Arthur Kroeber

So if they had tried to be maximally efficient and said, no, no, no, we're not going to allow banks to lend unless they can prove that this project is definitely going to have an ROI of X, they would have lended a lot less.

And they would probably have had a lot less growth because they were not willing simply to create that wall of money that would create broad-based growth.

And they might, in fact, have had substantially more inequality than they did because this wasteful method allowed them to spread out investment in a lot of areas more.

which were geographically disadvantaged, which might not have done so well in a purely efficiency-driven system.

So I think we need to be careful about assuming that inefficiency is bad.

I think inefficiency sometimes can be, as long as it is basically the result of a desire to be effective,

that can be sort of a byproduct of a successful growth story.

And I think that's basically my account of China.

Basically, that's my basic thesis.

And I think they've shown that this works quite well.

And I think that's also part of the answer to why, well, why aren't they richer on a per capita basis?

Well,

There are 1.4 billion people.

It is just gigantic.

If you just think about the scale problem, Taiwan, Korea, South Korea, they got to whatever they are relative to U.S.

per capita GDP, 60%, 70%, something like that, within a generation or two.

Because Taiwan, they had 20 million people.

South Korea, they had 40, 45 million people.

To move that number of people and get them all working in high-wage industrial or service jobs in urban areas, you can do that in the course of a generation, right?

20, 25 years.