In economics the labour force comes out of nowhere. Under capitalism children are still produced at home. Under slavery they were reared for profit. Children were reared collectively in kibbutzim and boarding schools. In industrialising Britain child labour paid for itself. Affluent societies rely on communal education. Even private schools are not-for-profit. The slogan of school choice was invented for racial segregation. Its appeal is social separation. For politicians and wealthy backers the charter school/free school/academy model is ideological money-laundering and opportunities for enrichment. Despite three decades of effort school choice has failed. Universities derive their economic support from student fees financed by government loans. This encourages expensive facilities, at the expense of students and staff. Student loans have become a lifelong burden exacerbating inequality. Bringing children to maturity relies on family altruism and public education. Other methods have failed.

In the United States a democratic impulse, multiple jurisdictions, and varied populations have facilitated corruption. Party machines relied on captive immigrant votes. Elected judges have corrupted the courts all the way to the top. Minority rule and voter suppression are rampant. Expert professionals take advantage of lay clients in finance, auditing, and healthcare. In healthcare doctors are venal and everybody cheats. A trilemma of democracy, governance, and markets cannot be resolved. In Britain, the neoliberal ascendancy relegated bureaucracy in favour of commercial cunning. Performance incentives replaced long-term government careers. Business and bureaucracy intermingle. Public service is hollowed out, diminished, outsourced, and privatised. There is little public benefit and no audit. Politicians and senior civil servants have been implicated in deep corruption. The Reagan–Thatcher revolution failed the public and has worked well for the rich.

Economics takes the view from the present. But as people become affluent, they care more for the future, which is what government provides for. In the twentieth century, government has grown faster than the economy, and even Conservative governments have failed to wind it down. The reason is that markets take the short view and cannot provide for the future on their own. Before the nineteenth century, interest was seen as usury, rent as parasitical, and profit as exploitation. In response, the neoclassical economics of the 1870s came to the defence of privilege: property was legitimate, interest and profit were the cost of patience, the reward for capitalist energy and enterprise. Markets were the natural order, government and taxes parasitical. Since the 1980s governments have embraced markets as enterprising, innovative, efficient, superior. But privatisation, deregulation, and outsourcing have not fulfilled their promise. Government has not gone away. An outline of the book concludes.

Reducing air pollution, a leading cause of death, has become a critical goal worldwide. However, the degree of success has varied greatly, even in the same locality over time. Theories and empirical studies so far mainly explain the static existence of pollution. The major social science explanations for the existence of pollution are: (1) sacrificing environmental quality at the altar of the economy; (2) pursuing short-sighted environmental planning; and (3) exploiting information asymmetry to weaken environmental monitoring and enforcement. However, they do not explain the systematic temporal variation in environmental policy implementation. This book fills this critical gap and takes a different view than the existing works regarding several factors that explain reported changes in air quality, namely the manipulation of air quality data by subnational officials and the effect of ad hoc, top-down implementation campaigns on actual air quality. The rest of the chapter provides an overview of the mixed methods used, intended audiences, and a roadmap for the book.

PM2.5 has more complex sources and formation processes than SO2, creating a greater regulatory challenge. The chapter lays out new policies and standards to curb PM2.5. Shen then uses both satellite-based and officially reported data on PM2.5 concentration to examine its interplay with growth, stability, and regulation. Officially reported data reflect what subordinate leaders wish their superiors to know, while satellite-based data are more objective. The results show that before PM2.5 control entered promotion criteria, local leaders were incentivized to gradually order laxer regulation of polluters during their tenure for social stability and (reported) economic gains, resulting in political pollution waves. However, after certain prefectures’ evaluation criteria incorporated gradually more aggressive PM2.5 reduction, political pollution waves continued based on satellite-based statistics, though officially reported local monitor readings seemed to suggest much-attenuated pollution waves. Thus, changing incentives of local cadres and monitoring was insufficient to dampen PM2.5 pollution waves. The nature and complexity of individual pollutants matter for effective regulation.

Chapter 4 analyzes how mineral resources shape the state–capital relations in resource-rich regions. It argues that the symbiotic relationship between local state and resource capital can easily become collusive under the resource boom. Through studies of resource-related corruption cases, it demonstrates how the state’s regulation and interference in the resource sector create structural opportunities for rent seeking and collusion between the regulators and regulatees and how the resource windfalls turn local government departments into hotbeds for corruption. Through panel data analysis on the corruption rates of Chinese provinces, it testifies that resource-rich regions are indeed more corrupt than other regions. This chapter suggests that mineral resources amplify the existing loopholes in the Chinese political economic system and highlights the danger of local state capture by resource capital.

Based on the findings of the empirical chapters, Chapter 6 recapitulates the impacts that rich mineral resources generate on the state–capital–labor triad in China. It analyzes in detail the Chinese state’s coping strategies to mitigate the resource curse at local levels. Moreover, it explains why the Chinese state is able and willing to take the observed strategies to contain the resource curse. The key lies in the Chinese Communist Party-state’s strong capacity to penetrate into the economy and the society and also in its top-down monitoring and tight control of the local agents. In the end, this chapter critically evaluates the successes and pitfalls of the China model of resource management.

The concluding chapter highlights the key finding that local political incentives can cause powerful, systematic policy waves independent of top-down implementation campaigns. To demonstrate the theory’s applicability beyond China, this chapter examines air pollution trends in municipalities in Mexico. Like local political leaders in autocratic China pleasing their superiors for promotion, local politicians in democratic Mexico face incentives to cater to the desires of their constituents and bolster their political parties. Shen finds a significant peak in PM2.5 concentration level due to regulatory forbearance in municipalities during gubernatorial election years. The chapter demonstrates that across countries and regime types local leaders may opt for laxer regulation to achieve career goals. Yet, environmental policies are not always sacrificed to economic development, employment, and stability. This book’s findings are timely for policymakers and academics studying the determinants of effective regulation and illuminate a solution centering on cooperation between scientists and policymakers to effectively manage complex pollutants.

Chapter 2 opens with a description of mineral resource distribution and the development of mining industries in reform-era China. It then examines the impacts of resource endowment on local economic development, with a focus on capital accumulation and investment. Through qualititative studies on mining entrepreneurs and statistical analysis on Chinese provinces, it shows that resource boom in general benefits capital by not only boosting capital accumulation in the mining industries but also generating positive spillover effects on other industrial sectors, especially those labor-intensive ones. However, resource-generated capital tends to impede the investment in high-tech industries and induce speculative investment in real estate, which may discourage industrial upgrading and undermine economic growth in the long run. Therefore, resource boom has rather mixed effects on local economic development.

Chapter 5 analyzes how mineral resources affect local provision of public goods. Through case studies and statistical analysis, it shows that local governments in resource-rich regions tend to spend less on human capital-developing public goods, including education and health care, due to the diminished demand for labor, the myopic decision-making of both citizens and officials, and the shedding of government responsibilities onto mining enterprises. On the other hand, wary of the tension between mining industries and local citizens and driven by the pressure to preserve social stability, the local governments in resource-rich regions spend more fiscal revenue on social security benefits for disadvantaged citizens. The redistribution of the resource wealth from resource capital to labor partially compensates for the latter’s welfare losses. Overall, while resource-rich regions have weak incentives to invest in human capital development, they do spend more on redistributive policies to redress popular grievance and ameliorate resource-triggered social conflicts.