Schrödinger’s Mice

Whether a cat is black or white makes no difference. As long as it catches mice, it is a good cat.”

– Deng Xiaopeng


Deng’s famous quote has long been used to support the assertion that modern China is really an aspiring capitalist state in socialist clothing. The assumption of course, has been that the nature of the mice catching in question is to capture a higher standard of living to China’s people.

China’s Western apologists routinely paint us a rosy picture of a nation maintaining its communist name and symbolism merely to save historical face, but inevitably progressing toward our model of liberal, capitalist democracy.  If we just continue our clever policy of “engagement” China will turn out like a nice, big Sweden.

However, Deng’s clarifying statements such as “socialism is not poverty” don’t spell democracy or capitalism just competitiveness and Hu’s and Jiabao’s continued talk of “stability” and “socialism” do not naturally lead to any assumption of real economic or political reform in the Western style. So, more honest Westerners are happy to admit that the Dragon is actually a militant, totalitarian regime with a command economy while openly admiring its power to deliver the goods in a tough global economy. These folks will even question the value and future of democracy; much like Herr Hitler’s American and British fan-boys from the 30s.

Routine visitors to the carefully groomed “China for Foreigners” branded theme parks that they think are actually Shanghai and Beijing get interact with a tiny subset of the population – tour guides and successful business people eager to please the Yángguǐzi – and they come back supporting this vision of progress. They will tell you: “It’s a great place”, “I had these wonderful meals,” “Everybody is so nice,” and “The economy is so dynamic.” All true enough – within their very limited context.

Heck, I love those sumptuous free meals with the big Lazy Susan too, but I also know that much of China is still pushing a plow behind the ass end of an Ox and sleeping in a mud brick hut, artist and peace advocates are being tortured in jail, and the police bug my phone and read my emails.

The broad, empirical evidence is clear: the actions of Deng in crushing political reformers (both within and outside of government) in 1989 and the heavy hands of those that have followed him leave no doubt about the real nature of his cat in the box. The continued domination of the Chinese economy by State Owned Enterprises (about half of GDP and assets) and the absolute control of all the most critical business sectors (resources, finance, heavy industry, technology) by the government do not offer a story of progress; unless, of course the goal of that progress is the destruction of jobs in America and Europe.

The whole matter of trying to figure out exactly what Deng’s cat is supposed to do – exterminate the capitalist mice with their own weapon or feed the Chinese masses – reminds me of physicists Karl Schrödinger’s famous thought experiment with a cat locked inside a box. The state of any given particle – or cat – that can’t be observed is merely a statistical probability until the box is opened and the truth comes out. The difference in this case is that the viewers outside the box, rather than the cat, that may end up dead based on a process they can’t observe.

Inside China’s opaque box of government we must assume somebody has a plan – not the publicly paraded five year variety with its lofty political statements and lists of lofty goals and technical minutia – but an actual national strategy. Are they striving to join the community of free nations or simply exploiting them? Outside the box, we are give the choice of inferring what is really going on via the statements of those who fear free speech or by observing their actions. With those two things in conflict, any rational person would conclude that capitalist mice should be very shy around Mr. Deng’s cat. To do otherwise would be to be as trusting as the students packed into Tiananmen Square on June 3, 1989.

–       Greg Autry teaches Macroeconomics at the Merage School of Business, UC Irvine and is co-author (with Peter Navarro) of the new book “Death by China”