How to Eliminate “One Size Fits All”? / Sheng Hong

e9a699e5a082

A few days ago, an article entitled “the State Council criticizes the social harm of demolishing constructions violated regulations with the style of “one size fitting all” was posted on the Internet, saying that demolishing “constructions violated regulations” all at once has lost 20 million jobs in China, which is rather conservative compared with the situation estimated in last year’s article of mine, “ordinary people’s livelihood, the foundation of a big country”. This kind of government departments’ concerted efforts to destroy the market and private property with great force will surely lead to the micro disaster of the common people and the macro recession of the whole society. In addition to “constructions violated regulations”, other aspects of “one size fits all”, such as urban scale control, comprehensive urban management, and environmental protection related coal to gas and the establishment of prohibited areas, have brought great impact on society. For example, in the context of African swine fever, the demolition of pig farms further reduced the supply of pork, resulting in soaring pork prices; forced closure of a large number of agricultural trade markets, building materials markets, street shops and stalls, homestays and farmhouses, resulting in the unemployment of tens of millions of people, ultimately showing a macro impact, adding frost to the background of slowing economic growth. Fortunately, the central government is still sensitive to these data and has adjusted policies in a timely manner. For example, the aforementioned criticism breaks the one size fits all rule, encourages small vendors and local stalls, and cancels a large number of restrictions on pig breeding, which may slow down the negative impact of “one size fits all” policy.

However, these remedial measures are not only to cure the symptoms but also to cure the root causes, and their policy means are the same as “one size fits all”. First of all, its purpose is to achieve the short-term single goal of the government administration. Such as slowing down the downward pressure on the economy, maintaining employment stability, or curbing the rise of pork prices. Secondly, it still adopts the form of administrative order. This will lead local governments to redouble their efforts to promote in order to flatter their superiors, and finally make excessive efforts to go to the other extreme. For example, if subsidies encourage pig raising, or even allow pig raising on basic farmland, it will lead to a large surplus of pig supply in the future, falling prices and serious losses for pig farmers. There will be a new round of one size fits all government policies. Third, the reason to stop the one size fits all situation is only the current emergency consideration. For example, to prevent the economy from continuing to decline, to lack the comprehensive rationality and legitimacy basis, and to relax the vigilance against one size fits all situation when the situation is not too severe, leading to policy swing. What’s more, we attribute the problem to “one size fits all” and blame the local government, avoiding more fundamental institutional problems. And if these institutional problems are not solved, one size fits all problems will never be solved.

Sure enough, when we just thought that the one size fits all “demolishing violated houses” behavior had been stopped, Cuicun town government in Changping District of Beijing issued an ultimatum to Xiangtang cultural village on October 17, requiring more than 3800 households in the village to demolish more than 500000 square meters of houses in one day, or it would be forced to demolish. Xiangtang cultural village is well-known in Beijing. It is a large-scale community formed by the self-built houses of the house purchasers in the local rural collective development mountainous area. It has a history of 20 years. It is said that the project was approved by Changping County People’s Congress, and the real estate certificate was stamped with the official seal of Cuicun town government. The ultimatum invokes the urban and rural planning law as the legal basis of the forced demolition, which actually violates the higher constitutional rights enjoyed by the local residents, namely, property rights and housing rights; the Cuicun town government negates the former documents with the latter documents, which can also negate the legitimacy of the ultimatum itself. Even if the former problems do not exist, it is beyond the reasonable scope of any normal person, not to mention a government, to require self-demolishing by the residents within one day. This shows that, despite the severe criticism of the State Council, “knife” is still “cutting”. If we want to cure the root cause, we must improve the system.

The first thing to consider is the decision-making mechanism of the central government. There are problems in these policy objectives of controlling the city scale, demolishing “regulation-violated buildings” and environmental protection. For example, the policy goal of controlling the size of urban population is based on the wrong theory of cities. Without government intervention, the size of urban population is adjusted by market mechanism. For example, when the market scope of urban radiation and the resources of urban survival and development are given, as long as the supply and demand of various resources can be adjusted by price, the urban scale can automatically reach a reasonable equilibrium level. Beijing’s slightly larger population is mainly due to the government’s excessive concentration of resources in Beijing, so if we want to reduce the population size, we need to transfer the resources improperly concentrated in the hands of the government to the market. On the surface, the main reason for limiting the size of Beijing’s urban population is the limitation of water resources, which can be solved by adjusting the price of water resources, without the government’s compulsive measures to reduce the urban population. The cost of raising water bills is nothing compared with the evil consequences of driving out migrants, forcing the closure of various markets and small shops, destroying citizens’ property and making thousands of people lose their livelihood in Beijing at the end of 2017.

The goal of environmental protection should be reasonable. Because of the economic externality of the environment, the market cannot fully function. However, environmental protection measures will inevitably have costs, including direct environmental protection costs, as well as economic losses of enterprises. If we only consider the value of environmental protection and ignore the economic losses and other losses, it may not be worth for the costs in the viewpoint of whole social welfare. Therefore, the environmental protection measures taken by the government should not be the traditional administrative means, but should take measures similar to the “emission trading” with the help of the market. In this kind of measure, the government sets a total emission limit and allocates it to all enterprises. Enterprises need to pay fees if they exceed the quota of “emission right”. Enterprises can not only pay cost to reduce emissions, but also purchase excess emission permits from other enterprises. The results will fall on the balance point of environmental protection and economic benefits. However, the characteristic of government administration is that it often overestimates the goal in order to achieve a single goal, while belittles or ignores other goals, such as the extreme slogan of “zero tolerance of environmental pollution”. Since there is “zero tolerance”, what’s wrong with tearing down the pigsty, or even the pigsty dozens of kilometers away from the city?

Moreover, once a certain goal is included in the policy goal, it will be mixed with the political consideration of the government. For example, in order to achieve “political achievements” in a short period of time, local governments are required to complete it within a very short period of time. Demolition of “violated buildings” has been implemented for many years. In many cases, the local government refers to the object of demolition as “violated buildings” in order to seize land. This has not had a significant macro impact from a national perspective. When the central government proposes to “demolish the violated buildings”, it will become a nationwide movement to achieve the goal in the short term. For example, according to the report, “since September 2018, the Ministry of agriculture and rural areas and the Ministry of natural resources, together with relevant departments and units, have set up a special action coordination and promotion group to organize and carry out special clean-up and rectification actions on the issue of” greenhouse houses “throughout the country.” They found that “there are about 168000” greenhouses “problems, involving the occupation of 130000 mu of arable land.” In this period of time, about 104000 mu of greenhouse houses were demolished, not thanks to the local government, but was the group’s great achievements. How can not such a strong lineup of the central government be “one size fits all”?

Therefore, to avoid one size fits all, we should first place the central government in the right place. This means that we should make clear the position of the government in the society. It is not the owner of the property of the whole society, nor the superior of all citizens, but the institution entrusted by all citizens to provide public goods. The first item of public goods is to protect the personal and property safety of citizens. Other public goods, such as environmental protection and urban management, are secondary public goods, while land use control is not public goods, but may be a public disaster. This priority structure has been clearly reflected in China’s legal structure. For example, Article 10 of the Constitution clearly states that “land in rural and suburban areas, except for land owned by the state as stipulated by law, belongs to collective ownership”. In other words, the property right of rural land belongs to rural residents. The property rights, whether regarded as “public property” or “private property”, are declared “holy and inviolable” or “inviolable” by the constitution. Who can not violate? It should refer to all people or institutions, including the administrative departments of the government.

The so-called “violated buildings” should generally be considered as a violation of planning under the premise of legal land rights. In fact, planning right is a kind of public power lower than land property right, and it should be a kind of reference noncompulsory public power. In the ladder of legal system, urban and rural planning law is the inferior law of the constitution. Because the appropriate mechanism to determine the effective allocation of land is the market, not the government. The nature of “valuing the rarity of things” in the market enables the landowners to effectively use the land according to the market signals. However, in the study of land economics, government regulation of land use has not been supported. Zoning, which deals with use control, was notorious from the start. Historically, the “Ghettos” in European cities was used to isolate Jews; in the United States, the zoning system was also used to isolate the rich and the poor, discriminating against ethnic minorities, including Chinese (O’Sullivan, urban economics, CITIC press, 2003, P. 284). Even a zoning system with good purposes is not necessarily better than a city without a zoning system. For example, the survey of Houston, a city without zoning system, found that it has more commercial strip development zones, and low-income people have more abundant and relatively cheap apartments. Others are similar to zoning (P. 295). Therefore, from the perspective of legal effect and practical effect, demolition of “violated buildings” is far less the priority of land property rights.

Therefore, if the rule of law is truly implemented in China, both the central government and the local government should act within the framework of the Constitution and the law, we should put citizens’ constitutional rights first, and recognize that administrative regulations, departmental rules or policies are legal only on the premise of not infringing these constitutional rights. In fact, due to the lack of constitutional education in the administrative departments of our government, most officials think that only the government policy is the supreme order, without considering the constitutional rights of citizens and institutions at all. In fact, only because of the commitment to protect the constitutional rights of citizens, the government has the legitimacy of existence. If we regard constitutional rights as an insurmountable existence, it is impossible for government rules or policies that violate constitutional rights to be implemented smoothly, or for policies to be implemented at the cost of infringing upon citizens’ property rights, let alone one size fits all problems. So if we want to eliminate “one size fits all”, what the central government has to do is to conduct constitutional self-examination of any administrative regulations and departmental rules, and conduct constitutional pre-examination when making policies, so as to put an end to the introduction of rules and policies that conflict with the Constitution and laws.

Administration within the existing constitutional and legal framework also has a issue of the due process to make regulation or policy. According to the legislative law, the formulation of administrative regulations and departmental rules should not only follow the constitutional and legal principles, but also have a due process, including holding hearings, listening to the opinions of stakeholders and experts, especially those against them, which should be discussed and adopted by the State Council or departmental meetings and signed by the executive head. Similar procedures are required for policy development. However, these “one size fits all” policies do not seem to follow the due process stipulated by the legislative law, neither discuss with stakeholders nor listen to experts’ opinions. When they were introduced, they were astonishing, and the implementation was even more sudden. For example, the ultimatum to Xiangtang cultural village was only informed to the residents one day before the deadline. In fact, policy research and discussion is a kind of thinking experiment or paper deduction of policy, which can foresee possible problems without implementation, and there is no need to actually make people and society suffer serious losses and then correct them.. But in recent years, the government’s policies are less openly discussed and criticized, and the policies themselves inevitably contain the content of violating citizens’ constitutional rights, let alone the victims of the policies.

In reality, the one size fits all behavior is rarely the initiative of local governments. Generally speaking, if the policies of the central government are harmful to the development of local economy, the local government should have no enthusiasm to implement them. For example, in Sichuan Province, tens of thousands of owners of leisure and tourism industry have been seriously damaged in the movement of demolishing greenhouses. It is said that the output value of leisure agriculture in Sichuan Province is about 160 billion yuan in 2018, accounting for 20% of the whole country. There are more than 30000 owners and 3 million employees. The demolition of greenhouses is the damage to Sichuan’s GDP, employment and tax revenue. Is that what the Sichuan provincial government would like to see? Only in some cases, the local government “actively implements” the wrong orders of the superior government. One is to seize the land. For example, “a farmer in Hubei who invested more than 50 million yuan to build a farm, in order to build a large-scale industrial park on this land three years later, the government will forcibly demolish it according to the principle of” violated building “, and only compensate more than 2 million yuan.” (Tencent News, “104 thousand mu of ‘greenhouse houses’ were demolished, and tens of thousands of leisure farm owners became’ cannon fodder ‘!” , October 14, 2019) In addition, some local officials speculate on the leaders’ intention and make political speculation.

However, in the absence of the rule of law in China, when the local government believes that the central government’s order may violate the interests of the local society, it is difficult for it to explicitly reject the “one size fits all” policy. Because what is obedience order and what is a one size fits all is not the local government has the final say. Don’t mention when the central government’s policies are considered wrong, they have the right to resist. In principle, the above principles applicable to the central government also apply to local governments. A local government should only be a government under the principle of constitution. Its primary task is to provide public goods to protect citizens’ constitutional rights. The criterion of judging whether an administrative act is correct is whether it is in accordance with the Constitution and the law, while the orders of the superior government can only be the supplement of the Constitution and the law. If it violates the Constitution and the law, the local government should have enough power to refuse to implement it. But it’s almost impossible. Because any local government official is appointed or removed by the superior government, and when they think they are wrongly treated, although China has the administrative procedure law, we have not seen a case where the subordinate officials “sue the officials” because they are dissatisfied with the punishment of the superior. That is to say, local officials have few legal means to help themselves from wrong punishment.

The one size fits all problem between the central government and the local government becomes more serious when it comes between the government and the people. Why can the 52000 square meter shed be demolished in one day? This is the problem. Compared with the local government, the people are powerless. Although both the Constitution and the law stipulate that the rural land belongs to the rural collective, and the inviolability of the property right and the housing rights, the legal system of our country cannot protect the constitutional rights. When the local government violates the land property rights when implementing some regulations or policies, the rural collective and other residents have no force to fight back. When they want to use legal means to protect their property rights, they find that the court is ordered by the party and government departments. For example, for quite a long time, the courts in our country basically do not accept land acquisition disputes, resulting in tens of thousands of group conflicts every year. There are not a few cases in which enterprises are shut down arbitrarily, their properties are damaged, and entrepreneurs are improperly detained, causing losses. When the court obeys the local party and government departments, how can citizens or enterprises who are infringed by the same departments get the protection of justice? Therefore, to eradicate the one size fits all behavior, we must protect citizens’ constitutional rights effectively, and make the judicial system be used to restrict and curb the abuse of public power.

In fact, a large number of so-called “violated buildings” are built under the call of the central government (such as “developing leisure agriculture, rural tourism”, etc.), the encouragement and investment attraction of the local government. The people of our country are not rich. They are naturally cautious when they put out large amount of money to invest or purchase housing and commercial facilities. So most people are encouraged by the government or even under the conditions of preferential policies, at least after seeing the endorsement of the local government for the project, they are willing to take out the real gold and silver. Therefore, in addition to the above-mentioned mistakes of using planning power to fight against constitutional rights such as property rights and housing rights, the local government also violated its effective commitment. Even if the legal basis of forced demolition is sufficient, there is also a problem of identifying the illegal liability. For example, if Cuicun town government sells houses first and then forcibly demolishes them, it is not only a problem of breach of contract, but also a problem of the legitimacy of the main body of the government. Because the government has an obligation to stop any breach of contract between two citizens, it cannot breach the contract itself in the first place. If the legal liability cannot be clearly identified, and when the two sides claim the conflict, it should be decided by a fair court. At this time, the local government can only be a party to the judicial proceedings, rather than a legal subject without any constitutional and legal constraints.

Of course, the implementation of constitutional rights is not only a judicial issue, but also a conceptual issue. Because any system to realize a certain social function is not a single system, but a group of institutional arrangements, or institutional structure. If we only rely on the judicial compulsory system, the social cost will be very high, so that we cannot effectively achieve the purpose of the constitution. Therefore, the concept of property rights is also important. However, although China has a long tradition of market economy, land can be freely traded since the Han Dynasty. Tang, song, Ming, Qing and Republic of China have always been a free trading country. However, thirty years of planned economy and the subsequent Cultural Revolution not only destroyed the market system in the tangible institution, but also interrupted the cultural tradition related to the market system. Therefore, the concepts related to the market system did not grow and take root naturally with the reform and opening up. Once there are some special circumstances, the concept of planned economy will play a role. For example, the government said that the city should be kept clean and tidy. So how? A simple idea is to remove those who are not clean and tidy stalls or street shops. At this time, a concept that violates the principles of market economy plays a role.

The most basic concept of market economy is to respect property rights. Why? Because if there is no protected property right, all other rules of the market are in vain. For example, competition is an important rule of market system. However, without property rights, competition rules cannot improve efficiency, but will lead to efficiency loss. When studying marine fishery, Professor Steven Cheung found that a fishing ground without property right boundary, because people can enter freely, will eventually reduce the rent value of fishermen, that is, the part of fishing income greater than the average wage, to zero. To generalize this conclusion is that competition without property rights is inefficient. In this way, only “respect property rights” is not enough, we should “awe”. At such a high level, people can prioritize different things. Of course, the government’s requirements for the city appearance are very important, but the government’s existence is to provide the most important public goods, that is, to protect property rights. It is obvious that the latter is much higher than and prior to the former between “orderly city appearance” and “reverence for property rights”. If the central government officials revere property rights, they will not issue so-called rules or policies at the cost of damaging property rights; if the local government officials revere property rights, they will fear before they start to forcibly dismantle them, or they may refuse to implement the wrong policies. In this way, the so-called “one size fits all” behavior will be greatly reduced.

Finally, when we think about the words “one size fits all” in Chinese (一刀切) carefully, we will find out how appropriate a metaphor it is. One side is “knife”(刀), the other side is “be cut”(被切); this reminds us of a idiom, “I am a fish while the other is a knife”. The knife is invincible, like entering the realm of no one; the fish has no resistance and will be slaughtered. This is a wonderful portrayal of the current situation of China’s system. As long as the government wants to do something, no matter what kind of constitutional right exists, it will not be an obstacle to the government, which not only has the will of “one size fits all”, but also has the ability of “one size fits all”. However, this is not a portrayal of a society ruled by law. In a society ruled by law, every citizen is the power source of the government, so the government rules and policies only exist in the administrative space under the premise of protecting citizens’ constitutional rights. When the government wants to implement a policy, it has to face a series of confrontations of constitutional rights from citizens to local governments. Such confrontations ensure that the social foundation will not be shaken, the negative factors in the policy will be eliminated, and finally the remaining policy influence can only play a positive role, so that the process itself can achieve appropriate social results. When we have to go to court, the court is the public organ for citizens, local government and central government to sue with equal rights. In this society, there is no “knife” at all, how is there the “be cut”?

October 24, 2019 in Fivewoods Study
October 25, 2019 published in FT Chinese

 

 

Author: flourishflood

Economist, Confucianist

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s