Unrecorded history: a queue forms at a street food tall in Hankou, capital of Hubei Province, in 1959
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The road to perdition

When Yang Jisheng’s father died from starvation in 1959, he thought it was an isolated tragedy. Years later, he learned the truth about the Great Famine.

At the end of April 1959, I was assembling a wall newspaper for my boarding school’s Communist Youth League when a childhood friend suddenly arrived from our home village of Wanli. He told me, “Your father is starving to death! Hurry back and take some rice if you can.” He said, “Your father doesn’t even have the strength to strip bark from the trees – he’s starved beyond helping himself.”

I collected a three-day meal ration of 1.5 kilos of rice from the school canteen and rushed home. When I got there, I found utter destitution. My father was half-reclined on his bed, his eyes sunken and lifeless, his face gaunt, the skin creased and flaccid. He tried to extend his hand to greet me but couldn’t lift it, just moving it a little. A murmur escaped from his lips, his voice faint as he told me to go quickly, go quickly back to school.

I kneaded my father’s hand, then hurried off with buckets on a shoulder pole to fill the water vat. Then I grabbed a hoe and went to dig up sprouts. I dug and dug some more, my heart full of remorse and guilt. Why had I not come back earlier and harvested some wild herbs? Why hadn’t I come back earlier with some rice? But all my self-blame was useless. I boiled congee from the rice I’d brought and took it to my father’s bed but he was no longer able to swallow. Three days later he departed this world. With the help of other villagers, I hastily buried him.

I grieved deeply over my father’s death, but never thought to blame the government. I believed that what was happening in my home village was isolated and that my father’s death was merely one family’s tragedy. Compared to the advent of the great communist society, what was my family’s petty misfortune? The party had taught me to sacrifice the self for the greater good when encountering difficulty and I was completely obedient. I maintained this frame of mind right up until the Cultural Revolution.

My sadness at my father’s death did not weaken my confidence in the Chinese Communist Party (CCP). Like me, many young people who enthusiastically participated in the Great Leap Forward were suffering from hunger along with their family members, but they never complained.

My support for the Great Leap Forward was due not only to the inspiration of communist ideals but also to ignorance. I came from a remote village whose residents knew virtually nothing about matters beyond the hills. The vast majority of us never circulated beyond a 50-kilometre radius of our village. Although we were situated only a little more than 100 kilometres from Hankou, that great city seemed impossibly remote to us. The county seat, Xishui, was much closer but even going there took one full day, with half of the roadway consisting of rugged mountain paths.

After the CCP gained power, it sealed China off from information beyond its borders and imposed a wholesale negation of the country’s traditional moral standards. The government’s monopoly on information gave it a monopoly on truth. As the centre of power, the party was also the heart of truth and information.

The government used its monopoly apparatus to instil communist values while eradicating all others. In this way, young people developed a violent longing to realise communist ideals. I sincerely believed that a weak and impoverished China that had been bullied by imperialism for nearly 100 years could go on to implement the highest ideal of mankind: communism. Compared to this sublime ideal, what were the petty problems I faced?

In 1960, I passed the entrance exam for Tsinghua University in Beijing. As soon as I entered the campus, I toured the university’s anti-rightist exhibition, embarking on an education in loyalty. While at university, I served as the Youth League’s branch secretary and joined the Communist Party in May 1964. At that time young people like me were considered very naive and simple, and it was true: our minds contained only the beliefs instilled by the public opinion apparatus and nothing else. In this way the party moulded the generation growing up under the new regime into loyal disciples.

My thinking began to change when the Cultural Revolution began in 1966. I was astonished by the appearance of thousands of “big character posters” at the university, which exposed the corrupt lives and debased mentalities of old revolutionaries whom I had long revered. I began to lose my faith in authority and officialdom, and I no longer believed everything I read. I began to doubt the myths the party had inculcated in me, and it was opposition to official privilege that led me, like most ordinary people, to take part in the Cultural Revolution. It was also during this period that the governor of Hubei Province, Zhang Tixue, said something that shocked me: during the three years of hardship in that province, some 300,000 people had starved to death. Only then did I realise that my family’s tragedy was not unique.

“Reform and opening” in the late 1970s brought considerable relaxation of intellectual strictures and the historical truth began to come out. In the past, the party had taught us that natural calamity had caused famine in limited areas of the country. Now we knew that it was a man-made disaster that had caused tens of millions of people to starve to death. My family tragedy was repeated in some ten million families throughout China.

Agricultural collectivisation had deprived peasants and cadres of the power to decide what would be planted, over how large an area and by what means. The labour and lives of peasants were tightly restricted. And if an error in policy prevented a collective farm from supplying daily necessities, peasants had no other recourse. Communal kitchens were a major reason why so many people starved to death. Home stoves were dismantled and cooking implements, tables and chairs, foodstuffs and firewood were handed over to the communal kitchen. Believing the state would come up with more food when current supplies were exhausted, some communes consumed all their grain by the end of 1958 and were left to wait for government replenishment that never arrived.

Multiple sources indicate around 36 million starvation deaths in China from 1958 to 1962. In some regions, nearly every family experienced at least one death from starvation and some families were completely wiped out. Entire villages were left without a single living inhabitant. It was, as Mao Zedong wrote in one of his poems: “A thousand villages overgrown with weeds, men wasted away;/Ten thousand homes where only ghosts sing.”

The Great Famine makes all of China’s other famines pale in comparison. The most severe famine previously recorded occurred in 1928- 30 and affected 22 provinces. That famine broke all previous records, but still killed only ten million people. The number of people who starved to death between 1958 and 1962 was many times greater than the number who died in any previous disaster in China.

Yet there were no anguished appeals to heaven, no hemp-robed funerals, no fire crackers and hell money to see the departed to their final destination. Tens of millions departed this world in an atmosphere of mute apathy. Some villages transported corpses by the truckload for burial in common graves. In villages where survivors lacked the strength for proper interment, the limbs of the dead protruded from the ground. In some places, the dead remained along the roadsides where they had dropped in their futile search for food. More than a few were simply left in their homes, where rats gnawed at their noses and eyes.

Refugees who escaped to Hong Kong and family members of Chinese living overseas managed to spread news of the calamity, and based on this information, some western media published reports on the famine. The Chinese government labelled these reports as “vicious attacks” and “slanderous rumours”.

To shape international public opinion, the Chinese government invited “friends of China” to visit and see for themselves, in the hope that they would write reports that “clarified the facts and truth”. The government meticulously planned every step of visitors’ itineraries, including which places they would visit and the people with whom they could come into contact. Foreign guests were kept segregated from ordinary people, and well-fed and well-clothed individuals were sometimes put on display.

Confronted by the severe consequences of the Great Famine, President Liu Shaoqi once said to Mao Zedong: “History will record the role you and I played in the starvation of so many people . . .” In the spring of 1962, Liu noted that “deaths by starvation will be recorded in the history books”. Yet, after more than 40 years, no full account of the Great Famine has been published in mainland China.

Liu Shaoqi also once said that this disaster should be engraved on a memorial tablet as a record “to be passed down to our children and grandchildren so that such an error will never be committed again”. China should erect memorials to the victims of the Great Famine in the places where the deaths were most concentrated, such as Xinyang, Tongwei, Luoding, Bozhou, Fengyang, Zunyi, Jinsha, Pi County, Yingjing, Rong County, Fengdu, Dayi, Guantao and Jining. These memorials would not only commemorate the dead but also serve as a permanent reminder of the importance of preventing such a tragedy from ever happening again.

Later generations will know that there was once a system established at a certain juncture of history in the name of “liberating mankind” that in reality enslaved humanity. This system promoted itself as the “Road to Paradise,” but in fact it was the road to perdition.

Extracted from “Tombstone: the Untold Story of Mao’s Great Famine” by Yang Jisheng, published by Allen Lane on 1 November (£30) © Yang Jisheng, 2012 (penguin.co.uk).

This article first appeared in the 22 October 2012 issue of the New Statesman, Ai Weiwei guest-edit

MILES COLE
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The new Brexit economics

George Osborne’s austerity plan – now abandoned by the Tories – was the most costly macroeconomic policy mistake since the 1930s.

George Osborne is no longer chancellor, sacked by the post-Brexit Prime Minister, Theresa May. Philip Hammond, the new Chancellor, has yet to announce detailed plans but he has indicated that the real economy rather than the deficit is his priority. The senior Conservatives Sajid Javid and Stephen Crabb have advocated substantial increases in public-sector infrastructure investment, noting how cheap it is for the government to borrow. The argument that Osborne and the Conservatives had been making since 2010 – that the priority for macroeconomic policy had to be to reduce the government’s budget deficit – seems to have been brushed aside.

Is there a good economic reason why Brexit in particular should require abandoning austerity economics? I would argue that the Tory obsession with the budget deficit has had very little to do with economics for the past four or five years. Instead, it has been a political ruse with two intentions: to help win elections and to reduce the size of the state. That Britain’s macroeconomic policy was dictated by politics rather than economics was a precursor for the Brexit vote. However, austerity had already begun to reach its political sell-by date, and Brexit marks its end.

To understand why austerity today is opposed by nearly all economists, and to grasp the partial nature of any Conservative rethink, it is important to know why it began and how it evolved. By 2010 the biggest recession since the Second World War had led to rapid increases in government budget deficits around the world. It is inevitable that deficits (the difference between government spending and tax receipts) increase in a recession, because taxes fall as incomes fall, but government spending rises further because benefit payments increase with rising unemployment. We experienced record deficits in 2010 simply because the recession was unusually severe.

In 2009 governments had raised spending and cut taxes in an effort to moderate the recession. This was done because the macroeconomic stabilisation tool of choice, nominal short-term interest rates, had become impotent once these rates hit their lower bound near zero. Keynes described the same situation in the 1930s as a liquidity trap, but most economists today use a more straightforward description: the problem of the zero lower bound (ZLB). Cutting rates below this lower bound might not stimulate demand because people could avoid them by holding cash. The textbook response to the problem is to use fiscal policy to stimulate the economy, which involves raising spending and cutting taxes. Most studies suggest that the recession would have been even worse without this expansionary fiscal policy in 2009.

Fiscal stimulus changed to fiscal contraction, more popularly known as austerity, in most of the major economies in 2010, but the reasons for this change varied from country to country. George Osborne used three different arguments to justify substantial spending cuts and tax increases before and after the coalition government was formed. The first was that unconventional monetary policy (quantitative easing, or QE) could replace the role of lower interest rates in stimulating the economy. As QE was completely untested, this was wishful thinking: the Bank of England was bound to act cautiously, because it had no idea what impact QE would have. The second was that a fiscal policy contraction would in fact expand the economy because it would inspire consumer and business confidence. This idea, disputed by most economists at the time, has now lost all credibility.

***

The third reason for trying to cut the deficit was that the financial markets would not buy government debt without it. At first, this rationale seemed to be confirmed by events as the eurozone crisis developed, and so it became the main justification for the policy. However, by 2012 it was becoming clear to many economists that the debt crisis in Ireland, Portugal and Spain was peculiar to the eurozone, and in particular to the failure of the European Central Bank (ECB) to act as a lender of last resort, buying government debt when the market failed to.

In September 2012 the ECB changed its policy and the eurozone crisis beyond Greece came to an end. This was the main reason why renewed problems in Greece last year did not lead to any contagion in the markets. Yet it is not something that the ECB will admit, because it places responsibility for the crisis at its door.

By 2012 two other things had also become clear to economists. First, governments outside the eurozone were having no problems selling their debt, as interest rates on this reached record lows. There was an obvious reason why this should be so: with central banks buying large quantities of government debt as a result of QE, there was absolutely no chance that governments would default. Nor have I ever seen any evidence that there was any likelihood of a UK debt funding crisis in 2010, beyond the irrelevant warnings of those “close to the markets”. Second, the austerity policy had done considerable harm. In macroeconomic terms the recovery from recession had been derailed. With the help of analysis from the Office for Budget Responsibility, I calculated that the GDP lost as a result of austerity implied an average cost for each UK household of at least £4,000.

Following these events, the number of academic economists who supported austerity became very small (they had always been a minority). How much of the UK deficit was cyclical or structural was irrelevant: at the ZLB, fiscal policy should stimulate, and the deficit should be dealt with once the recession was over.

Yet you would not know this from the public debate. Osborne continued to insist that deficit reduction be a priority, and his belief seemed to have become hard-wired into nearly all media discussion. So perverse was this for standard macroeconomics that I christened it “mediamacro”: the reduction of macroeconomics to the logic of household finance. Even parts of the Labour Party seemed to be succumbing to a mediamacro view, until the fiscal credibility rule introduced in March by the shadow chancellor, John McDonnell. (This included an explicit knockout from the deficit target if interest rates hit the ZLB, allowing fiscal policy to focus on recovering from recession.)

It is obvious why a focus on the deficit was politically attractive for Osborne. After 2010 the coalition government adopted the mantra that the deficit had been caused by the previous Labour government’s profligacy, even though it was almost entirely a consequence of the recession. The Tories were “clearing up the mess Labour left”, and so austerity could be blamed on their predecessors. Labour foolishly decided not to challenge this myth, and so it became what could be termed a “politicised truth”. It allowed the media to say that Osborne was more competent at running the economy than his predecessors. Much of the public, hearing only mediamacro, agreed.

An obsession with cutting the deficit was attractive to the Tories, as it helped them to appear competent. It also enabled them to achieve their ideological goal of shrinking the state. I have described this elsewhere as “deficit deceit”: using manufactured fear about the deficit to achieve otherwise unpopular reductions in public spending.

The UK recovery from the 2008/2009 recession was the weakest on record. Although employment showed strong growth from 2013, this may have owed much to an unprecedented decline in real wages and stagnant productivity growth. By the main metrics by which economists judge the success of an economy, the period of the coalition government looked very poor. Many economists tried to point this out during the 2015 election but they were largely ignored. When a survey of macroeconomists showed that most thought austerity had been harmful, the broadcast media found letters from business leaders supporting the Conservative position more newsworthy.

***

In my view, mediamacro and its focus on the deficit played an important role in winning the Conservatives the 2015 general election. I believe Osborne thought so, too, and so he ­decided to try to repeat his success. Although the level of government debt was close to being stabilised, he decided to embark on a further period of fiscal consolidation so that he could achieve a budget surplus.

Osborne’s austerity plans after 2015 were different from what happened in 2010 for a number of reasons. First, while 2010 austerity also occurred in the US and the eurozone, 2015 austerity was largely a UK affair. Second, by 2015 the Bank of England had decided that interest rates could go lower than their current level if need be. We are therefore no longer at the ZLB and, in theory, the impact of fiscal consolidation on demand could be offset by reducing interest rates, as long as no adverse shocks hit the economy. The argument against fiscal consolidation was rather that it increased the vulnerability of the economy if a negative shock occurred. As we have seen, Brexit is just this kind of shock.

In this respect, abandoning Osborne’s surplus target makes sense. However, there were many other strong arguments against going for surplus. The strongest of these was the case for additional public-sector investment at a time when interest rates were extremely low. Osborne loved appearing in the media wearing a hard hat and talked the talk on investment, but in reality his fiscal plans involved a steadily decreasing share of public investment in GDP. Labour’s fiscal rules, like those of the coalition government, have targeted the deficit excluding public investment, precisely so that investment could increase when the circumstances were right. In 2015 the circumstances were as right as they can be. The Organisation for Economic Co-operation and Development, the International Monetary Fund and pretty well every economist agreed.

Brexit only reinforces this argument. Yet Brexit will also almost certainly worsen the deficit. This is why the recent acceptance by the Tories that public-sector investment should rise is significant. They may have ­decided that they have got all they could hope to achieve from deficit deceit, and that now is the time to focus on the real needs of the economy, given the short- and medium-term drag on growth caused by Brexit.

It is also worth noting that although the Conservatives have, in effect, disowned Osborne’s 2015 austerity, they still insist their 2010 policy was correct. This partial change of heart is little comfort to those of us who have been arguing against austerity for the past six years. In 2015 the Conservatives persuaded voters that electing Ed Miliband as prime minister and Ed Balls as chancellor was taking a big risk with the economy. What it would have meant, in fact, is that we would already be getting the public investment the Conservatives are now calling for, and we would have avoided both the uncertainty before the EU referendum and Brexit itself.

Many economists before the 2015 election said the same thing, but they made no impact on mediamacro. The number of economists who supported Osborne’s new fiscal charter was vanishingly small but it seemed to matter not one bit. This suggests that if a leading political party wants to ignore mainstream economics and academic economists in favour of simplistic ideas, it can get away with doing so.

As I wrote in March, the failure of debate made me very concerned about the outcome of the EU referendum. Economists were as united as they ever are that Brexit would involve significant economic costs, and the scale of these costs is probably greater than the average loss due to austerity, simply because they are repeated year after year. Yet our warnings were easily deflected with the slogan “Project Fear”, borrowed from the SNP’s nickname for the No campaign in the 2014 Scottish referendum.

It remains unclear whether economists’ warnings were ignored because they were never heard fully or because they were not trusted, but in either case economics as a profession needs to think seriously about what it can do to make itself more relevant. We do not want economics in the UK to change from being called the dismal science to becoming the “I told you so” science.

Some things will not change following the Brexit vote. Mediamacro will go on obsessing about the deficit, and the Conservatives will go on wanting to cut many parts of government expenditure so that they can cut taxes. But the signs are that deficit deceit, creating an imperative that budget deficits must be cut as a pretext for reducing the size of the state, has come to an end in the UK. It will go down in history as probably the most costly macroeconomic policy mistake since the 1930s, causing a great deal of misery to many people’s lives.

Simon Wren-Lewis is a professor of economic policy at the Blavatnik School of Government, University of Oxford. He blogs at: mainlymacro.blogspot.com

 Simon Wren-Lewis is is Professor of Economic Policy in the Blavatnik School of Government at Oxford University, and a fellow of Merton College. He blogs at mainlymacro.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt