During the summer, I was able to study businesses in Taiwan, Hong Kong, + China; one particular session with top-level executives at Shui On Land, which is basically the best property developer/operator in mainland China, really stuck with me. This company builds entire cities with multiple skyscrapers holding millions of people. But, because the government owns all the land (land is rented under long-term leases), developers, like SOL, need to be able to relocate existing land occupants (this is not a debate as to whether such development is necessary; these issues are rather complex, to say the least). Specifically, developers need to do the following things: (1) secure the cooperation and oversight of the Chinese government; and (2) pay the people that are living on the land to move. The result: these poor farmers and families that have been living on land (on lease from the government) get paid $$ to relocate–the Chinese government + development companies make rich people out of these people that initially occupied the land.
Couple this with a recent news story coming from China: "during the 11th Five-year Plan period (2006-2010), China will build 10,000 eco-villages in 500 counties that are based on the recycling of resources. This is part of a national program to make people rich by constructing environmentally friendly homes." To make people rich. This blows me away. I understand the intricacies involved with command and market economies and I’m not going to trash on the one that has blessed me, but we can see how a command economy can lead to positive outcomes. China has the power to see where change needs to happen and make that change, without having to rely on the slow, and often corrupt, processes of democratic government. Understandably, command economies don’t always work out this way, but as it relates to green innovation, China is taking the lead (See Tom Friedman). I have a lot more faith in good old American ingenuity, but under our system, which is more market than command, I think we need to internalize the costs of what happens to the environment, especially if we want to be effective at innovating for the future. Via Linton; picture.