lecture 04 what caused china_s famine_draft2

8/6/2019 Lecture 04 What Caused China_s Famine_draft2

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Chinas share in the global GDP (at PPP),

18202025 (Source: A. Maddison, World Bank, Virmani)

3 3

17%

8 %4 % 4 %

11.50 12.07 12 .58 1319

2 5

1.50

9 %

18

2 72 1.50

21.25 21.16 2 1.04 2 1.03

2 0

17.50

0%

10%

20%

30%

40%

50%

60%

70%

80%

1 82 0 18 70 1 913 19 50 1 973 2 00 1 20 02 2 00 3 20 04 20 15 20 25

China Ind ia Japan US Big Four W es tern European c ou


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Chinas share in the global GDP (at PPP),

18202025 (Source: A. Maddison, World Bank, Virmani)

3 3

17%

8 %4 % 4 %

11.50 12.07 12 .58 1319

2 5

1.50

9 %

18

2 72 1.50

21.25 21.16 2 1.04 2 1.03

2 0

17.50

0%

10%

20%

30%

40%

50%

60%

70%

80%

1 82 0 18 70 1 913 19 50 1 973 2 00 1 20 02 2 00 3 20 04 20 15 20 25

China Ind ia Japan US Big Four W es tern European c ou

If you watched the second part of the

movie and read the required reading,there were some economics (Brandt,

Rawski, Meyers) that show that industry

is growing some using new technologies

from West investment (FDI) is

growing some trade is growing

BUT, most of work is done in small

pockets of China around Shanghai and

Canton (Guangzhou)

And, growth is shown to happen between

1931 and 1937

What happens before and after: W-A-R

lots of reversals for growth no trade

/ no technology / no investment capital

no growht / negative growth

GROWTH

DURING the

1920s / 1930s /

1940s


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Unsurprising

With such poor performance, a new regime

emerges

SOCIALISM


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A Flurry of Activities in the 1950s

(rural) 1949 Speech in Tiananmen (civil war is over) Rural

1950 Land reform (give land to peasants never take away execute about 1million or so landlords)

1951 begin ag tax [in kind deliveries to state for payment but low prices markets banned]

But never does not mean never 1952 cooperatives (10 families share tools)

1954 early collectives (10 families work together some output sharing)

1955 advance collectives (30 to 50 families output sharing each according to work workpoints)

1957/58 communes (>20,000 people in a single work unit each according to need sometimes will eat together)

1957 Labor movements to urban areas prohibited everyone works on Local SteelMills

1959/60/61 FAMINE30 million people die! (is this good for growth?)


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A Flurry of Activities in the 1950s

(urban) 1949 Speech in Tiananmen (civil war is over) Urban

1950/51/52: nationalization of industry and commerce

Begin to move workers into units compounds through which the state supplies all services housing / education / health / child care / social security also a way to keep track ofeveryone ]

1951/52: Korean War

1953 to 57 love fest with Soviet Union [sort of} Soviet Aid

Loans from Soviet Union

Industry first policy (will talk about on Tuesday)

Research and Development / University restored

First crack down on dissidents

1957 100 flowers campaign be patriotic tell us what you believe is wrong with the system

we will take your suggestions and act of them 1958 Great Leap Forward

Step 1: acting on suggestions means the Gulag for many stifle dissent

Step 2: Huge investment push catch up with England surpass America

Step 3: debate squash debate continue to leap ahead

1959/60/61 Collapse of Industry

1959/60/61 FAMINE

30 million people die! (is this good for growth?)


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What is Famine?

A famine occurs when sizable parts of a

population do not have enough to eat

Prolonged periods of food deprivation leads

to increased morbidity and eventually death

Often in large numbers!


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Great Famines in Historical Perspective

Years Place Cause Deaths(millions)

1928 Mongolia Drought 3

1937 Henan Famine 4

1940 WWII War 40

1965-75

Vietnam War 2

1974 Bangladesh Famine 1

1982 Sudan Famine 0.6


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The causes of a famine

Production declines

Food Availability

Food Entitlement

Food Demand [Consumption Efficiency]


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But most famines are avoidable

A. K. Sen (Nobel Laureate), 1981

Malthus is wrong population growth andproduction failures -- which are a fact of life inthe world for the past 200 years -- have notbeen behind famines

World food production has outpaced

population growth Populations expand slowly, while a famine is

an acute event


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Production declines

Food Availability

Food Entitlement

Food Demand NO! [Consumption Efficiency]


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And, famines happen even when food production is not reduced too

much andare avoided when there are severe production shortfalls

0

102030405060

708090

100

Percent of foodavailable

compared to

normal year

Sudan

(FAMINE)

Ethiopia

(FAMINE)

Botswana

(nofamine)

Zimbabwe

(nofamine)

C.Verde

(nofamine)


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Production declines NO!

Food Availability

Food Entitlement

Food Demand NO [Consumption Efficiency]


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Famine when food is abundant

Case of Bangladesh (famine of 1974) Massive amounts of food in storage prior to floods of

1974

Case of Sudan (famine of early 1980s) Prior to drought, stocks of food were highest since the

1960s

After flood/drought, traders exported food fromSudan / shipped food to Calcutta (across the

border in Eastern India)

1 million people died in Bangladesh / 0.6 million

in Sudan


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Production declines NO

Food Availability NO!

Food Entitlement



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Sens Policy Contribution: Explaining causes

of famine and devising prevention strategies Looks at why people starve?

It is lack of Entitlement or loss of income and

ability to access food When some event starts a shortfall of food

(e.g., a flood), it also often eliminates theincome earning opportunities of a group of

people (e.g., landless laborers), who also arefrequently the most vulnerable


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Sens Policy Contribution: Poor are caught

between falling incomes and higher prices After some disaster, when large parts of the

population have little or no income (and whenthere is little prospect of earning anymore), the

price of food actually drops (of course, there is noone buying) so, people with food (e.g., tradersand merchants) will ship grain out of famine areas [as they did in Sudan / as they did inBangladesh]

The poor? They are out of a job; they have noearnings most have no savings

The result: no food / no money / starvation


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The solution

Entitlement programs .. Ensure the poor have incomewhen they need it the most

For example: Self-targeting Public Works Programs

After disaster, set up Public Works Program

Set very low wage, so only poor will come

With new sources of income and a high demand for

food, prices rise, grain traders will not leave and newones will come

Famines can be averted by attacking them at theirreal source:


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Summary: The causes of a

famine

Production declines NO

Food Availability NO

Food Entitlement YES!



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Sens Conclusions There should never be a famine if the proper institutions

are in place Good markets [domestic / international output + labor mkts]

Public works projects, with low, self-targeting wage

Small amounts (at most) of storage for buffer (do not need a lot,

markets will provide new sources of food) also free press ... publicize disasters and shortages

India, for example, a country that Sen has advised fordecades, has not had a serious famine since the nation has

set up its Public Works-based, Famine PreventionNetwork

In sum good governments can always avoid having itspeople starve

Good ideas? Won Sen the Nobel prize!


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Main Question: Why is it that socialist countries

countries that are supposed to have government set

up to serve the peoplehave not only also

suffered droughts, but have suffered the worst inhistory?

Years Place Cause Deaths (millions)

1928 Mongolia Drought/Famine 3

1932 USSR Famine 5

1940 WWII War 40

1959-61 China Famine 29

1965-75 Vietnam War 2

1974 Bangladesh Famine 1


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Todays Specific Questions

What was the magnitude of the famine and

how did it strike the population

What caused it? Was it merely a failure of

entitlement like Sen hypothesized?

What policies might have prevented it? Would

public works projects have been sufficient?


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Historic Background Land Reform (give farmers land, forever they are heros of

revolution1950/1951) Start close cooperation with Soviet Union (early 1950s)

Central Planning replaces Markets (1952)

Nationalization of Enterprises / Housing / Others (1952/53)

Voluntary Cooperative Movement (1953)

Creation of Mandatory Delivery Quotas (1955)

Stalinist-style Heavy Industry first plan (mid-1950s)

100 Flowers Campaign (1956)

Anti-Rightist Campaigns (1956-57)

Collectivization Movement (1956-57) Communization of Farming (1957-58) Great Leap Forward Backyard Steel Mills (1958-61) Break with the Soviet Union (1959-60)


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Figure III-1: China: Investment Rate (GDCF/GDP)

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

52

54

56

58

60

62

64

66

68

70

72

74

76

78

80

82

84

86

88

90

92

94

96

98

1950s!


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State of China in 1959

Best of times / and the start of the worst

Morale is high economy has grown since 1950

But, the mistakes of the Great Leap andCommunization are starting to become apparent

Much of the steel output is useless but at Maos insistence

efforts of forced industrialization are redoubled


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Famine Strikes: What are its

Causes?


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Possible causes of Chinas

famine?

Production ?

Food Availability ?

Food Entitlement ?

Food Demand ?

Consumption Efficiency ?


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Production

YES but why?

In fact, it was a bad weather year (Y.Y. Kueh,

1996) But, Chinas government blamed all of the famine

on bad weather is not supportable.

Problem with this argument?

no correlation between places where famine hit worse

and the places where there was bad weather


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Excessive Mortality during Early 1960s


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Abnormal Weather and Death Rates

Province Weather was

abnormal?

Higher than average

death rates?

AnhuiBad weather yes

Shaanxi Bad weather no

Hubei Good weather no

Sichuan Normal weather yes


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Other Production Factors

All able bodies men and women were working in thesteel mills, cutting down trees to make charcoal, andsearching for iron ore

MOST IMPORTANT: real incentive problem inChinas communes output not tied to effort noway to monitor laborers free rider problemprevails no one works hard and output falls For each extra unit of grain produced by each additional

increment of labor, how much does villager get: On own farm: 100%

On cooperative: to 1/3 of unit

On collective: 1/n, where n = 10 families or so

On commune: 1/N, where N = 20,000


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famine?

Production YES!

Food Availability ?

Food Entitlement ?

Food Demand ?



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Ever increasing quotas and food

availability and the disappearance of

Chinas food supply During Great Leap Forward, communes (like steel mills) were pressured toincrease production

Much evidence of falsifying reports Pictures in Peoples Daily of children dancing on top of wheat in the field

The corn will grow higher, the harder one wills low output = bad political

attitude Fear of a repeat of political reprisal like were used in the mid-1950s With the over reporting of grain output, the state began extracting ever

increasing amounts of grain Despite falling stocks, extraction continues communes report phantom

increases in output

The big question: Did Mao know?


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China was still exporting grain in 1960 and 1961

even as the nation was starving!

Grain Exports

0

0.51

1.5

2

2.5

3

3.54

4.5

1952 1953 1954 1955 1956 1957 1958 1959 1960 1961 1962

M

illionsofTons

G i P b f d i


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Grain Procurementbefore, during,

and after the famine

Year Net Procurement

(Million Tons)

Percent of Output

(%)

1956 28 14

1957 33 17

1958 41 21

1959 47 28

1960 31 22

1961 26 17

1962 26 16

1963

1964

29

32

17

17


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famine?

Production YES

Food Availability YES!

Food Entitlement ?

Food Demand ?



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famine?

Production YES

Food Availability YES

Food Entitlement ?

Food Demand YES! (small)



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How much would you eat?

You live in a commune

Your commune has a fixed amount of food

You eat in a common dining hall

just like a dorm the price is free

Even when facing a shortage, how much would youeat?

If you cut back, what might your neighbor do?

Your neighbor thinks, if he cuts back what will you do

He might eat/ so you eat He thinks you might eat, so heeats and more rapidly than would happen if the stocks

were held privately, the food is eaten up


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Many doubt the consumption

efficiency story (did China

really eat itself to death?)

There are some reasons to doubt:

Villagers and their leaders are not so dumb asto let an institution exist that will allow them to

eat themselves into starvation

Dining halls in many areas disbanded quickly

Many adopted rules and started rationing

Institutional response to scarcity


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famine?

Production YES


Food Entitlement ?

Food Demand YES (small)

Consumption Efficiency YES! (maybe)


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The Causes of the Famine

First: It is NOT a traditional Sen-like famine Most communes had money and access to funds [it was food they lacked

and since no markets, grain did not flow in]

Grain was not flowing out the countryside because of a lack of entitlements[there were no profit-seeking grain traders]

Exports happening through State Trader (not Cargill)

Migration restrictions no labor market option

WORSE: Policy restrictions kept people who needed food even those who had the means to purchase it from buying it

Hence: Sens advice would not have worked


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Irony of Chinas famine?

Reverse of famine in a market economy

Production YES


Food Entitlement NO

Food Demand YES (small) Consumption Efficiency YES (maybe)


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Final Summary of Answers to the Specific Questions?

What was the magnitude of the famine? And how did it strike the

population? Huge with 30 million dead, largest human-made disaster in history

It struck all parts of the populationincluding women/children/elderly

What caused it? Was it merely a failure of entitlement like Sen

hypothesized? It is not a traditional famine Multiple causes some natural but most the result of policy unlike

the USSR famine in the Ukraine that was probably a policy of purposefulgenocide, this was BAD POLICY but, people just as dead

What policies might have prevented it? Would public worksprojects have been sufficient? Sens solutions would not have worked

Sen, in fact, in Poverty and Famine says it is precisely because of thenature of Central Planning that this could happen need markets / free

lecture 04 what caused china_s famine_draft2

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