Economic Crisis and the Black Death
When a screenwriter puts pen to paper in hopes of crafting a tale about heroes and villains, there is one fundamental that hasn’t changed in 50 years or so: throw in some Nazis as your bad guys. You can’t lose with Nazis.
For novels about medieval Europe, nothing compares to the Black Death as a backdrop. You got your life and death struggles, your social upheaval, economic dislocation, and so on. It’s the gift that keep on giving.
So I was recently reading Ken Follett’s sequel to Pillars of the Earth (classic story if you’re into cathedrals), entitled World Without End. It takes place in England in the 14th century before and during the Black Death. Excellent read for the whole family, even if you’re not an infectious disease expert.
I once made a list of all the lectures I attended as an undergraduate on the Black Death (the number came to five). Suffice it to say that I have a background on the subject. The Follett book reminded me of some of the more interesting things that happened during that time, including huge changes in economic activity, political structure, social mobility, changes in the standard of morality, and so on. This is what I do with my spare time.
I am in no way trying to scare anyone by making some sort of comparison between today’s recession and the Black Death. I was not fishing around for an analogy and came up with the Plague. No, I just so happened to be reading about it at the same time as I was reading all the scary economic news. One is bound to make some comparisons.
The big picture here is that times of great change are . . . well, times of great change. The precipitating event can be good (e.g. the Internet boom) or it can be bad (e.g. economic catastrophe).
The same goes for the effects of that change. An economic dislocation can lead to innovation and efficiencies, new industries and opportunities. It can also lead to job losses, the death of entire industries, and permanent problems.
I think on the economic side, we are going to see a lot of both here in China. We are already seeing a great number of manufacturing enterprises bite the dust. Some may come back, while many others will move on to lower cost jurisdictions and never return. This trend started before the economy slowed down, and it has accelerated in recent months.
We could also see Chinese companies become more creative and competitive. This will require some major industry shakeouts, but the government is certainly willing to see that take place as long as job losses are acceptable, and is even encouraging consolidation (see for example the new M&A financing rules).
All this is pretty basic stuff. The business end of this will sort itself out eventually, although the economic pain will be significant.
For those of us who enjoy speculation, it’s much more fun to consider the social and political implications, both in China and elsewhere. Let’s start with social issues.
During the Black Death in Europe, the instability and unpredictability of life led to a certain degree of permissiveness, a sense that the old rules just did not make sense anymore in the face of impending doom. This all occurred, remember, in a society dominated by the medieval Catholic Church, not a very liberal institution.
China is a fairly conservative place as well in many respects. Social creativity and permissiveness has been on the upswing in recent years, however, particularly as the Internet has allowed for new means of expression, often in an anonymous fashion.
Will the current recession lead to any dramatic social changes? Perhaps not dramatic change, but certainly we will see some changes in attitudes. I remember when I first came to China in 1998 and spent some time up north in Shenyang. Some of the people I was teaching at the time were adults facing, for the first time in their lives, job loss. Many of them simply had no idea what to do and how to react — a guaranteed job was something they had grown up with.
Some of the younger workers in China today had until recently a similar sense of entitlement, a feeling that things will just keep getting better and the economy will keep growing. We’ve always said that these double-digit growth rates were unsustainable, but a lot of people refused to get ready for the inevitable slowdown.
Reaction could include lashing out at industry or the government. The former has already occurred and will probably continue to some extent, although actions from local and State-level government have helped defuse some of the volatile labor protests. I have a feeling that the income gap, which could widen with a recession, might provoke quite a lot of resentment of rich folks. We are certainly seeing this in the U.S. with respect to CEO pay and bonuses. Whether or not this resentment coalesces into some sort of movement is another issue, but to the extent that popular pressure pushes the government towards policies aimed at narrowing the income gap, that could be a good thing.
One issue that is rather cool is the way that the Internet is being used as a community organizing tool and as a way for people to get together and commiserate in the face of hard times. The "bujingqi" site (recently profiled at the WSJ China blog) is a good example. Not only is this a platform for job seekers, but it is a place for people to let off steam and trade stories. These kinds of sites could be important in facilitating mutual support and keeping unemployed folks "plugged in" to society. Millions of unemployed people with nothing to do but play games, blog and chat — that will definitely result in something interesting and unexpected.
It’s the end of the week (a long, six-day work week) and I’m tired, so excuse the weirdness here. However, I can’t help but imagine what sorts of games, chat rooms and online communities would have been created if the Internet was around in Europe in the mid-14th century. I wish Monty Python was still around to explore that further.
