Coal mine accidents in a "properous dynasty" (盛世"的矿难), - solution simple, but takes determination

Another 134+ workers perished in Heilongjiang, this time in a state owned coal mine. "Accidents killed more than 2,700 miners in the first half of this year alone."

The painting shows Mao Zedong on his way to Anyuan (安源), Pingxiang City (萍乡), a coal mine in the west of Jiangxi province, just north of the famous Jinggangshan (井岗山)

• "Everyone old enough in China will know this picture...Mao (and Liu Shaoqi) went to Anyuan to tell the workers, "your working condition was horrible, what you dug is your own blood, you live a live worse than that of cow and horse, this is all due to an unreasonable system; therefore, you should stand up, organize your own union, protect your own interests, and overthrow the unreasonable system"... 80 years have passed, what are the fates of the mining workers?... I am reminded of a black joke, thanks to the Party, we finally can live like the cows and horses now!"
• "现在中年以上的中国人都会清楚地记得一幅曾经铺天盖地的画——穿长卦的青年毛泽东手拿一把伞走在去安源煤矿的路上，画名就叫《毛主席去安源》。
  且不论搞农运起家的毛泽东进入以刘少奇为主导的工运圈是否偷天换日违背史实，重要的是，毛或刘去安源干什么？他们是去那里告知矿工，你们的工作条件很差，你们挖出来的是你们的血，你们过的是牛马不如的生活，而这一切都是一个不合理的制度造成的，所以，你们必须站起来，组织自己的工会，维护自己的利益，推翻不合理的剥削制度。这，是不争的史实。 将近八十年过去了，中国矿工们的命运如何？......我想起一个黑色笑话：旧社会，我们是牛马不如，感谢党，我们终于过上如牛马的生活了！" - "盛世"的矿难

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To be sure, China's mining workers do make more money now than many rural farmers and migrant workers (picture compares the condition of coal miner in Manchuria 1940 and Yunnan 1990s, not much improvement from the Japanese colonists). That is because they are risking their lives on a hazardous job. According to this post (in Chinese, more pictures in the link)

• Mining workers can make twice as much as their counterparts who operate on top of the mines, i.e. RMB1000-1500 a month. The highest paid worker in the large mines in Shanxi could make RMB3000.
• However, a portion of the pay is "taxed" by corrupted managers.
• Many mines operate on minimum facilities. i.e. no breather, minimum machinization, hence slashing the cost of mining by as much as 70%, to about RMB 40/ton
• The miners are paid by the amount of coal they mined, so they often continue to work even if the gas concentration in air exceed the recommended safety standard of 1%
• There is a back-of-the-envelope calculation on the economics
• Worker can move 50kg per trip, 20 trip/day, making about RMB30 for 1 ton he moves
• Wholesale price is about RMB135 (450-500 for hig quality coal), miscellaneous other cost about RMB20-30, owner makes about RMB80/ton
• The right to mine a 50k ton pit costs about RMB0.8M. So the owner can recoup the cost in the first year

What does the economics tell us? There is significant profit margin even if the mine owners spend more to improve the safety of these mines.

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I have previously discussed about the need of a quantifiable incentive system for China's bureaucracy. I am aware of the fact that such scoring system do exist for the high level official, especially in terms of key figures such as GDP growth. What I am not sure is how such system can be improved and implemented. A few weeks ago The Economist has a great report on the "Greening of China" (or here), about the points systems and the inadequacy of it.

• "AN ELABORATE points system that determines the careers of officials is often blamed for many of China's problems. Targets are usually set by the next-highest level of the party (for party leaders) or government (for government officials). To minimise the need for subjective judgments, they are often very precise.
• A leader is told that his area must achieve a certain rate of GDP growth, attract a certain sum of inward investment and increase government revenues by a specified amount.
• Some of these are designated as “veto” targets: failing to meet them will ensure that the cadre is rated as underperforming, even if he scores well in other areas. GDP growth, population control and social order are often among the veto categories.
• In their drive to meet targets for economic growth, local mandarins squander money, ride roughshod over citizens and ravish the environment. So now China is trying to devise and embed into its assessment of officials a way of calculating a “green GDP”—which allows for environmental costs in national accounts—to help mitigate some of these excesses.
• Last February, the government said that ten regions, including Beijing, were carrying out a pilot project in green GDP assessment. Pan Yue, the deputy director of the State Environmental Protection Administration, said a “framework” for a green GDP accounting system could be unfolded within three to five years. This would make China the pioneer of a statistical approach that no other country has adopted—and which many economists around the world eschew as an attempt to quantify the unquantifiable."

This is good. I am glad that China is using an objective measure to achieve its objectives. This is really how China Inc should be run. The measure and the system are bound to be imperfect from the start. But any thinking along this line is already a great start.

The safety of the coal mines and the responsibility to control pullution can also be enforced by such system.

• First, "veto" scoring needs to be implemented in the local official appraisal system. Recently China imposed fines for those violating safety standard and even shut down some of the privately operated mines. That is a good start, but far from enough. Heads need to roll, at least some heads in the officials and some in the commercial side. Incentive needs to be tough and quantifiable.
• e.g. is 200-220k RMB per life enough for the Qitaihe accident? should there be punitative penalty? For smaller mine owners, should there be deposit (and insurance) in case they would go bankcrupt?
• Should the local government also be punished and fined?
• But the top down approach is not enough. Someone needs to be given the incentive to monitor the situation. For example, insurance need to be enforced, with high pay-out floor. Then the insurers will do their job in checking and enforcing safety standards are followed. And insurers should be empowered to do so by law.

"Accidents and disasters cause more than 1 million casualties annually in China. They also bring economic losses of 650 billion yuan each year, equivalent to 6 percent of gross domestic product, according to Wang Jikun, a senior official with the Ministry of Public Security. "

650billion Yuan, 6% GDP. Dear President Hu, and the local officials, here is the economic incentive to justify the cost for doing this.