s reform movements spanned over decades, and did not all take place at the same time. This allowed for market institutions, economic industries, and the private sector to develop successfully to replace any state planning. The Chinese approach absolutely contrasts with the method of Eastern European countries in which they took a drastic approach in rapidly privatizing economic industries, which did not allow for inflation to rise steadily since the inflation rate had to compensate for rapid economic growth. Even when compared to other swiftly developing economies, such as Brazil, Mexico, and India, China still surpasses these economies in growth rate and effectiveness (“Key Trends in Globalization”). China’s economic rise is truly without comparison. A combination of less government regulation, increased investment spending, and higher worker productivity has catapulted China to superior economic performance. Since China implemented reforms in an effective order and proper manner in order to prevent any declining economic aspects, the country will be able to sustain impressive economic growth rates into the future. Even though there are still potential lingering issues, China’s transition from a command economy to socialist market economy has undoubtedly propelled China’s economy to unprecedented rates of growth. The chart below displays tremendous China’s GDP growth between 1952 and 2005:
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Source: (“Creative Commons”) GDP growth remained stagnant in China until Deng began implementing economic reform, and the graph experiences a shift and spike in 1978 when the reform movements were first initiated. After more reform movements were implemented, China was set on a steep slope of profound economic growth due to the effectiveness of these changes. These reforms will be the foundation for China’s ability to sustain future economic growth due the overall efficacy of these reforms, as were mentioned before in the paper. Some unfavorable favorable factors still persist, such as remaining socialist ideals and enduring ineffective state-owned enterprises, and should be improved to adjusted to meet the demands of a market economy. Regardless, the paradigm shift of decentralization of state authority and the reinvigorating of private sector stimulated China’s economic growth and prosperity for many years. Deng Xiaoping deserves much credit for this success. Although he did not create many of these reforms, he passed them in an attempt to galvanize the economy. Government regulations also lessened, while barriers to enter investment both domestic and foreign decreased. China’s exports industry drastically augmented, and so did
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efficient trade overall. With a newly developed diversified economy, the private sector will continue to expand and innovate. China became a major economic power in the realm of international commerce with the most potential to continue to develop in the world. These reforms were so effective that they catalyzed a rapidly growing superpower in the Chinese economy. The true testament of the lasting beneficial impact of these reform movements is the relative lack of oscillations and variability in China’s GDP growth when compared to other nations around the world:
Source: (“Business Insider”) As the country’s intense periods of growth continue in the future, the socialist market economy within China will continue to mature and strengthen. With new permanent and fundamental market capitalist ideas in place as essential building blocks, China is prepared to carry this economic success and efficacy into the future. Implementation of capitalist ideals has allowed for significant economic development in numerous sectors in the Chinese economy.
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Economic Freedom: Despite China’s undoubted successful improvements in its overall economic state due to a series of effective reform movements, China still maintains a relatively low level of economic freedom. Economic freedom is crucial for a country’s economy because it allows for entrepreneurship, investment spending, and overall innovation to let the private individuals help stimulate economic growth instead of letting state-owned enterprises take priority. Without proper economic freedom, the prospect of experiencing economic expansion of full capacity is unlikely. Even though the level appears to relatively low, it does not tell the whole picture because the level of economic freedom is continue to drastically improve and will continue into the future. China’s economic freedom score is 52.5, which makes it the 137th freest economy in the 2014 Index. Its overall score improved by some points in the previous year due to continual improvements in investment freedom, business freedom, and monetary freedom. Certain categories, such as trade freedom have increased tremendously, as China continues its rise to trade prominence. The problem is that improvements in these economic sectors have to combat against declines in freedom due to corruption, labor freedom, and the overall management of government spending. This might indicate that China needs to initiate more reform movements, as leaders did in the past, to improve levels of economic freedom with more balance and stability. Balance and stability in an economy are both essential traits for the sustainability of an economy. China is ranked 29th out of 42 countries in the Asia-Pacific region, and its overall score is still below global and regional averages (“2014 Index of Economic Freedom”). Over the 20 year time of the Index, China’s economic freedom rating has surely improved from its previous absolutely egregious economic freedom level. However, it is still at a level in which the economy tilts towards more lacking freedom than actually being free. Comparatively, economic freedom rates
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in China have grown much slower than countries at its previous level, but in the end, the level of freedom is still growing. There still remains a lack of political desire to restructure failing economic aspects, such as a continuing dependency on public investment. This can be attributed to China’s Communist Party’ ultimate authority on the economic system that undermines the rule of law. The Communist part still possesses strict control of speech and religion. Contrary to common rights that the United States grants through the Bill of Rights, rights in China are still behind. Low levels of political and social freedom show correlation with inadequate economic freedom, as discussed before through Milton Friedman’s Capitalism and Freedom. Many advocates for anticorruption encounter physical violence or intimidation, and they cannot expect any proper protection from police. These forms of corruption can affect the banking sector, finance, and overall government implementations. Even China’s judicial system is weak and highly susceptible to political manipulation and corruption. Overall taxes represent 19% of GDP. Government expenditures account for 24% of the economy’s GDP, while the reported public debt is 23% of GDP. These statistics represent relative weaknesses in China’s economy due to a lack of political and economic freedom, but these statistics have gradually improved over the years. The common prevalence of state-owned enterprises continues to hinder China’s full potential for economic growth. Even though the financial sector has experienced reform, it is still under rigid control of the state, as the state determines its action to manage the economy. In many instances, these financial institutions are skewed in such a way to favor state enterprises instead of the private sector. The government still implements some strict labor regulations, while subsidizing fuel, electricity, and agriculture at $160 billion. Subsidization at $160 billion is double that of the United States and the European Union combined (“2014 Index of Economic
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Freedom”). This remarkable difference showcases the economy’s continuing reliance on government intervention and regulation. It also marks some deviation from capitalist ideals, which will not be conducive for economic growth. This continuing struggle of subsidizing can be rooted back to 2005 in which the Hu-Wen government administration began plans to reverse many of Deng Xiaoping’s effective reform movements. The government adopted more populist policies in increased subsidization and control over the health care sectors. This in turn slowed down privatization of China’s economic sectors from state-owned enterprises. The state sector was the primary beneficiary of government investment and the private sector suffered. There is still hope, however, for improvement in economic freedom. Behind the many measures instituted to liberalize sectors of the Chinese economy in conjunction with leadership by the General Secretary of the Communist Party, Xi Jinping, increased political and economic freedom is likely. The new government has responded to an economy that is experiencing less rapid growth rates with small-business tax cuts and stimulus spending. Additionally, the government took major steps is passing legislation, such as a recent Employment Law and Anti-Monopoly Law. These implementations were passed in order to improve the business environment and make it more conducive for entrepreneurs and investment (“2014 Index of Economic Freedom”). The government is developing more cognizance of the importance of maintaining a favorable and stable employment sector to avoid any economic fallbacks. These new government legislations are imperative for China to not only improve economic and political freedom, but also continue successful economic expansion into the future. These measures resemble those of fiscal policies implemented by the U.S. government to galvanize an economy out of recession. Even though there are undoubtedly lingering weaknesses in China’s economic freedom, new
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government policies and overall trends indicate that the Chinese economy will be able to sustain its trajectory of tremendous economic growth into the future. Since levels of economic freedom continue to demonstrate significant progress, they have facilitated tremendous development in essential components to the Chinese economy. Uniform improvements in these components serve as the foundation for China’s continue economic growth into the future.
Global Commerce and Major Industries: Due to the effectiveness of reform movements to increase economic freedom and implement capitalist ideals, China experienced a diversification of industry and now plays a major role in international commerce. Over the past decades after success economic reforms that promoted economic growth and efficiency, and China’s economy has vaulted itself to economic prominence in the realm of trade. With improvements in economic freedom and capitalism, China actively sought out after for resources for trade. Not only can China import valuable resources, such as oil to further improve economic sectors within its economy, but also expanding trade volumes forces China to develop their own industries more significantly in order to export valuable commodities. Previously, under a command economy, privatizing of industry was severely limited, and state-owned industries were dominating. There was no room for progress and growth in these industries because the state determined what would be produced and at what quantities. Now, the private sector can freely develop various industries without any limitations through factory development and other means to open up China’s capacity for trade. The development of the private sector’s industries has proved to be essential towards developing China’s trade dominance. And now China plays such a vital role in global trade, and its trading volume continues to increase in size. At these rapid rates of expansion, the nation will be able to sustain its current economic growth into the future. China is currently the world’s largest
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exporter at $1.971 trillion the second largest importer of goods at $1.653 trillion (“Economy: China”). This position of prominence has steadily developed after successful reforms, as illustrated by the graph below:
Source: (“National Bureau of Statistics of China”) As the graph indicates, China’s trade volume has grown exponentially, and it shows no glaring anomalies or any signs of slowing down. This continuing exponential growth will bode well for the nation’s economic future. In conjunction with rapidly improving productivity levels in workers, the Chinese economy will continue its relentless growth. Not only has trading volumes dramatically increased, but also the increases in the number of exports have gradually constituted a larger role, percentage wise, for China’s overall GDP growth. The graph below illustrates how as China’s export quantities took off, the nation’s GDP growth sustained its growth curve.
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Source: (“National Bureau of Statistics”) Exports represented a larger proportion of China’s GDP growth. Net exports are components of a GDP value. Since net exports represents the quantity of exports- imports, if the number of exports grew to a certain extent as overall trade increased to represent a larger percentage of GDP growth, then the pace at which the number of imports grew in the Chinese economy must have been slower than that of its exports:
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Source: (“National Bureau of Statistics”) The graph above corroborates the premise that the growth rate of exports must be faster than that of the economy’s imports. China’s exports now represent 26.9% of its GDP value, while imports represent 24.1%, which results in a net budget surplus because there is more capital inflow than outflow (“Economy: China”). These percentages also point to how trading on both ends serve as major components of the value of GDP. It is a promising sign that both the total trading volume of China is increasing and the disparity between exports and imports. In general, increasing trading volume showcases a greater desire for specialization and industry and increased efficiency because trade is voluntary and mutually beneficial for both parties in some way. Also, since the gap between exports and imports of goods is also increasing, there is a strong probability that China will be able to maintain its growth in GDP because as the gap in net exports gets wider, so does the value of GDP. In addition to the actual trading volumes, the diversification of economic industries drives these values and also will support China’s continual economic success in the future.
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China’s diversification and significant development in industry drives enhances the levels of trading volumes, while also driving economic growth in the present and into the future. China is now the largest manufacturing economy in the world, and it maintains its distance from a second place United States in its services-driven economy. Once viewed as merely a location for agricultural production, China now boasts tremendous output in numerous other more advanced and diverse sectors following successful economic reforms. The country is the world leader in gross value of industrial output (“Economy: China”). This marks a remarkable milestone in the history of the development of the Chinese economy. Previously, China’s economy was limited to production related in the agricultural sector, and it never had the proper resources or opportunities to expand the breadth and variety of its manufacturing. This lack of adequate resources and planning ended when successful economic reforms were implemented starting in 1978. China began to catch up and even eclipse the United States economy, the major production economy powerhouse, in numerous economic sectors. Nothing epitomizes China’s economic development and diversification than in the nation’s new prominence in industrial production.
Source: (“UN National Accounts”)
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The graph above China’s consistently increasing slope of industrial production, and its overtaking of the United States relatively stagnant growth in industrial production. In 2013, Chinese economy’s industrial production growth rate was 10.4%, while that of the United States economy was 2.7%. For 2014, China is projected to grow at a rate of 7.5%, and it is an outstanding statistic considering the nation is already the world’s leader in this category. China is the world leader in gross value output of mining and ore processing, iron, steel, aluminum, coals, textiles, petroleum, cement, chemicals and fertilizers. Not to mention also countless consumer products, such as toys, electronics, and footwear. Additionally, other crucial industries that China leads the world are in automobiles, ships, aircraft, satellites, and overall transportation equipment (“Economy: China”). Clearly, China is not over reliant on agricultural production and the economy’s diversification is evident. The most surprising fact of it all is that China, with outstanding growth in industrial production, has maintained its dominance in agricultural production. The nation is still the world leader in gross value of agricultural output of rice, wheat, potatoes, corn, peanuts, tea, barley, apples, cotton, pork, and fish. The economy has mastered numerous different sectors that only advance the reliance of other countries for China’s commodities through trade. In 2011, China was the largest exporting/importing partner for 32 and 34 countries respectively ("Strong China January Trade Data Sparks Cheers, Doubts"). China’s main trading partners for export are as follows: U.S. 17.2%, Hong Kong 15.8%, Japan 7.4%, and South Korea 4.3%. The previous statistics are significant for a myriad of reasons. For one, China’s number one trading partner for exports is the United States, probably the most dominant economy in the world. As the Chinese economy continues to overtake the United States economy in sectors, such as industrial production, it is
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building an edge. The U.S. is showing a major dependence on the Chinese economy, and it can prove to be detrimental in the future because the U.S. can be susceptible to Chinese price fluctuations or mercurial Chinese trade policy down the road. If China continues to maintain this relation with the world’s most powerful economy, it might be able to potentially usurp the role as the world’s number one in decades to come. As for the other three trading partners, they are located in the vicinity of China, and are all major players in the region. China is able to fuel trade through regional commerce, but the nation still maintains its regional dominance, as it continues to expand on the global level. On the contrary, China’s import percentages with trading partners are as follow: Japan 9.8%, South Korea 9.2%, and the U.S. 7.1% (“Economy: China”). China maintains an overwhelming competitive advantage in net exports over the U.S. As mentioned before, keeping a proper net export balance is crucial for a country’s economic growth and GDP value. However, China does have negative ratios with Japan and South Korea, which might appear to be problematic for regional commerce. In reality though, China still has a very healthy positive trade balance between overall exports and imports, so the nation’s commerce will continue to fuel economic growth. Another potential reservation of China’s commerce statistics is that its trade per capita is only at $2,413 in respect to the ratio between total trade and population ("China Trade, Imports and Exports."). It is a relatively low statistics, and definitely should improve in the future to be more representative of a truly effective nation of commerce. It is without a doubt, though that China has dramatically improved its trade per capita over the years. As long the number continues to show improvement, it should not prove to be a hindrance towards achieving sustainable economic growth. The combination of rapidly growing trade volume, increasing gap between exports and imports, and overall diversification of economic
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industry will continue to propel China’s economy to tremendous growth and success into the future. China has also developed robust economic industries in sectors, such as the auto industry, steel production, and power and energy. These foundations will only serve to progress and further develop the nation’s rapidly developing economy into the future. The Chinese automobile industry has ascended into a prominent sector following economic reforms.
Source: (“OICA”) The graph above illustrates the exponential growth of the Chinese auto industry. A major positive sign is that domestic sales have leveled with the increases in production. This balance has maintained equilibrium between the supply and demand of automobiles, which is essential to maintain growth in production and economic expansion. Cars have become a prime commodity for consumers in China. Dominant auto industries are usually associated with the United States and Japan, but China surpassed Japan in auto production in 2006 and the U.S. in 2009, to become the world’s largest auto producer. In 2012 exports of Chinese automobiles were about 1 million vehicles per year and keep rapidly increasing (“China Major Industries”). With this
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rapidly growing sector as a prime export-trading asset, it will serve as a solid foundation for the Chinese economy. Just as the automobile industry has taken a more prominent role in the Chinese economy, so has the steel industry. China has been rapidly increasing its steel production following successful economic reforms. China has passed the United States, the former steel production giant, and China has no signs of slowing down steel production. Steel production was at 140 million tons in 2000, and it grew to more than 420 million tons by 2007 (“China Major Industries”). The Chinese economy has assumed a prevailing role as the world’s leading producer of steel.
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Source: (“World Steel Association”) The first graph above illustrates China’s constant growth rates in steel production. While the second graph demonstrates the principle of the nation’s number one role as the world leader of steel production. As the world’s total steel production has naturally increased, it was really fueled by China’s consequent increase in steel production. A commodity, such as steel is extremely vital for many other industries, such as means of transportation like the automobile industry. As a result, it will continue to be in demand, and many countries will keep importing high quantities of steel from China. The Chinese economy has secured a fundamental asset in Steel as an export that will continue to flourish into the future. This export growth will be conducive to China’s continuing economic success and growth. Compared to Chinese automobile and steel industries, the power and energy industry has developed the fastest of them all. Currently, China is ranked second in the world in the installed capacity of generators and generated electricity. From the 1990s, the capacity of generated has increased from 100 million kilowatts to 385 million kilowatts by 2003. Now, major power grids cover all cities and the majority of rural areas of China. The ubiquity of power grids marks a milestone for China into a shift to a nation of larger power plants and grids with higher voltage, automation, and autonomy. As a result, overall efficiency and production capabilities increase with better automation capacities. In the 1980s, the Chinese government made significant investment in enhancing the coal industry, and these effective investments have resulted in a sufficient power supply throughout the country. Petroleum and natural gas are also crucial Chinese energy resources. In 1995, the crude oil output was 150 million tons, and in 2003, it grew to over 160 million tons, which ranked fifth in the world. The growth and development of the oil industry has catalyzed growth of connecting industries, such as manufacturing, steel, and
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transportation. With the increases in the output of petroleum and natural gas, the capacity for oil consumption also increased, which has surely proved to be beneficial for economic growth. In 2003, China's nuclear-power-generated electricity marked a historical increase from 2002 of 120 percent. In the future, by 2020, China plans to build 27 million kilowatt nuclear power facilities, which will serve to further enhance the efficiency and capabilities of energy power to help stimulate economic growth. A lingering underlying issue in the power industry is a potential shortage of energy resources that could have the potential of hindering China’s economy growth. However, China is in the process of developing energy resources in the form of wind and solar power. The government invested 1.5 billion Yuan in the past four year in wind power and 200,000 wind generators already serve an important role for agricultural regions. Due to the country’s major steps forward and improvement in the power and energy industry, it continues to attract foreign investment (“China Major Industries”). China’s economic future is bright with a tremendous diversification of economic industry that will continue to propel its economy to exceptional growth for years to come. As economic freedom and opportunity improved over the years, so did China’s diversification of industry and trade prominence.
Worker Productivity: Additionally, one underlying beneficial consequence of China’s numerous economic reforms towards capitalism is the nation’s exceptional increase in worker productivity. Enhancements in worker productivity were natural occurrences following China’s development in industry and trade volume. As profitability increased throughout various economic sectors, firms had the capability to increase workplace efficiency, especially in the form of worker productivity. As China continues to tap into its resources following a shift towards improving economic freedom, the nation must be able to stay competitive globally and advancing
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productivity is essential. Worker productivity is crucial for a country’s economy. If workers become more competent and skilled, they will be able to produce higher quality goods at a faster rate and become more efficient. Increases in efficiency allow for people to venture into new businesses and industries, and thus an economy will undergo an increased diversification of economic sectors. The long-run production possibilities for economic growth will increase with increased worker productivity, as production possibilities increase. This phenomenon is simplified into a Production Possibilities Curve (PPC), as displayed below.
The original curve depicts the original production possibilities for a country to produce capital and consumer goods with current productivity and efficiency levels. If a country can improve worker productivity through means of inputting better human and physical capital, the production possibilities curve can shift to the right and expand. Thus, a nation, such as China in this instance, has the capacity to produce more and develop its economy. Also, worker productivity helps differentiate an important contrast between the value of total GDP and GDP per capita (“Krugman’s Economics for AP”). For a country, such as China, with the world’s largest population, it can easily be misconstrued that the nation’s enormous GDP value constitutes a dominant economy. In reality, GDP per capita or GDP per person is a better indicator of economic prominence and efficiency because an increase in population will not
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subsequently increased the value since both total GDP and population will increase in a direct relationship. Instead, the only way to augment a GDP per capita value for a nation’s economy is to increase worker productivity and efficiency. Better labor productivity is a driving force to propel long-run economic growth, and since China has improved this value, it will be able to continue incredible economic growth into the future. Building upon 30 years of successful reform for economic freedom and the essential entry into the World Trade Organization in 2001, China has experienced unprecedented growth rates in terms of labor productivity. Before 1978 and Deng’s reforms, China’s labor productivity was at a level negligible for any valid comparison with other nations when the economy was centrally planned and wages were allocated by the government. These wages were allocated without any effectiveness and lacked any cognizance for conditions of market competition and any incentives for increased worker productivity. As a result, any potential for increased growth of worker productivity was stunted. Also, the quality of goods was not of top importance since wages were already pre-determined. With supply and demand principles guiding the prices of goods and the wages of workers, there is an increased incentive for workers to produce higher quality goods in order to earn more since the pricing of goods is solely determined by their quality. Following the efficacy of Deng’s economic reforms, China has continued to experience drastic increases in worker productivity. Thanks to a plethora of successful economic reforms and implementation of capital market ideals, which reduced the dominance of state-owned enterprises and allowed for increased success for the private sector, a sense of robust competition and higher priority of efficiency formed in the Chinese economy. Competition among firms, both domestically and globally (after the Open Door Policy), led to the dire need for workers to become productivity for any chances for businesses to build lucrative ventures. The Open Door
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Policy launched a global integration of markets, which resulted in the motivation for workers and firms to be more productive in order to survive the pressures of more competition. As a result, worker productivity increased dramatically following this shift in the dynamics of the Chinese economy. China must embrace greater competition by liberalizing the banking system to free up credit and promote greater competition and overall productivity. The development of the private sector will also generate additional jobs. Other reforms, such as liberalizing wages to set incentives for more productive workers gave people a tantalizing motive to work harder and to become more skilled and efficient in the workplace. Now, having a robust foundation with a sophisticated education was of a higher priority for Chinese workers. Education is a form of human capital that allows for workers to become productive. Consequently, job mobility increased, as people were able to improve matching with employers that suited their certain higher skill set and characteristics for certain employers. Thus, as worker productivity increased, the labor market became more competitive, which initiated a positive cycle of increasing productivity and competitiveness. Ownership reform also was beneficial for better worker productivity. State-owned enterprises no longer dominated China’s GDP value, and as the private sector rose, so did worker productivity. In 1999, 78% of Chinese workers only had one job throughout their lifetime (“China’s Productivity Challenge”). This statistic epitomizes the nation’s steps towards a more labor productive economy. As workers became more skilled and efficient, they could find a better match for work and stick with that source of income for the rest of their lives. Another motivation for Chinese workers to become more productive over the past years into the present is the need for capital investment. With more free flowing capital, investment spending dramatically increased in China. Previously, investment was primarily concentrated in
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state-owned enterprises that chiefly acquired capital from state-owned banks. As a result, the capital to labor ratio was high and very inefficient. In an ideal scenario, capital or money available for investment should increase directly when the source of labor and productivity increases. However, by implementing proper reform movements to diminish the priority and existence of state-owned enterprises, the private sector dramatically increased productivity, especially in the industrial sector in the need to receive capital investments. The ratio of capital to labor also decreased to a more efficient level, as the number of workers significantly increased and became more productive as well. These new dynamics in Chinese economy rewarded companies that were more successful and worthy of crucial capital investment (“China’s Productivity Challenge”). Now, firms would only hire workers if they would add value to the company with an adequate skill set to provide increases in productivity, output, and quality of output. If the marginal costs of hiring the workers were greater than the added benefits of what the worker would bring, firms would have no need to hire. This coincides a fundamental economic concept in which continually increasing something, or in this case workers, will lead to a diminishing marginal utility in which the next worker will continue to provide the less for the company. The only exception to this principle is if the company continues to expand or if the worker is skilled, efficient and productive enough to provide the company with an added boost. Additionally, China’s beneficial increases in worker productivity can be attributed to more advanced inputs of technology as another form of capital conducive to higher efficiency and growth. With domestic and global competition rising and taking more precedence, companies need to do anything to give them an upper hand and edge in order to grow prosperously. One such comparative advantage is disparities in technology between firms. A firm with archaic technology is not as likely to succeed with a lack of efficiency when compared
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to companies with the most advanced technology and efficiency. Production capabilities improve and technology is enhanced and overall input costs and good prices decrease. Workers become much more productive with the proper technology to supplement their skills in production (“China’s Productivity Challenge”). Thus, there is a higher desperation to develop and utilize more advanced technology to increased worker productivity in the face of competition. As a result, not only is China’s economy improving in terms of worker productivity, but also in terms of technology development in relation to the rest of the world. Since better technology and more productive workers show strong correlation with each other, China has improved in two fundamental aspects, which will set the stage for future economic growth and success. In less than a decade, between 1997 and 2005, China’s labor productivity doubled, which represented 1/8 of the worker productivity in the United States. China has had faster labor productivity growth than any other country, even similar sized and economic state nations, such as India. This has contributed to China’s faster overall GDP growth, and has vaulted the nation into prominence among the world’s major economies in the mere span of three decades. Overall, China’s drastic increased in worker productivity can be summed up due to three primary factors: labor market reforms, increased competition, and a larger opening up to the global economy. The combination of these three factors conducive to better labor productivity, culminated to China’s unparalleled increases in worker productivity. In the span of the years between 1980 and 2005, most major economies in the world experienced modest growth, and they had nearly tripled their worker productivity. On the contrary, China’s levels of productivity increased a phenomenal seven times from their previous levels of labor productivity. 40.1% of the drastic GDP increases over the years are attributed to the increases in total factor productivity. During the time of Maoist policies before 1978, total factor productivity experienced a decline of 13.2% (“China’s
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Productivity Challenge”). Regardless in comparison with any other countries’ productivity growth rates, such as the United States and India, China surpasses them all, as illustrated in the graph below of major global economies due to the supreme effectiveness of Deng’s reform legislation:
Source: (“International Labor Organization) China has regularly outpaced the rest of world in improving worker productivity, and this constant increase in efficiency and GDP per capita will allow the nation to maintain its exceptional economic growth into the future. Overall global labor productivity growth is sluggish presently, but the remaining constant is China’s place at the number one country in its rapid pace of enhancing worker productivity. The latest statistics from the Conference Board, a research firm, illustrates that global worker productivity fell to 1.8% in 2013 from a rate of 2.3% in 2011 due to the global financial crisis. In China, average productivity growth decreased from 12% a year between 2003 and 2007 to a little less than 9% between 2008 and 2012 (“Labor Productivity”). Even though China’s rate of average worker productivity decreased, it is still
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growing at a phenomenal rate, and is faster than any other country, as the following bar graph depicts:
Source: (“The Conference Board; The Economist”) Clearly, China is still outpacing the rest of the world in improving worker productivity and efficiency with a distant second place in India, another up and coming nation. However, China’s GDP per worker is still only represents the 17% of the productivity of American workers, as the following bar graph illustrates:
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Source: (“International Labor Organization”) China needs to continue to increase worker productivity in order to compete more successfully with the United States and exert its dominance in the realm of global commerce. The China Economic Review concluded that China improved from representing only 3.0 of United States labor productivity in 1952 to 7.6 in 1997 on a scale of a 100, which represents the United States. Now China in 2005 is at 17, which demonstrates China gaining a comparative labor edge on the United States. Even through there still exists a significant gap in labor productivity, China is still exhibiting rapid increases in worker productivity and points to a bright future success for the nation’s economy. At the root of China’s still relative low worker productivity is the remaining existence of state-owned enterprises. Although they were significantly lessened, they seem to garner more investment spending and thus a higher capital per worker. This inhibits the private sector from obtaining its full capacity of investment spending to increase worker productivity and overall production possibilities. As a result, some Chinese firms might struggle to find investment spending and be strapped for adequate capital (“Labor Productivity”). This partial inhibition is a left over consequence of the inefficient state-owned sector, but has gradually improved over the years, and it should not be prove to be problematic in the future. However,
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since China has experienced a prolonged rate of growth in worker productivity, investments and commodities in China appreciate in value. Investors gain a certain confidence and develop a propensity to continue to invest in China since innovation and more skilled workers continue to support the nation’s economic rise. Continuing rises and productivity with increased investment spending will prove to be a tremendously beneficial combination for China’s sustaining economic growth and success into the future. China’s private firms are crucial for stimulating economic growth, and gathering investment spending is an important catalyst. If China is able to manage and improve upon these primary factors to keep improving its worker productivity, the nation will to build upon efficiency and production. With a recently implemented economy of increased opportunity and economic freedom, China is taking full advantage of this chance to remain competitive in trade and production in its diverse industries by continuing to improve upon worker productivity. Now, most signs point to China maintaining increases in worker productivity to help facilitate its expanding economy into the future.
Education and Literacy Rates: Contributing to increased worker productivity is China’s increases in overall education participation and literacy rates. Due to successful reform movements in increasing economic freedom, Chinese industry developed significantly. Coupled with a diversification of industry was profitability and increased efficiency in the work places through advances in worker productivity. As economic freedom continued to improve, people had more flexible opportunities to actively seek higher forms of education. Education became more of a major priority because efficiency and worker competence is essential for China to stay competitive globally in their economic industries. Thus, people have an increased incentive to gain knowledge and ability to remain competitive in the workforce. A foundation of education and
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intelligence will be extremely successful in helping China achieve tremendous economic growth in the long run. As a form of human capital, people gaining more knowledge through higher levels of education will only benefit the Chinese economy. It will help increase long-term efficiency and worker productivity. As a result, it will allow for room for development of more advanced industries, increased production, and economic growth and expansion. In 1999, less than 1 million people graduated from a university, but by 2013, it is almost at 7 million. According to the National Bureau of Statistics, China is now producing more completers of first university degrees than the United States, as a sufficient mark of education to pursue advanced research jobs (“It’s Official: China is Becoming a New Innovation Powerhouse”).
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Source: (“UNESCO Institute for Statistics”) The two graphs above both show strong correlation between GDP per capita, which is a very strong indicator of economic growth, and increased education. The first graph shows how just having increased literacy rates in China have increased GDP per capita and led to economic growth. The second graph depicts how after the average number of years studied increased in China, incomes per person increased, as people became more sophisticated and capable of taking on more advanced jobs that earn higher wages, which leads to economic growth.
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Source: (â&#x20AC;&#x153;China National Bureau of Statistics) The graph above illustrates how the government in China is now making investments in education a higher priority to improve overall education quality. Compared to more prominent economic nations, China still invests relatively less in education at less than 4%, while other nations average over 6%. However, there is still a clear trend of improving percentages of attempts to improve educational quality in China. As long as this percentage continues to increase, Chin will continue to reach its full potential for economic growth. It is a promising sign that the government is more cognizant of the rewards of a high quality education.
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Source: (“Ministry of Education”) The table above shows the drastically increasing number of masters and PhD students in China. China is producing more intelligent students who are pursuing higher education levels in order to attain more advanced jobs. China’s shift towards improving economic freedom and opportunity through capitalist ideals has marked a subsequent shift towards an increasing emphasis on education. Education was not always a major priority in the eyes of the average Chinese worker. However, as economic industries continue to develop, advancements in worker productivity and competence became essential. With these current trends in education attainment, China is primed to continue its tremendous economic growth path into the future.
Innovation: Following a shift towards economic freedom and an increased emphasis on education, China’s capacity for innovation has dramatically improved. Through implementations of capitalist market ideals, people and firms have the ability to expand into other industries and technologies. Combined with economic independence, a more intellectual population sets
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education as a higher priority is allowing for the progress of advanced industries. Not only do firms seek to innovate, but also the government. Devoid of any command economy severely hindering economic progress, the Chinese government is able to prioritize the importance of innovation. As a result, officials can specifically target this sector of its economy and development through significant investment. Innovation is vital for a growing economy. Advanced technologies and industries allow for increased efficiency, better productivity, and overall economic growth. Especially in today’s globally competitive market, any advantage in innovation is necessary to build and successfully run a lucrative enterprise. China has dramatically improved its investment spending in science over the past decade, and it continues to grow in relation to other major economies around the world
Source: (“The Economist”) China still has much room for improvement in this sector, but it is quite the promising sign that the nation continually enhances, while other major nations primarily stagnate in growth. As long
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as the Chinese government puts an increasing amount of emphasis, on technological progression, the Chinese economy will experience subsequent growth. China’s overall research and development has undergone tremendous progression. It was previously known just for its manufacturing dominance, but now Chinese technology firms are challenging global market leaders. This technological prowess will lead to overall increases in worker productivity as well.
Source: (“Battelle Memorial Institute, The Wall Street Journal”) As the graph above indicates, China is now second in the world in investment spending on research development. It speaks to a shift to purchasing power parity among major economies, as the playing field for innovation and growth are leveling. China has normally been the world’s manufacturing factory for creating advanced gadgets and other products for global companies. Now however, the nation is staying more competitive by innovating and producing its own technological products. It was never perceived to be a nation that could compete in high-tech industries. As a nation, China is cognizant of the importance of continuing to innovate to allow
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for further economic growth and development. With an increased priority on investment spending on research and development, it has strongly correlated to higher technology output.
Source: (“National Science Board”) The chart depicts overall trends in high-technology output in major economies. In the past decade, China’s production dramatically improved and rose to a second place standing in the world. Now major Chinese technology companies are directly competing with the acclaimed companies of Silicon Valley in the United States, and these Chinese companies are catching up. While the United States growth in this sector has remained relatively stagnant, China is on a trajectory to ultimately eclipse the United States in high technology output. From increased focus on investment spending on science and research and development, China has taken significant strides a more self-sufficient and technologically advanced society. The nation now boosts diversification in industry, which will be conducive for long-term growth. This growing technology output reflects upon the more sophisticated and productive workforce. Instead of
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merely working in factories or agriculture, which was ubiquitous under Mao, people now have the propensity to design and innovate products and inventions. The only area that needs to improve is consumers’ perception of Chinese companies. Since only recently have these Chinese firms emerged to be formidable in the technology industry, buyers perceive them to produce lower quality products with less reliability ("The Rise of China's Innovation Machine"). The problem should alleviate, as these companies continue to grow more prominent in global competition, and this competition will lead to major shifts in the dynamics of the technological industry. Ultimately, due to the effectiveness of past economic reform movements, China has been able to tap into its own resources and intellectual population in order to promote innovation. China’s increases overall spending and subsequent increases in high-technology output are promising signs that the Chinese will be able to sustain long-term economic growth.
GDP Composition: As a result of successful economic reform movements, China’s GDP composition has shown more balance and improvement. The Chinese economy has experienced unparalleled growth rates for the past decades, but the most promising signs of its growth rates is the composition of GDP that will be conducive to supporting China’s ability to sustain its growth into the future. In 2012, China’s real growth rate was 7.8%, which was the 13th highest in the world. This growth rate was only lower than very highly undeveloped countries, so the statistic is more indicative of China’s amazing success because this growth is occurring in an already robust economy. However, a rather alarming statistic is China’s GDP per capita level (PPP) of only $9,300, which is 120th in the world. At times, the total GDP and size of an economy can be deceiving without taxing in context, the size of the population. In this case, China has a high total GDP, but also a massive population. This statistic is indicative of the state of a nation’s economy,
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and it must continue to improve in the coming years. The GDP composition by end use, which indicates percentages of who is spending in an economy, is as follows: GDP Composition by end use of the U.S. and China: Household Consumption Government Consumption Investment in Fixed Capital Investment in Inventories Source: (“CIA World Factbook”)
U.S. 70.9% 19.5% 12.8% 0.4%
China 36% 13.5% 45.7% 2.1%
The table above shows some promising signs for the Chinese economy, but also illustrates an area that needs to improvement. One such promising sign is in China’s continuingly decreasing percentage value of government consumption of GDP composition. The government consumption statistic consists of all government expenditures on goods and services. Usually, increased government spending is misconstrued as being entirely beneficial for an economy because government spending directly contributes to a higher value of GDP. Increased expenditures might lead to short-term economic growth, but it is not always conducive to growth in the long run. If the government is spending at rates that surpass those of the nation’s worker productivity, than it might point to an economy that is not healthy enough to generate growth autonomously. However, since Deng’s effective reform movements led to increased economic freedom and a capitalist driven economy, the government no longer needs to dictate the economy’s spending as it would under an ineffective command market economy that was previously employed. The healthiest form of economic growth is through increasing worker production, and allowing increased consumer demands facilitate the laws of supply and demand. An overreliance on government expenditures to galvanize economic growth can prove to be detrimental in the long run. As a result, it is an encouraging factor that China’s government spending relative to GDP has been steadily in the past few years, as its economy continues to
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become more independent enough to naturally expand. The graph below illustrates clear trends in the government putting less emphasis on expenditures more consistently in recent years.
Source: (“World Development Indicators”) China also has tremendous percentages when it comes to investment in fixed capital and investment in inventories of 45.7% and 2.1% respectively. The investment in fixed capital category involves total business spending on fixed assets, such as machinery, equipment, and factories. These investments provide the basis and foundation for future production, as these investments are geared towards enhancing businesses and developing infrastructure. Improving levels of economic freedom have fueled these investments. With more privatization and fewer state-owned enterprises, firms have more flexibility and opportunity to invest and develop their respective industries without a reliance on government investment. When compared to that of the U.S., the percentage of investment in fixed capital is overwhelmingly in China’s favor. Since investment in fixed capital is such a large percentage of GDP composition by end use, it will be conducive to China’s economic growth down the road. Investment in inventories consists of the
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net changes to production and outputs that are still waiting to be sold to the end user. Essentially, it is involving increased unsold inventory. This percentage has been gradually decreasing for China, which is a good indicator for economic growth. Businesses will be able to grow and the economy is likely to accelerate when inventory is sold and assets are being sold rapidly since businesses will need to continue to increase production to replenish their inventory levels. As a result, China will need to continue decreasing its percentage of investment in inventories and lower it to the level of the United States. Nevertheless, it is an encouraging sign that this percentage is decreasing, and it will allow room for more economic growth into the future. On the contrary, the household consumption percentage composition of the GDP by end use is too low. It is currently at 36%, and when compared to that of the U.S., it shocking low to the 70.9%. Household consumption includes household expenditures on domestic and foreign goods and services that are consumed by individuals. This low percentage can be attributed to the improving levels of distribution of wealth and lowering level of inequality. As people’s purchasing power increases and parity improves throughout China, the household consumption percentage will continue to increase. It is imperative that the statistic improves because household spending is a key contributor to economic growth, while it also indicates the state of a nation’s economy. This percentage will also continue to increase with subsequent increases in GDP per capita. Overall, even though this statistic is low, it should not be viewed as a possible deterrent for future economic growth. China’s continuing dependence on investment might seem to be worrisome. However, there is increasing balance in China’s GDP by end use with increasing rebalancing of incomes and productions. Migrant workers and rural households are continuing to grow incomes, and it will lead to an increasing household consumption percentage.
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With business investments at an all-time high level, with household spending improving, the Chinese economy is on the verge of expanding its economy for decades to come. Other positive signs for the Chinese economy are the growing diversification in both, the GDP composition by sector of origin and the percentage of Labor force by occupation. The GDP composition by sector of China is shown in the table below: GDP Composition by sector of origin of China: Agriculture Industry Services Source: (“CIA World Factbook”)
China 10% 44% 46%
The table above shows a promising sign in the percentages of GDP origin among these three main sectors. The distribution of these three percentages marks a historical shift in China’s GDP origin and production. China’s output of services at 46% has finally overtaken the output of industry at 44% for the first time in the history of its economy. The industry sector includes construction, mining, energy production, and manufacturing, while services cover government implementations, communications, transportation, finance, and the rest of private economic activities that do not produce goods. An economy structure in a particular way in which services are the primary component of GDP is extremely beneficial. Once considered a tertiary structure to the Chinese economy, services are based upon catering to consumers and their complex needs instead of merely making products for them through industry or agriculture of fishing and farming. In years past, China implemented a command economy in which products and services were not catered to the needs of the consumers. This proved to be problematic because it did not allow for the natural law and dynamics of supply and demand to exist in order to naturally grow an economy. Following growth of economic freedom, this shift into services is China’s fastest
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rising sector. This growth depicts a growing diversification and sophistication in the Chinese economy, as it continues to mature. The positive signs for the GDP composition by sector of origin have improved in conjunction with the expanding diversification in China’s labor force. Labor Force by Occupation: Agriculture Industry Services Source: (“CIA World Factbook”)
China 34.8% 29.5% 35.7%
China was a nation previously predicated on its dominance in agricultural production has now undergone a major turning point. In all three sectors, the highest percentage of the labor force is now most concentrated in services. This shift in the labor force showcases the increased capabilities in China’s workers. Closely connected with China’s increasing worker productivity, this shift illustrates how workers are now more educated, productive, and sophisticated enough to venture into other sectors of work. Ultimately, the past successful reform movements that promoted ideals of capitalism have facilitated this shift. As a form of human capital, knowledge and gaining more and more wisdom, enhances the capabilities of these workers. This is a promising sign for the Chinese economy. Even though improvement has happened, there is still plenty of room for more. Almost 35% of the labor force still works in agriculture, as a major part of rural China is still dedicated to agriculture, which will need to improve. Although it will take many years to improve, as long as China continues to show positive change in the labor force, it will prove to be conducive to long-term economic growth.
Inflation and Unemployment Rates: After years of drastic vacillations, China’s inflation and unemployment rates have stabilized due to the economy’s shift to free market ideals. The stability of these rates at ideal
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levels serves as an optimistic sign for the future of the Chinese economy. In 2012, the Chinese inflation rate was at 2.6% ("China's Economy In Three Parts."). The perceived notion is that inflation is a totally bad occurrence for an economy. In reality, a certain and moderated amount of inflation is very good for an economy, as it is a useful indicator of healthy economic growth and future success. The propensity of nations that undergo rapid economic growth is to mismanage inflation rates and allow for dangerous hyperinflation that puts the value of a nation’s currency in jeopardy. This usually happens because countries produce too quickly and production cannot keep up with demand, and with no equilibrium between supply and demand established, hyperinflation occurs and the value of currency depreciates. China was more successful in its growth because economic expansion was rather gradual and spanned decades, as economic reforms towards free market ideals successfully happened. As a result, as consumer demand and purchasing power could naturally increase, so would production and supply.
Source: (“International Monetary Fund”)
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The graph above depicts the inflation rate trends of both China and the U.S. Although China experienced a couple of years of very high inflation rates in the 1990s, the nation was able to lessen the fluctuations and stabilize its inflation rates at paces comparable to the steady inflation rates of the United States. At China’s current rate of 2.6%, it indicates a period of stable economic growth. Stability and lessening price fluctuations is crucial for sustaining long-term economic expansion. The trends of China’s inflation rates in recent years foster a beneficial setting that will allow for continuing economic development. Similarly, China’s unemployment rate in 2012 was at 6.5%. Another major misconception is that unemployment is completely detrimental to an economy. Actually, a moderated level of unemployment is beneficial for an economy to help promote increased competition and ensure that there is an adequate demand of a workforce to match the needs of suppliers. An unemployment level of 6.5% is a healthy and ideal statistic that shows a relative lack of deviation from the country’s natural level of unemployment. Basic unemployment theory states that countries will have normal oscillations of unemployment levels or actual unemployment levels. These actual unemployment levels deviate away from a natural level of unemployment, which will be reached in the long run under stable conditions. At a level of 6.5% China is nearing a more stable level of unemployment closer to its natural level with less fluctuations. Maintaining proper and stable conditions and environment for the labor force is crucial to the state of a country’s economy, and this stability in levels of unemployment will only support China’s economic expansion down the road. It is no coincidence that the nation’s inflation and unemployment rates have improved to more stable levels in similar fashions. These statistics share a particular relationship with each other, and they can be explained by the dynamics of a Phillips Curve (“Krugman’s Economics for AP”).
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As the Phillips Curve above illustrates, there is an inverse relationship between inflation rates and unemployment rates. If a nation can maintain an ideal equilibrium balance point between the two points that is conducive for economic growth, the nation is primed for success. In Chinaâ&#x20AC;&#x2122;s case, the level of unemployment rose only to a certain extent to which inflation rates to decrease to healthier speeds to a balance point at which both statistics are favorable for economic expansion. Due to the promising components of GDP, unemployment, and inflation rates, China is in good shape to maintain its current incredible growth trajectory for decades to come. Inflation rates also share a crucial relationship with short-term interest rates, and the Chinese economy maintains proper levels of both statistics, and these levels will be beneficial for sustaining economic growth. The difference in the quantities of inflations rates and short-term interest rates is essential in determining the environment for investment, both foreign and domestic in a nation. As discussed in a previous section, a relatively high inflation rate is not the most desirable state, but some inflation is good for an economy, as it correlates with natural economic growth and expansion. Also, a particularly high inflation rate is not a sufficient enough reason to avoid a certain economy because the countryâ&#x20AC;&#x2122;s inflation rate does not paint the whole picture of the state of the economy. Inflation rates must be compared with short-term interest rates. However, if inflation rates are higher and outpacing short-term rates of the market, it is a major warning point for an economy and an economic decline or even recession is on the verge
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of happening. This is a major negative because the incentive to invest or deposit money in a certain economy will drastically decline. Money earned through interest rates will not be enough to compensate for the faster pace of the depreciating value of the currency through inflation. Naturally, according to the loanable fund model, as interest rates decrease, so does the quantity demanded for loanable funds for investment by both domestic and foreign investors, as illustrated below. As interest rates decrease, the demand for loanable funds, the blue line, will shift to the left and decrease.
Source: (“Krugman’s Economics for AP”) As a result, investors would be losing money because the short-term interest rates are not high to account for the rate of inflation. People would have a tendency to sell their investments in a
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particular nation out of a lack of trust in fear of the nation’s economic conditions. They would now approach any future investments with more caution and hesitations, which would hinder the potential for economic growth, as investment spending is crucial for expansion. In China’s case, its interest rates have been consistently higher than its inflation rates, as its economy takes a more stabilizing turn.
Source: (“Trading Economics”)
Source: (“Trading Economics”) The two graphs above clearly indicate China’s constant positive difference between interest rates and inflation rates. Additionally, both rates have shown strong stability, and thus, it will be easier
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to extrapolate for future projections and maintenance of this essential balance of relationships. These two factors in China foster an environment conducive to encouraging foreign and domestic investment in China, which will continue to facilitate economic growth. Investors will remain confident and feel safe that their investments in the rapidly developing nation of China can continue to reward them with profits. Ultimately, economic reform is at the core of growing stability in Chinaâ&#x20AC;&#x2122;s inflation and unemployment rates. This stability is essential for investment and overall economic growth. With the stability of known investments continuing to arrive, China will be able to stay on its path towards economic expansion.
Consumer Confidence and Investment Spending: A foundation built upon favorable relationships between short-term interest rates and inflation rates have fostered an environment in China in which consumer confidence is at record highs and investment spending is flourishing. Implementation of a market economy through successful reform movements has created a surge of growing confidence and investment. These conditions are crucial for the nationâ&#x20AC;&#x2122;s economy because they allow for developing infrastructure, improved production, and overall long run economic growth. At this moment, China is a world leader in general consumer confidence, as the two graphs show below.
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Source: (“BCG Global Consumer Sentiment Barometer”) The graph on the left above shows how China is expected to increase discretionary spending by 22% spending in the next 12 months, which outpaces all the other major economies in comparison. It is especially intriguing because China is compared with other rapidly developing economies in Brazil, Russia, and India, as all four countries are part of BRIC nations. Regardless, if China is compared with a BRIC country or an established economy like the United States, its economy is primed to experience the highest increase in consumer confidence and spending, which is an extremely positive sign for the Chinese economy. While, the right graph depicts China is also number one in trading up or increasing volume of trades, production, and spending. If consumer confidence is increasing, people are willing to spend and invest more, and the economy develops a strong cycle of growths in both supply and demand that allow for economic expansion. This improving sentiment of Chinese consumers is a good sign, as it showcases that public is optimistic about the future of the economy and people will invest more to boost the
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economy. A declining consumer confidence would lead people to be more cautious and less willing to take risks, as they are more uncertain about the future. This lack of confidence would surely trigger and economic decline. Increases in consumer confidence leads to increased investment spending, and China has seen a surge in loan-driven investment spending.
Source: (“Morgan Stanley”) Loans are driving investment spending in China, and these are stimulating economic growth. As the previous loanable funds graph indicated, a relatively high level of short-term interest rates leads to increased funds and more investment spending. These increases in investment spending have culminated to a point in which stock of direct foreign investment at home is third highest in the world at $1.344 trillion (“Economy: China”). This value consists of all investments in China made directly by residents. Through a socialist market economy, China can let the laws of supply and demand drive economic growth. With this economic freedom, the nation can allow people’s own confidence in China’s potential fuel investment spending and growth. As a result, China’s economic future is bright and continued progress is inevitable.
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Trends in the Balance of Payment and International Debt Levels: As discussed before, China has rapidly increased the gap between its exports and imports, as the overall trading volume continues to expand. With increased economic freedom, China actively sought out to tap into its resources and developed a diversification in its economic industries. Thus, China was able to dramatically increase overall trading volume, while importing essential resources that will catalyze economic growth domestically. As a result, China has continued to maintain a surplus, and it allows for the country to keep a net capital inflow into China. For this reason, China has been privy to a positive current account deficit for the past few years.
Source: (â&#x20AC;&#x153;ONSâ&#x20AC;?) As the graph above illustrates, when compared to the current account deficits of other major economies, the Chinese economy continues to have the largest budget surplus out of all these countries. This surplus is extremely beneficial for the Chinese economy. There is excess capital available to finance growth and moderate inflation rates, which would lead to increased
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productivity. This positive deficit would also entice investors to pour capital into China due to the increased probability of China maintaining a stable economy that continues to grow. Throughout the same period, China has dramatically increased reserves of foreign currency and its current account balance.
Source: (“Reuters”) The graph above illustrates how China’s reserves of foreign currency and current account balances have both increased steadily, and these two quantities are closely tied together. The current account value consists of the balance of traded goods and net income from abroad transfers. As a result, a positive current account would indicate that country is a net lender to the rest of the world, as the quantity is essentially difference between a nation’s savings and investment (“Krugman’s Economics for AP”). In China’s case, the nation maintains a current account surplus, which increases its net foreign assets. In this case, parts of these net foreign assets are compensated by China receiving reserves of foreign currency, and that is why both the
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current account balance and reserves of foreign currency increase at the same time. China’s current format of its balance of payments indicates that it continues to gain capital through direct exchanges and transfers through international commerce. This inflow of capital in the short run is very useful for financing investment and growth. China’s recent economic reforms have shifted the nation to a market economy in which trade and investment take higher priority. China has also built a foundation for the long run in which the nation now holds foreign assets in the form of stocks and bonds of foreign currencies, which help down the road when these investments are recouped. With this current balance of payments, China is on the verge of experiencing tremendous economic growth.
Saving Rates and National Savings: Just as China is preserving a beneficial surplus, the nation has also increased its savings rate due to a proper foundation of market ideals and economic freedom. This improved savings rate indicates that its economy is in proper position to experience significant economic growth into the future.
Source: (“China National Bureau of Statistics”)
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As the graph above depicts, starting in 2000, China has consistently increased its saving rate as a percentage of GDP, while its investment rate is starting to slow down. At first glance, it might appear to be a bad sign that the nation’s saving rates are increasing, while investment is slowing down. It is often misconstrued that a higher marginal propensity to save (MPS) than a marginal propensity to consume (MPC) is detrimental. It might appear to indicate that there is reluctance for investment, but in reality, it sets China in good position to set up for growth and prosperity in the future. Due to China’s increased savings rate, there is a bright outlook for the nation’s longterm economic growth. After beginning to implement a market economy with capitalist ideals, the nation no longer needs the government and state to fuel the economy through their own spending. Now, there is less of a reliance on state spending because through a market economy, people can dictate what and when to spend and allow natural relationships of supply and demand to take place. With more savings, there will be more capital available for consumption and investment in the future when China especially needs it, and it will be an economic boost.
Currency Exchange Rate: On the contrary, it may appear that China’s fixed currency rate is hindering the nation’s full potential for economic growth while also limiting economic freedom. However, there are merits to China’s current system in place, and it coincides with the nation’s export dominance. China’s currency rate has been developing into a more stable currency rather than a fluctuating currency, and this policy has both its positive and drawbacks. Recently, China’s central bank has stated that it plans on continuing to keep the Chinese yuan stable, and that the nation will not undergo any revaluation of its currency.
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Source: (“Bloomberg”) China continues to employ its unorthodox approach to currency by fixing it currency rate. In 2005, China’s central bank briefly allowed an appreciation of the currency, but ended that policy when the global economic crisis affected demand for China’s goods. As the graph above illustrates, since mid 2008, its currency rate has barely moved at all in that time period. Most countries, such as the United States, operate on a floating currency without any central bank interference or regulation. In recent years, China has been scrutinized for fixing its currency, and other countries put an emphasis on getting China to shift to a floating currency. Countries, such as the U.S., have asserted that China’s regulation of the yuan is allowing the nation to assert its dominance and exports to the detriment of foreign competitors ("China Yuan Stability Pledged."). In the end, there are both benefits and negatives to a fixed currency policy. By using a fixed currency, China can ensure economic stability down the road because its currency will not be susceptible to oscillations, and it will only appreciate gradually. Also, by keeping this currency at a fixed and relatively low level, the nation is ensuring its dominance and demand for exports. Since the prices of imports from China will be staying the same, foreign countries will always
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have the purchasing power to continue acquiring Chinese goods at a high rate. This continuing dominance will allow for China to continue achieving economic growth. However, by operating on a fixed currency, China is inhibiting its full capacity of economic growth. Since there is such a high demand for Chinese goods, the yuan would surely appreciate. But by fixing its currency, the nation is not allowing for the natural laws of supply and demand to take place. The graph below depicts a foreign money market graph that illustrates this phenomenon. If the demand for Currency Y or the yuan increases, the D or demand curve will shift to the right. This would result in it requiring more of Currency X to exchange for the yuan, and thus the yuan would have appreciated in value.
Even though itâ&#x20AC;&#x2122;s not the idea ideal scenario for a currency rate, in Chinaâ&#x20AC;&#x2122;s particular case, it still seems to be beneficial to maintain a fixed currency for its unique circumstance. China will still be able to maintain progress towards a free market economy by ensuring of currency stability. Ultimately, economic freedom is not being suppressed through a fixed currency due to the numerous benefits that this system is providing for the Chinese economy. This currency will ensure stability and export demand, and it will allow for economic growth in the future.
Conclusion:
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China’s successful reform movements in increasing economic freedom have facilitated drastic growth in numerous economic sectors. These essential foundations provide the nation the ability to maintain their rates of unparalleled economic growth and expansion into the future. Although the Chinese economy is not lacking flaws, it primarily maintains robust economic components. Now with an economy based upon ideals of capitalism and free market, the Chinese economy has endless potential. Milton Freidman shrewdly argued that economic freedom and political freedom show connection and correlation. As China’s economy continues to shift to a true free market economy that implements ideals of capitalism, then perhaps China’s political system also has the potential to transform from a continued socialist state to one of a democracy. Analyzing the factors behind growth in China’s economy and projecting its prospects for the future is a polarizing topic, so a breadth of analysis is required to take a certain stance. As a result, throughout the paper, numerous economic sectors were analyzed with a variety of perspectives. Even though the topic of the Chinese economy can be polarizing, the analysis of evidence shows strong optimism with many beneficial factors that will help contribute to long run economic growth for China. According to the Rule of 70, which is a formula that helps calculate the number of years required to double a certain quantity, with its current real GDP growth rate of 7.6% in 2013, China would double in economic size in a little over 9 years. However, this calculation is under assumption that the growth rate is constant at this rate. In actuality, China’s growth has experienced vacillations with the majority of them trending to upwards of increases in growth rate. As a result, it will most likely take fewer than 9 years for China to double in economic growth, which is outstanding when considering the size of the nation’s economy. With the plethora of beneficial factors that have been analyzed throughout the paper, China is on the verge to double in economic
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breadth in an unprecedented number of years. As the nation maintains its incredible growth trajectory, it is not a stretch to project the Chinese economy having the potential to eclipse the United States economy in overall worker productivity and GDP per capita in 510 years, as the graph below illustrates.
(Source: “Haver Analytics, The Economist”) Maybe as John Maynard Keynes astutely remarked why does the long run even matter when “in the long run we all die.” Does the long run economic state of China matter when we should be focusing on the present? Instead, as is done throughout the paper, analysis must be done on China’s present economic state, and see how it projects into the future. The Chinese economy already serves a crucial piece in the dynamics of the global economy. As it continues to grow, it will only increase its role of economic prominence. Other nations will become more reliant on and vigilant toward China’s economic production and policy. In due time, the United States
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economy will no longer be the world’s superpower, and the Chinese economy will claim its rightful spot as the world’s most dominant and efficient economy.
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