Security, freedom and international competitaveness

Comments on James Leibold "China tightens its security screws", 26/12/2015

It is uncertain whether the tightening of security in China is a short term or temporary measure or a long term trend, because ironically it is possible to tighten security before serious social and political reforms so to create a better environment for reform. I hope my conjecture is right.

Should the tightening be designed as a long term measure, then there will be significant and serious long term implications.

While in short term the effect may not be clearly evident, the restriction on people’s freedom can have accumulative and long term detrimental effect, including both lower people's utility (satisfaction and happiness) and lower economic productivity.

Nations compete on productivity, creativity and enterprising. If the people of a nation do not have adequate freedom, they will lose out in those crucial and essential areas, resulting in unnecessary disadvantages in international competition. As a result, that nation will sooner or later find out that detrimental consequence and will take measures to correct unnecessary restrictions, that is, to provide freedoms to its people.

While it is a challenge for China now to avoid the so called middle income trap, the longer term challenge will be even greater if and when its people will work in a much more restricted and limited domain than other nations (consider which gives better result: restricted optimisation versus unrestricted optimisation). The lower bound of high income is only a fraction of those of the high income countries at the world income frontier such as the US - the road to catch up will be long and hard.