1. 'A sense of terrible crisis was a prerequisite for an Asian economic take off'

China's Crisis of Success—1 : 'The essence of the Asian economic miracles: fear and simplicity,' says Bill Overholt.

'Why is this sense of terrible crisis a prerequisite for an Asian economic take off? Because it creates a certain political environment.'...'The counterpart, on the economic side, is an economic simplicity.' says Bill Overholt.

Political Fear. 

'The Asian Miracle countries are all countries that were scared out of their minds.'

  • 'Japan after World War II. South Korea after the Korean War. Taiwan after the Chinese Civil War. Singapore after a very traumatic separation from Malaysia. And, China, after what I call a "bad hair" century - a  terrible series of crises and wars, ending with the Cultural Revolution.'

'Why is this sense of terrible crisis a prerequisite for an Asian economic take off? Because it creates a certain political environment.'

  • 'The leaders are so scared that they're willing to take great political and economic risks. And, to do bigger things, more dangerous things than a normal leader would.'
  • 'The people are conditioned the same way. They're scared that society is going to collapse. That their kids won't have anything to eat. They're willing to accept more stressful change than people in a normal, unfrightened place would accept.'
  • 'The leaders offer policies and tell the people, "You need to know this is going to be terribly disruptive. And painful. But, it's going to save our society."'

Economic simplicity. 

'The counterpart, on the economic side, is an economic simplicity.'

  • 'These countries' economies, when they're getting started, are basic agriculture, weak infrastructure, and some very primitive manufacturing.'
  • 'Even the government can figure out what to do in that situation initially: stimulate growth, build infrastructure, and open and marketize the economy.'

'The Asian Miracles have a succession of models, starting with Japan, each asking: How we can create a great economic take off? The common answer:'

  • 'Gradually open the economy to foreign trade and foreign investment'. 
  • 'Gradually marketize the economy by allowing market prices and other market phenomena to work.'
  • And, build infrastructure like crazy.'

'This works for quite a while because politically it's relatively simple.'

  • 'That doesn't mean there aren't terrible political struggles, that doesn't mean there isn't a resistance, but it's not the way it would be in Britain, or the  US, or China in normal times when people would push back against these tremendous, rapid changes.' 

'So, all this works for a while. And then, success comes.'

  • 'And, then you gradually get to a point of complexity, where there is an economic and political crisis of some kind.'

'Successful economic modernization has eliminated the fear that once energized the  Asia's Miracle Economies.'

  • 'Simple economies and politics have been replaced with immensely complex ones.'

'Economic and political complexity are two sides of the same coin.'

  • 'The rise of large, rich, efficiently organized economic sectors is the same as the rise of large, rich, powerful interest groups with conflicting interests of immense complexity.'
  • And, this creates the crisis of success.
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