Stein’s Law—named for the late economist Herbert Stein, who was chair of Richard Nixon’s Council of Economic Advisers—goes something like this: “If something cannot go on forever, it will stop.” (His son Ben Stein’s law, by contrast, is probably this.) It’s one of the few pithy economic phrases that has filtered into the popular discourse: So much so that in the past few years alone, it has been cited in columns by Charles Krauthammer, Robert Samuelson, and Paul Krugman.
Stein’s law has the rare distinction of being both tautological—by definition, if something can’t go on forever, it will stop—and also … well, perhaps not true. Recent geopolitical developments illustrate that Stein’s law is under severe strain. Could it be that, in our unpredictable, perverse world, even if something can’t go on forever, it still might?
Consider first, the news that Xi Jinping will rule China in perpetuity. Xi has now guaranteed himself lifetime rule over the three pillars of the Chinese political system—the military, the Communist party, and the state—and will not be forced to relinquish the presidency after two terms, as has been custom for decades. Personal freedoms, meanwhile, are contracting severely: After the comparably liberal reign of Hu Jintao, Xi has cracked down hard on free speech and assembly.
People have been predicting the collapse of China’s hybrid system for literally decades. The idea was that no government, no matter how powerful, could guarantee economic rights while simultaneously denying political liberties. Political liberalization, the theory went, would inevitably follow economic liberalization. To put it in Stein-ian terms, the Chinese system could not go on forever; it would stop. It’s been nearly 40 years since Deng Xiaoping commenced the gradual opening up of the Chinese economy—and yet the authoritarian state persists. Ditto for Chinese economic growth: We’ve heard, repeatedly, that its debt-funded, state-directed economy would soon collapse. I heard this back in 2002 (!), on my first trip to China. Suffice it to say, that hasn’t happened.
Now cast your eyes on Venezuela. The South American nation is in dire straits: Its GDP has shrunk by half since 2013. Medicine is in scant supply. Hunger is rampant. Surely, observers have said for years, this can’t go on: Nicolas Maduro’s government must collapse. The reasons are quite different—in China, things are too good to go on, whereas in Venzeula things are too bad to do so–but people still expect Stein’s law to take its course.
Of course, that was before Maduro’s party won a massive and “surprising” victory in regional elections last fall. And now it appears likely that Maduro, despite his record as probably the worst elected leader in the world, will win reelection this spring.
The most tragic refutation of Stein’s law is the continued existence of the abomination that is the Kim dynasty’s rule over North Korea. For more than 60 years, Koreans with the misfortune being trapped north of the 38th parallel have been ruled by a government that has starved them, imprisoned them, and brainwashed them. We’d like to think it can’t go on forever. But it hasn’t stopped.
Eventually all of these systems will end, of course. At a minimum, about 1 billion years from now, when the sun starts to boil the oceans. To paraphrase one of the other few famous economics phrases: Sure, China/Venzuela/North Korea will collapse in the long run. But in the long run . . . we’ll all be dead.
