Lejoyeux points to the “Florence syndrome,” described by French novelist Stendhal in the 19th century after he was overwhelmed by the beauty of Michelangelo’s David. The “Jerusalem syndrome” refers to “mystical” events and hallucinations experienced by some visitors to the holy city. “Traveler’s syndrome is an old story,” he said. The Paris syndrome is different in that it stems from the reality falling short of romanticized expectations. The visitors have to contend with unfriendly locals and tourism professionals who aren’t always welcoming, Zhou said. “Waiters are impatient, they don’t speak English,” he said. “Our clients tell us: Parisians are mean.”
The existence of this surplus labor, in turn, has two effects. First, for a while such countries can invest heavily in new factories, construction, and so on without running into diminishing returns, because they can keep drawing in new labor from the countryside. Second, competition from this reserve army of surplus labor keeps wages low even as the economy grows richer. Indeed, the main thing holding down Chinese consumption seems to be that Chinese families never see much of the income being generated by the country’s economic growth. Some of that income flows to a politically connected elite; but much of it simply stays bottled up in businesses, many of them state-owned enterprises. It’s all very peculiar by our standards, but it worked for several decades. Now, however, China has hit the “Lewis point” — to put it crudely, it’s running out of surplus peasants. That should be a good thing. Wages are rising; finally, ordinary Chinese are starting to share in the fruits of growth. But it also means that the Chinese economy is suddenly faced with the need for drastic “rebalancing” — the jargon phrase of the moment. Investment is now running into sharply diminishing returns and is going to drop drastically no matter what the government does; consumer spending must rise dramatically to take its place. The question is whether this can happen fast enough to avoid a nasty slump.