An Economic Anthropology Blog
The “Ghost in a Shell” lecture shed some interesting light on informal financing that has been going on in Ordos. Until recently, Ordos had been a relatively poor municipality, but extensive coalmining within Ordos brought wealth to the region. The region quickly urbanized, with real estate increasing 9 fold in the first decade of the millennium, and a booming informal economy developed. The speed and flexibility of the informal finances made it more attractive to many than the formal economy, and thus the extent of the informal finances reached seemingly everyone. I found it interesting that many people could make more money from informal financial transactions than from their formal salary. In the talk, it was quoted that 62% of the adult population were involved in informal financial transactions, but Woodworth believed the percentage to be even higher. Because of the great influence of informal finance in Ordos, when the speculation bubble popped in 2011, a large percentage of the population would have been thrown into financial predicaments. Many people had entered into informal financial transactions with family or friends. Woodworth talked about how the economic crisis ruined many relationships—another example of how economics is invariably affecting relationships and social interactions. What sounded like mafia style actions were taken by lenders to get their money, and it would be interesting to see if these same tactics are as prevalent in formal lending or if more proper methods are used to ensure payments.
Informal finance took a municipality that had been historically poor, and made it into one of the richest areas in China by taking advantage of the resources that had begun to be taken advantage of. Informal finance was not only its own market that grew exponentially during this time, but a market that help contribute to the increase in price and production of coal within Ordos and also helped to create the large real estate market, where many citizens of Ordos made their wealth. The influence of informal finance and its ability to help in really creating these other booming markets, shows its potential and the power that it can hold, as shown in Ordos. The crash of the informal finance market in 2011, took a city that many saw to be moving very quickly into a great future, and turn it into a ghost town. Through government interference and the pop of the bubble that seems inevitable in every market, many people in Ordos lost everything. The government did not bail out these informal money lenders as governments often do with state affiliated banks, so the economy of Ordos was decimated.
I thought Dr. Woodworth's lecture was very interesting. I was aware of massive unfinished buildings inside of districts in china, but I also doubted the truthfulness behind it. It amazed me to see the rapid rise of business and development inside a community and the equally rapid decent from booming are to ghost town. His insight and study into informal economies was very informative, as well. Prior to his lecture, and this class, I had no prior exposure to legal forms of informal economies. I thought it was innovative and handy to have a way to lend money even though it has been around for a long time. However, it shows how economies and booming industries can collapse if growth happens too fast without allowing financial stability to be placed. Regarding his lecture quality, I believe he did very well. I enjoyed his speaking style. His use of visuals and quality of visual information was a great way to keep the audience engaged and able to follow what you are saying. I did not like the other professors or guests who asked questions, however. In my opinion, everyone who had a question proceeded to tell Dr. Woodworth that he was wrong, and then proceed to tell him why they think he was wrong, RATHER than propose questions that could further develop research or clarify information.
I found this lecture extremely interesting. The striking part to me was the social implications of these informal economies. Because of a boom in mining money flooded the region and many people relied on informal financing and other forms of non-regulated economies. The social implications of these were far reaching, indeed after the collapse, pictures of fraudulent people showed up in the newspaper. Another extreme example was the rise in suicide rates following the crash due to social exclusion and in some cases shaming. I think it is always important to remember that the economy is always related to social interactions and in many cases before the industrial revolution the economy revolved around social relationships.The overall feel of the lecture was great. Dr. Woodworth seemed very knowledgeable and established ethos from the beginning talking about his extensive time spent in China and specifically Ordos. The lecture was also interesting because of the opposing viewpoints brought up at the conclusion. I thought that this added to the arguments that Dr. Woodworth was putting forth.
This lecture of informal finance was very cool since it was centered around economic ephemera of the ordos municipality in western china. The speaker had three arguments; based off informal finance, how urbanism replaced industrialism, and the implications of china's economic change. The speaker spoke of inner mongolias high production of coal in the mid-2000's; highly redistributive forms of saving, housing, demand, and income growth. I found it interesting that underground banks in Ordos contain creditors that are the most common forms of capital. Ordos has a speedy and flexible system of repayment (long-term loans). Ordos is centered around connections of urban finance; enlargement of urban change in the area was the only way to receive dividends. Informal finance supplements the income (easy money; not meager salaries at ordinary jobs through dividends). Financial institutions in Ordos acts as growth, pragmatic to regulation. The growth is pragmatic to regulation, "informality" exists as a state of dregulation. The most interesting part of the lecture was about the information of ephemeral and abnormal phenomenons; the social transformations by resource booms. He said that enduring transformations are productive episodes. The emptiness in ordos is connected to the social ties generated in the social system (women were central in underground banks within ordos). Eager and widespread engagements point towards a widespread picture. Informal lending enlists and entrains formal finance. Finance was depicted as a powerful social aspect, not for pecuniary gains, but for the broadening of urban transformations!
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