Thursday, September 9, 2010

Status and the Economies of the East

Once again, I take up the gloomy topic of why China will fail to live up to the expectations of most observers here in the West. It is almost impossible to completely describe the headwinds faced by the Orient in the quest for material bliss, mostly because it takes so long to illuminate the innumerable differences between our two mindsets and the fantastic number of obstacles these differences create. I find that I can sit and write entry after entry about why the East, and China in particular, will likely fail, and each time I have new and almost unrelated reasons in support of my thesis. Which is to say -- there are many, many problems to address.

I have occasionally written before about several intertwined, self-reinforcing characteristics of Chinese culture that lead to many of the dynamics one tends to observe there -- hypercompetitiveness, despair/hopelessness, survivalism, the arbitrariness of fate. This time I will focus on another which is intimately involved with the others but was not included -- the issue of status.

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Too often, understanding of the East is attempted on the basis of parallels with the West. Thus Christianity is compared with Buddhism or Confucianism, Western feudal history with Chinese, and Western family structure with Eastern. But there are no parallels. These are not parallel institutions. Easterners, for example, expect very different things from their 'religions' than we do, so much so that it is almost worthless calling them the same word.

Buddhism and Confucianism are more like philosophy, Hinduism more like a mythology. None are like Christianity any more than Christianity is like mathematics, and nobody tries to make useful comparisons between those two because to do so would be obviously stupid. No offense to Christianity, Hinduism, Buddhism or math alike, they're just not in the same category. Comparisons are invalid, and one is better off understanding each on its own terms -- whether working from West to East, or East to West.

I think the two systems are best understood as systems of mutually reinforcing attitudes or suppositions, especially the Eastern system as it tends towards 'cyclical self-reference,' with no real core to define it. None in particular stands alone, but each depends on the others for reinforcement and support to a point of inseparability. I cannot decide if the best analogy is a house of cards, where each card would be unable to stand on its own but for leaning for support on its neighbors, and when taken together produce an elaborate shape, or like the strands of a rope, where the strength and resiliency is due to many separate strands tangled together to the point that they cannot be easily separated or broken. That rope, or house of cards, whichever suits the reader, has tremendous implications for everything operating withing the Eastern sphere, including economics.

Eastern 'Scarcity' -- and Waste

The seminal economic fact that almost nobody understands is how spectacularly wasteful the Chinese economy is, and as a result, how poorly resources are put to use there. And since we are talking about the subject of economics, that would tend to indicate poor performance. I can remember riding in a car along the bank of the Yangtze and being amazed at a bustling little city huddled along the opposite bank, with lush and utterly wild-looking mountains above stretching away as far as one could see. The thing that struck me was just how little impact that number of people was having on their surroundings. If only one tenth as many Americans were living in that same area, the hillsides and mountains would be covered with houses and roads would criss-cross the place. As it was, apart from the specifics of the city and the cars on the roadway, I doubt the place would have looked much different a thousand years ago. It really gave the place an ancient feel.

All of which is to point out that China is not starved for resources, as so many would have it. It is positively drowning in them, but they go unused or wasted. I was located in a fairly developed and populated area. The Western two-thirds of China is largely undeveloped and sparsely uninhabited.

Status -- The Prime Commodity

Much of that wastefulness is intimately tied up with one of the most ancient and fundamental facts of Eastern civilization -- its seemingly never-ending love affair with hierarchical regimentation and, more importantly, the core element of all hierarchies -- status.

Anyone who wants to make a fortune off of consumers in China -- pay attention! I am about to give away the secret that has eluded every Western corporation and merchant sailor since colonial times. Status is easily the most valuable commodity in that society. If you can figure out a way to manufacture status and put it in a bottle, you'll be rich beyond your wildest dreams.

Now, that is not to say that China is a nation of chest thumping apes or stuck-up prigs. That would be to draw too direct a parallel to Western notions, and incorrect. Most Chinese don't give much more thought to that kind of thing than anyone else does as far as I can tell.

The difference is that, for them, status defines to a very great degree who they are as individuals, how they relate to one another, and strongly influences individual prosperity. Like it or not, it is an integral and inescapable aspect of that society, far more so than in the West. Easterners are extremely sensitive to issues which to Westerners are trivial -- age, occupation, level of education, or anything else that might be tied to how they are viewed. It crops up in almost all social situations, even what Westerners would consider 'informal' and therefore excluded from any relevance to the subject. Not so in the East.

Saving Face

Most people have heard, for example, of the peculiar Eastern phenomenon of 'saving face.' If such behaviors strike one as preposterous and irrational, and that nobody could possibly be so prideful or believe such pretenses as are often on display in Eastern conflicts, he would have stumbled onto more truth than he had realized. The real secret to 'saving face' that it is not primarily an issue of pride. It is fear. In a society where status is everything, to lose status is some degree of suicide. An apology is much more than an admission of error, it is an invitation of personal destruction. The accused prefers to double down, heaping insult on his accuser and daring him to put his own reputation on the line in the hopes that he will back down rather than accept even a tiny amount of blame. The higher the station, the greater the risk and the higher the tendency to such behavior.

In reality, nobody is fooled, not even the accused. The show of bluster is not intended to persuade. It is for fending off the circling sharks. The thing about a society based on status is that whatever status one man has is status another can not have, but would often like. Status is conserved, so to speak, so it is a zero-sum game. As the principle source of personal well-being, it is highly coveted. So the way to advancement and prosperity is often through personal destruction. Perfection is demanded, or at least a defensible pretense of it, and anyone found wanting might as well be trash. He will be destroyed.

Longing for a Different Way

There is great irony in the way many Chinese immigrants talk wistfully of Americans' 'carefree attitude' and 'frankness,' as though toying with a dream of being so easygoing and straightforward. Which is understandable. Oriental status-mongering is no doubt very stressful. There is a feeling of being trapped, however, and this is revealing. Most who have tasted life in the West would really like to put an end to the pettiness. They don't like it. They don't want to obsess over status, but when it defines who they are and the entirety of their well-being, they feel they don't have any choice but to participate. When the bureaucratic hierarchy is all that there is, to be excluded is to be destroyed. Opportunity is perceived to be in tight supply, and there is none outside the social order in a regimented society. Therefore, the system perpetuates itself. The American way of things is often viewed as being a childish indulgence of people who have never really had to face the harsh realities of life.

Thus one can understand a great deal about Eastern culture -- the preoccupation with elaborate customs and manners (though that has become more lax in China since the revolution), the exceptional political viciousness, pretence, dishonesty, and obsessive pettiness, which are integral components of all politics everywhere but multiplied many times over by  status hypersensitivity in the East, the emphasis of recognition and prestige over actual achievement, such as in the idealization of advanced degrees and employment in established bureaucracies over bootstrap-entrepreneurship, and a strict aversion towards indebtedness, to name just a few. All derive in large part from the preoccupation with status.

The Status Factor in Real-Estate

Status issues saturate the markets as well. For example, the market everyone is talking about -- real estate. It is well known that for a young Chinese man wishing to get married, a house is more or less a prerequisite these days. Without one, a girl won't give him the time of day. While this does have something to do with the horrible skewing of the sex ratio, which is itself a status issue -- the favoring of boys over girls -- it is also an issue of competitiveness between women, like showing off an expensive engagement ring here in the West, only it is taken far more seriously, especially by her family.

Likewise, it is well known that this whole affair drags in previous generations of the groom's family to help him buy a house. Why do they get dragged in? Once again, issues of status. Older generations are expected to cough up money for that kind of thing. Not to do so would look bad. Worse, there is no real anchor in individualism to prevent 'social stampedes' into such behaviors, which only a decade ago were virtually unheard of. 'Peer pressure' is obviously going to be a big issue in a status obsessed culture. Too much standing is given to what everybody else is doing and thinking for individuals who might consider it a bad idea to resist. This leads to a terrible sort of herd mentality, also quite well known, where the right thing to do is what everybody else is doing and what they expect others to do. It's either follow the herd or become a pariah and be trampled by it. Once again -- status.

Homes as Status Symbols

What is less well known (or at least talked about as far as I have seen) is the gaping difference between the way Westerners think of real estate and the way Easterners seem to. The house is a status symbol in both cultures, but far more so in China. Simply walking through paired houses would reveal it. Westerners tend to buy houses for the purpose of filling them up with all the junk that makes them happy. They would all like bigger houses, probably, but not so much to express their worth as people. The larger size is mostly for holding more stuff/happiness, and maybe a little showing off.

In China, where people were forced into tiny unadorned apartments for generations, having a very large living space is a sign of status. Now people prefer to live in gigantic unadorned homes and apartments. But they are mostly just giant empty spaces, with little in the way of furniture, ornaments or ammenities. The preferred architectural style is grandiose, with unusually high ceilings and oversized windows, less designed for human convenience and more for creating a visual perception of expansiveness.  In my experience they are remarkably bare relative to ours, which usually leaves the average Westerner scratching his head. What's the point of having a garishly huge, empty house? Likewise, commercial real estate. Bigger office, taller building -- more status, just like here. But it's a bigger issue there.

Empty Homes, Empty Lives

That big empty house really illustrates to me the 'hollowness,' of the situation. Call it 'Empty Shell Syndrome.' It is not as if there is no such thing as status symbols and such here in the West. But there is also much more than that in people's lives. People spend money on all kinds of things, like boats, vacations, cars, houses, and land, that do have an element of status tied up in them. But it is a much smaller ingredient in the motivation for purchasing them than the happiness they bring to the buyer. That is the main thing. Westerners also have hobbies to immerse themselves in, and belong to volunteer organizations and give to charities, all of which have little to do with status. Those kinds of activities tend to be squeezed out of Eastern societies. Instead, it is common to hear of someone spending two months salary on a cell phone or some other such triviality. Which is to say, on status.

Where Westerners' visible lives are usually fair reflections of themselves, in the East the life becomes a large hollow shell for others to see -- as large as money can buy. On the inside, where the individual resides, is often a stressed-out, longing emptiness, and fear that someday that emptiness will be discovered, the lie revealed, and the individual destroyed by his peers and neighbors who are instinctively seen as competitors. More than all the other symptoms of that famous Eastern despair, that is the true materialist curse of the East -- that so much is expended for the attainment of what is known and felt to really be worthless, whether it is an extensive education in an uninteristing subject, a pile of expensive material posessions, or mastery of some showy performance art for which no passion is felt. In the end, all is for show, not real worth. All attainment is aimed at empty status, and yet not to attain is to perish.

Status Bubbles in a Status Driven Economy

So all told, you have the makings of a fantastic real estate bubble, or really in any market that emerges as status-sensitive, when coupled to an expanding money supply. You have a human stampede as people pile into a single market quite literally with all that they have for dear life. You also have the potential for spectacular levels of waste, as for example people pile on more and more square footage in an attempt to keep up with their neighbors. When guys like Jim Chanos sarcastically remark that there is enough office space in China either built or under construction to provide a twenty-five square foot cubicle for every living Chinese, he'd better take this penchant for wastefulness into account. It may very well be that the Chinese office of the future averages 500 square feet per person, ridiculous as that sounds.

You also have the potential for fantastic social instability and bloodletting when markets blow up and collapse and people have so much of themselves tied up in them, and so little else available to define individual meaning. In the West, one has other places to turn. Primitivism and rugged individualism is also a respectable and frequently invoked alternative here when things go south. We can 'let go' a bit easier, it seems, and put status in new terms more easily. But it is not so in the East, at least to the same degree.

Status-Mongering and the Division of Labor

But the real estate example is actually a trivial one, if a bit more approachable and revealing. Status-mongering raises its ugly head in many other, and far more substantive, instances as well. With respect to the division of labor, status issues can pose an absolute nightmare in getting people to cooperate in a productive fashion. It introduces all sorts of barriers to interaction -- stupefying and debilitating levels of pretense, a tendency to take things far too personally, obstacles to establishing working business relationships, difficulty handling promotions and other internal politics, inflexibility in the assignment of tasks, stifling of creativity and self-expression, inability to identify and admit mistakes accurately (and therefore to correct them), envy, pettiness, hypercompetitiveness, disloyalty, jealousy, and eventually dishonesty and corruption -- that are all extremely difficult to deal with and can paralyze or destroy an organization. So, the division of labor tends to suffer, or where it is forced higher, to operate very inefficiently. That is probably the greater indictment against status obsession in view of economic growth -- it directly impedes the development of the division of labor itself.

So much for the status based economy. Status issues wreak havoc from both sides -- production and consumption. If you ask me, China is too entangled in various social pathologies to really flourish by Western standards, economically or otherwise. Forget about 'free-markets' and political reform -- for China to really bloom, it will have to deal with its deep cultural dysfunction first.

The Never-Ending Bureaucracy

Those who speak of the fall of Communism and the abandonment of the 'old-ways' imagine China somehow 'reverting' to a flourishing, liberal, enlightened state in its immediate past which simply did not exist. They do not know of what they speak. Before the present bureacratic, status-obsessed power-mongering State Pragmatism, China was a bureaucratic status-obsessed Communist state, and before that it passed through a tumultuous bureaucratic, status-obsessed colonial period, and before that it spent right around a millenium as a bureaucratic, status-obsessed feudal empire. Old habits are hard to break, and though the fading of Communism may be coughing up a dividend, it really is hard to imagine having gone downhill from that point. It seems to me obvious that the older barriers to greatness are still firmly in place.

Status mongering is inherently wasteful and morally corrosive. As G. K. Chesterton said of the Eastern philosophies:
Something different, something detached and irresponsible, tinges the moral atmosphere of Asia and touches even that of Islam... Deeper than the depths of metaphysics, far down in the abysses of mystical meditations under all that solemn universe of spiritual things, is a secret, an intangible and a terrible levity. It does not really very much matter what one does. Either because they do not believe in a devil, or because they do believe in a destiny, or because experience here is everything and eternal life something totally different.

Any Christian will recognize the dangers inherent in instinctive despair and other such beliefs coupled with a preoccupation with status -- only a shade away from that most destructive temptation of pride. Corruption, the ultimate nemesis of prosperity, cannot follow far behind where these have begun to hold sway. Until the East grapples with its deepest, darkest demons, it will never really break free of the cords that continue to bind it in its ancient, desperate prison cell.

Perhaps the rope analogy was the best.

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