The year 2009 is a big one for China and the ruling Communist Party (CCP), as years ending in the number 9 mark several important anniversaries. In 1919, May 4 witnessed the patriotic, “modernizing” youth movement that catalyzed the formation of the CCP. In 1949 the People’s Republic of China (PRC) was established, and 1979 saw the inauguration of reform and opening, which re-legitimized the Party after the Cultural Revolution debacle and set China on the path to record-breaking economic growth and international power and status.

These are not the only “9” years, however, that mark milestones in recent Chinese history. 1959 saw Beijing crush the Tibetan uprising against PRC rule that led the Dalai Lama to flee into exile; it was also the first of three years of mass starvation in the Great Leap Forward. In 1979, the brief but bloody Sino-Vietnamese War took place. And in 1989 the leadership of the Chinese People’s Government ordered the People’s Liberation Army to fire on unarmed Chinese people demonstrating in Tiananmen Square.

Needless to say, some anniversaries are celebrated with great fanfare, as moments in the nation’s history of which all citizens can and should be proud. Massive parades to commemorate the sixtieth anniversary of the PRC’s founding can certainly be expected this October. In the run-up to anniversaries of events-that-should-be-forgotten, by contrast, dissidents are detained, the media muzzled, websites suddenly shut down for “maintenance,” and public security intensified at sensitive venues such as the Potala Palace in Lhasa and Tiananmen Square in Beijing. This month, angered by what it perceives as interference in its internal affairs, China has rebuked foreign dignitaries, including Taiwan’s President Ma Ying-jeou and U.S. Secretary of State Hillary Clinton, for their calls on the CCP leadership to acknowledge those killed at Tiananmen. According to Foreign Ministry spokesman Qin Gang, China has already reached a verdict on that history. The Party has set the country on “the proper socialist path that serves the fundamental interests of the Chinese people,” and there is nothing more to be said.

Enforcing historical forgetting, however, requires more than clampdowns at anniversary time and stony assertions that matters are resolved. Efforts to silence critical voices are ongoing, and the so-called Great Firewall of China routinely blocks access to sensitive information on the Internet. Meanwhile, despite liberalization—which has allowed professional historians considerable freedom to address many hitherto taboo topics—the content of museums, memorials, historical films and television dramas, and, above all, school textbooks remain restricted through a battery of laws, regulations, and vetting mechanisms. In line with official diktats, these officially authorized histories generally gloss over unhappy episodes or rewrite them to present a mostly happy tale of inexorable progress since 1949, and to portray the Party and the country in a positive light. If mentioned at all, acts of state violence or suppression are represented as necessary measures taken to safeguard national territory, unity, and stability. At the same time, in order to emphasize a common national bond against external threats, they highlight past acts of aggression that foreign countries committed against China. This patriotic history is not “my country, right or wrong;” rather, it is “my country (and the Party) has always been right.”

Despite these concerted efforts, it has proved difficult to erase unhappy memories of domestic repression or disaster from public consciousness, or to prevent the dissemination of unofficial histories. Research shows that omitting past events or persons from public commemoration does not guarantee they will be forgotten, especially if they are focal points of group identity; indeed, they may serve as the foundations for counter-histories. For example, the year 1959 is central to the Tibetan narrative of resistance to Chinese domination. Furthermore, even when official histories are forcibly and repeatedly imposed, such as through compulsory education and examinations, they may not necessarily be remembered or deployed as originally intended, particularly if they run counter to personal or community experiences. In fact, they may be used in ways that actually challenge the official narrative. Students in Tiananmen Square in 1989 saw themselves—not the CCP—as inheritors of the spirit of May 4th, 1919. Not coincidentally, May 4th radicalism has been somewhat downplayed in recent years, and its ninetieth anniversary this year astonishingly low-key.

Ruling regimes often seek to use history both to legitimize their political authority and to suppress dissent. Nevertheless, controlling the past is considerably more complicated than merely adding or deleting events from the historical record and commemorating or silencing them on key anniversaries. In China, 2009 will certainly not be the last year in which tensions arise between those who want to remember and those who would have them forget.

The Director of the Asia Health Policy Program, Karen Eggleston, served as guest editor of the International Journal of Healthcare Finance and Economics for the June 2009 issue. The eight papers of that issue evaluate different provider payment methods in comparative international perspective, with authors from Hungary, China, Thailand, the US, Switzerland, and Canada. These contributions illustrate how the array of incentives facing providers shapes their interpersonal, clinical, administrative, and investment decisions in ways that profoundly impact the performance of health care systems.

The collection leads off with a study by János Kornai, one of the most prominent scholars of socialism and post-socialist transition, and the originator of the concept of the soft budget constraint. Kornai’s paper examines the political economy of why soft budget constraints appear to be especially prevalent among health care providers, compared to other sectors of the economy.

Two other papers in the issue take up the challenge of empirically identifying the extent of soft budget constraints among hospitals and their impact on safety net services, quality of care, and efficiency, in the United States (Shen and Eggleston) and – even more preliminarily – in China (Eggleston and colleagues, AHPP working paper #8).

The impact of adopting National Health Insurance (NHI) and policies separating prescribing from dispensing are the subject of Kang-Hung Chang’s article entitled “The healer or the druggist: Effects of two health care policies in Taiwan on elderly patients’ choice between physician and pharmacist services” (AHPP working paper #5).

In “Does your health care depend on how your insurer pays providers? Variation in utilization and outcomes in Thailand” (AHPP working paper #4), Sanita Hirunrassamee of Chulalongkorn University and Sauwakon Ratanawijitrasin of Mahidol University study the impact of multiple provider payment methods in Thailand, providing striking evidence consistent with standard predictions of how payment incentives shape provider behavior. For example, patients whose insurers paid on a capitated or case basis (the 30 Baht and social security schemes) were less likely to receive new drugs than those for whom the insurer paid on a fee-for-service basis (civil servants). Patients with lung cancer were less likely to receive an MRI or a CT scan if payment involved supply-side cost sharing, compared to otherwise similar patients under fee-for-service. (This article is open access.)

The fourth paper in this special issue is entitled “Allocation of control rights and cooperation efficiency in public-private partnerships: Theory and evidence from the Chinese pharmaceutical industry” (AHPP working paper #6). Zhe Zhang and her colleagues use a survey of 140 pharmaceutical firms in China to explore the relationships between firms’ control rights within public-private partnerships and the firms’ investments.

Hai Fang, Hong Liu, and John A. Rizzo delve into another question of health service delivery design and accompanying supply-side incentives: requiring primary physician gatekeepers to monitor patient access to specialty care (AHPP working paper #2).

Direct comparisons of payment incentives in two or more countries are rare. In “An economic analysis of payment for health care services: The United States and Switzerland compared,” Peter Zweifel and Ming Tai-Seale compare the nationwide uniform fee schedule for ambulatory medical services in Switzerland with the resource-based relative value scale in the United States.

Several of the papers featured in this special issue were presented at the conference “Provider Payment Incentives in the Asia-Pacific” convened November 7-8, 2008 at the China Center for Economic Research (CCER) at Peking University in Beijing. That conference was sponsored by the Asia Health Policy Program of the Shorenstein Asia-Pacific Research Center at Stanford University and CCER, with organizing team members from Stanford University, Peking University, and Seoul National University.

As Eggleston notes in the guest editorial to the special issue, AHPP and the other scholars associated with the issue “hope that these papers will contribute to more intellectual effort on how provider payment reforms, carefully designed and rigorously evaluated, can improve ‘value for money’ in health care.”

Some theorists of modernization have influentially claimed that successful “late industrialization” led by developmental states creates economies too complex, social structures too differentiated, and (middle-class-dominated) civil societies too politically conscious to sustain nondemocratic rule. Nowhere is this argument—that economic growth drives democratic transitions—more evident than in Northeast and Southeast Asia (hereafter Pacific Asia).

South Korea and Taiwan, having democratized only after substantial industrialization, seem to fit this narrative well. But “late democratizers” have been the exception rather than the rule. Indonesia, the Philippines, and Thailand democratized before high per capita incomes were achieved. Malaysia, and especially Singapore are more wealthy than they are democratic. The communist “converts” to developmentalism, China and Vietnam, are aiming for authoritarian versions of modernity. Table 1* shows that there is no clear pattern in Pacific Asia. Indeed, according to the nongovernmental organization Freedom House (and using the World Bank categories of low, lower middle, upper middle, or high income), poor and rich countries alike in Pacific Asia are rated “free,” “partly free,” or “not free.”

What key factors have influenced the different timing of democratization in Pacific Asia? Democratization has occurred early in the developmental process when authoritarian states have failed to create sustainable economic growth, which in turn has led to mounting debt. Many reasons explain this phenomenon, but a primary cause is the so-called failure to “deepen”—that is, certain countries’ inability to become major manufacturers of high-tech and heavy industrial goods. For example, when economic crises rocked the Philippines in the mid-1980s and Indonesia in the late 1990s, both nations lacked the economic maturity and breadth to rebound, prompting abrupt financial collapse. These nations’ political systems were too ossified to channel popular unrest, and mass mobilization resulted. Ideologically, the Marcos and Suharto regimes faced accusations of cronyism, as favored business leaders stepped in to rescue failing conglomerates, sidelining once-influential technocrats in the process. In the end, these countries’ limited economic development actually broke down their authoritarian systems.

 “Late industrializers,” by contrast, do succeed in industrial “deepening.” But they are often less successful in terms of “widening”—the perception that the benefits of development are being fairly shared in society. Statistics show that South Korea and Taiwan are relatively equal societies. Nevertheless, neither of these technocratically oriented authoritarian regimes was able to blunt criticisms that growth was unjustly distributed. South Korean workers and native Taiwanese felt particularly disadvantaged. In Malaysia, too, tensions are now mounting about distribution along ethnic lines. Electoral authoritarianism helped to defuse earlier crises in South Korea and Taiwan, but beginning in the mid-1980s, opposition forces in both nations launched successful challenges through the ballot box to bring about democratization. In Malaysia, the opposition scored major gains in the 2008 elections. Ideologically, all three authoritarian regimes were weakened by activist campaigns for social justice, which mobilized middle class professionals.

One can only speculate about whether Singapore will one day democratize. Its economy has continually deepened, most recently through a major drive to grow a biotech industry. At the same time, it has widened through a series of welfare-related measures focused on housing and pensions. The Singaporean government has also perfected a system of electoral authoritarianism, allowing some competition and participation without threatening the ruling party’s hold on power. Ideologically, the government has long determined the political agenda through its collectivist campaigns (including the once high-profile “Asian values” discourse). However, when Singapore’s founding father, Lee Kuan Yew, eventually passes away, the nation’s technocratic elite may be tempted to democratize. Democratization would give the government greater legitimacy to reform welfare provision, which many believe is currently limiting Singapore’s competitiveness. The main arguments are summarized in table two.*

It is evident that China and Vietnam are trying to imitate the Singaporean model. Though each faces many obstacles, both countries have already made great strides in industrial deepening and widening through an elaborate postcommunist welfare system. Ideologically, these countries will rely not just on growth—which will inevitably slow during the current economic crisis—but also on appeals to a collectivist identity that is simultaneously both nationalist and neo-Confucianist in character. Whether China and Vietnam eventually democratize or remain authoritarian despite modernization is one of the most important political questions in the world today.

* Please contact the Manager of Corporate Relations for a full PDF copy of this dispatch, including tables.

The Asia Health Policy Program at the Walter H. Shorenstein Asia-Pacific Research Center is pleased to announce that Brian K. Chen has been awarded the %fellowship1% for 2009-2010.  Brian is currently completing his Ph.D. in Business Administration in the Business and Public Policy Group at the Haas School of Business, University of California at Berkeley.  He received a Juris Doctor from Stanford Law School in 1997, and graduated summa cum laude from Harvard College in 1992. 

As an applied economist, Brian’s research focuses on the impact of incentives in health care organizations on provider and patient behavior.  For his dissertation, Brian empirically examined how vertical integration and prohibition against self-referrals affected physician prescribing behavior.  His job market paper has been selected for presentation at the American Law and Economics Association’s Annual Meeting in 2009.

Brian comes to the Shorenstein Asia-Pacific Research Center not only with a multidisciplinary law and economics background, but also with an international perspective from having lived and worked in Taiwan, Japan, and France.  He has a particularly intimate knowledge of the Taiwanese health care system from his experience as an assistant to the hospital administrator at a medical college in Taiwan.

During his residence as a postdoctoral fellow with the Asia Health Policy Program, Brian plans to conduct empirical research on cost containment policies in Taiwan and Japan and how those policies impacted provider behavior. His work will also contribute to the program’s research activities on comparative health systems and health service delivery in the Asia-Pacific, a theme that encompasses the historical evolution of health policies; the role of the private sector and public-private partnerships; payment incentives and their impact on patients and providers; organizational innovation, contracting, and soft budget constraints; and chronic disease management and service coordination for aging populations.

Since 2005, research teams comprised of participants from across East Asia have been working on a collaborative survey project known as the East Asian Social Survey (EASS).¹  The participating research teams include the Chinese General Social Survey (CGSS) from Hong Kong University of Science and Technology and Renmin University in China; Osaka University of Commerce in Japan (JGSS); SungKyunKwan University in Korea (KGSS); and the Taiwan Social Change Survey (TSCS) at the Academia Sinica, Taiwan. The plan of the project is to conduct a survey with different topics for every two years. The first EASS survey, which focused on Family, was conducted in 2006. KGSS had now integrated the data that the four research teams compiled by the end of 2008. This data set is now ready for research use, both by members of the teams and by other interested parties. The topic for the 2008 survey is Globalization and Culture.

During the past two decades, the export-oriented economies of Japan, Korea, and Taiwan experienced strong economic growth and rising income levels. More women entered the labor markets and obtained better-paid jobs. However, in the regions surveyed, men and women often do not equally share in economic prosperity and there still exists a sex gap in earnings. A paper recently co-written by this author and Paula England,²  using the 2006 EASS data, may be the first attempt to explore the size of the sex gap, the factors that explain the gap, and the variations among Japan, Korea, and Taiwan.³

To explain the disparity between the pay of men and women in the survey nations, we used regression analysis to predict the hourly wage from various characteristics, using separate regressions for men and women in each nation. Then we assessed how much human capital factors may contribute to the sex gap in pay. For each factor, there are two estimates of how much it explains, reflecting whether we use male or female slopes, or rates of return. The table below summarizes some of the paper’s preliminary findings. The last row of the table shows that the sex wage gap is highest in Korea, with Japan coming in second place. In Taiwan, women earned about 82 percent of what men earned. For comparison, in the United States in 2003, the comparable wage ratio of female-over-male was 79.4 percent.

What factors might explain the sex gap in earnings? In Japan, the table shows (20 percent for the make slope and 34 percent for the female slope) that education is a key factor—notably, women are less likely to be college graduates. Another key factor is that women are more likely to work in contingent or temporary jobs than in permanent, full-time employment. In the Korea case, the difference between the male or female slopes is small, and 37 percent (male) to 32 percent (female) of the gap is explained, again, by education, as fewer Korean women have completed college than men. In Taiwan, a much lower share (6 percent for men and to 0 percent for women) is explained, mainly due to potential work experience, followed by employment status. In Taiwan, women actually have more education than men, as more women than men have completed college. This education imbalance supports our finding that the sex gap is largest in Korea, where women are less educated than men, and smallest in Taiwan, where the reverse is true.

Human capital factors (education and potential work experiences) seem to explain smaller proportions in the societies with a smaller gap. On the one hand, if we were to attribute all the elements of the gap not explained by mean differences in our supply-side measures to be sex discrimination, this would imply that a higher portion of Taiwan’s (albeit smaller) gap can explained by pay discrimination. On the other hand, women in Japan and Korea are disadvantaged, both in their educational achievements and their opportunities for regular employment. The contingent or part-time jobs that these women do pay less per hour than do the permanent or full-time jobs in which their male counterparts are employed. The EASS survey indicates, thus far, that economic prosperity and advancement in human capital factors may not naturally bring about sex equality in earnings.

Notes

¹  More information on the EASS can be found at http://www.eass.info.

²  Chin-fen Chang and Paula England "Gender Inequality in Earnings in Industrialized East Asia," to be presented at the Beijing RC28 Meeting, Renmin University, Beijing, China, May 14-16, 2009.

³  In this paper, we excluded Chinese data because the other three societies are more comparable to one another in terms of their economic development.