Views on the News: China's social credit system
Nelson Sa (ECON)
Big data and artificial intelligence: a perfect mix to elicit age-old Orwellian fears. Broadly speaking, reputational mechanisms are pervasive in our lives, and credit scores are heavily used in countries like the United States. Debtor-targeted policies like the ones making the rounds in the latest news require, however, excellent governance. Expedited and transparent mechanisms need to be in place for individuals to dispute and correct errors. Sharing large databases across multiple platforms adds new risks for hacking and identity theft. In a political system prone to complex bureaucracy, individuals may easily get entangled in petty review processes and become subject to abusive rent-seeking behaviors. In the meantime, anyone marked as a debtor under such public conditions may be precluded from a large range of economic opportunities, facing layers of punishment that go beyond those legally prescribed. By the end of the day, when technological development outpaces the ability of institutions to handle new challenges in a fair and prompt way, distortions arise, and incentives may fail to accomplish their intended goals. Policies cannot be evaluated in isolation. Different areas of institutional development need to be addressed (in particular in the workings of the financial, legal and political systems in China) before initiatives of this kind can inspire broader trust.
Nelson Sa is a Lecturer in the Economics Department Specializing in Macroeconomics and Industrial Organization.
Alexander Holtmann ’21
The Chinese Social Credit System is in fact nothing outrageously new. In Nudge Theory, political agendas and behavioral economics are used by governments to change the environment so that a desired outcome - the citizens’ behavior - is achieved. What is new about the Chinese system, however, is how severely it paralyzes citizens’ access to important resources. The problem with this is that it sets personal debt equal to harming the public. One could only imagine this system on a college campus or at a Federal Reserve; we would be drowning in shame. In light of the Chinese government’s agenda to mass surveil its citizens, this is yet another tool that will further foster insecurities and public tensions. Looking forward, no changes are planned to make platforms less revealing, as the goal of them is to feed into a finger-pointing culture that abides the rule of the governing party’s ideology.
Alexander Holtmann ’21 is an Economics and Philosophy double major and an undergraduate Researcher at the Center for German and European Studies.
Alden Good ’21
I feel that while this system may accomplish a practical goal for the Chinese government of eliminating a good deal of debt that might be present. It seems as though this system is another form of the Chinese Communist Party re-engaging in an invasion of privacy that was once quite normal and is, unfortunately, becoming normal once more. This is to say nothing of the millions of marginalized elements that have emerged in recent years. Exposing and exploiting the debt of these persons, who have often times gone unpaid by their government, would be an immense hypocrisy on their part. While the ultimate outcome of this program is unknown, it will no doubt serve to create an immense resentment in the already displeased Chinese people while perhaps having little to no effect on the actual debt that people may hold.
Alden Good ’21 is a Politics and Economics double major.
This approach to China’s debt system is reminiscent of an episode of Black Mirror and has nothing but negative implications. While China generally has lower household debt than most Western nations, there has been a rise in debt within the past 15 years. This means of trying to shame people into paying their debts does not seem effective; this is under the assumption that everyone is motivated by public shame to improve their social standing and that people are simply not paying their debts due to laziness. The software is supposed to target those that have withstanding debt, despite their ability to do so but not everyone has the same social circumstances. Money that the government assumes can be used to pay debt might be used to pay medical bills or other familial expenses. A better way to address the issue might be to create more debt-forgiveness programs that allow people to work off their debts, in a sense.
Nia Lyn ‘19 is an Associate Editor for the Justice