The Department of Economics Theory, History and Development Seminar series presents

“Size and Dynastic Decline: The Principal-Agent Problem in Late Imperial China 1700-1850”
with Tuan-Hwee Sng, Princeton University

Monday, November 28, 2011
3:30-5:00 p.m.
Social Science Plaza B, Room 3266

This talk will argue that one reason for China’s relative economic decline in the 19th century was its size. A ruler governing a big country faces a severe principal-agent problem. Given his monitoring difficulties, his agents have strong incentives to extort from the taxpayers, especially the politically weak ones. To prevent over-exploitation that could foment rebellion, the ruler has to keep taxes low. The result is the paradox of low state revenue despite a heavy tax burden on the poor. Economic growth could further exacerbate the situation as it increases the incentives for corruption. Tuan-Hwee Sng will apply this model to late imperial China and explain that its predictions are well supported by empirical evidence. The Qing state taxed lightly and official land tax burdens were especially low in regions far from the capital. Furthermore, the fiscal and managerial capacity of the Qing dynasty began to contract steadily during the prosperous 18th-century, sowing the seeds for China’s socio-economic problems of the 19th-century.

For further information, please contact Gloria Simpson, simpsong@uci.edu.

 

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