I don’t usually press my financial articles on people. I’d much rather you go watch the hilarious comedy “The Retributioners,” or listen to my often eclectic but increasingly accessible rock music on the right hand side of this page. But if you want some insight into the China and its economy, you might like this article I wrote for Financial Advisor magazine.
First of all, China has taught us that free markets are superior to ones that are totally government controlled. In 1979, Deng Xiaoping introduced market reforms to China, conferring a special economic zone status on a sleepy fishing village. That village, Shenzhen, has become one of the fastest-growing cities on the planet, a place where China still tries out new free market experiments while also learning how to balance it with its responsibility to its people’s well-being. To the shame of the Chinese, they have not yet developed Western style free speech, and the country’s human rights record is abysmal–government critics are imprisoned, vital AIDS statistics are suppressed, and the country is in denial about the environmental impact of its boom. These are all things to fear about a country not totally awake from its legacy of totalitarianism. But don’t let these things cloud your vision of what the country has done economically or get confused that free markets alone are saving it. What’s making the country better is a sober-sided and smart mix of capitalism and socialism both.
Now that it has been unleashed, China is now about to explode with a rampant consumer economy. More than half of its population is still rural, and as the country inevitably urbanizes, it will gobble up the world’s iron, copper, oil and coal. It’s become the biggest market for cars and, according to some sources, for energy. Its economy has fuel to burn. This growth was threatened by the economic crisis of 2008, so China’s government did what any responsible leaders would do: they spent money on stimulus. About a trillion dollars. This has kept their GDP humming while the United States’ has faltered. Some say that China’s growth can’t be compared to ours, because it’s a actually a brand new economy with lots of room to run. A country where many of the cell phones and cars have yet to be bought, where there are few hackneyed businesses and lots of room for innovation and enterprise. Nevertheless, government stimulus indubitably can help an economy out of trouble when markets overheat, an idea that short-sighted Americans have either forgotten, out of impatience in 2010, or deny themselves, out of ideological fanaticism because fanaticism is part of their identity, much like their old company t-shirts and pet rocks.
It’s a bit harder to see how a mature economy such as ours can explode again when we first have to cut out all the cancer–the overleveraging, the overspending, the abundant undeserved credit. Some say we just wait for the next tech bubble and get rid of our government in the meantime. That’s a cruel, nihilistic philosophy, and if that doesn’t chill your heart, let’s just call it completely wrong. For anybody with a memory (hard to find in the United States), I’ll remind you that America got through the years of the New Deal (let’s say 1932 to 1980) with high progressive taxes and Social Security and Medicare, and at the same time we created computers, lasers, televisions, FM stereos, new ways of distributing and preserving food, new ways of communicating and we went to the moon–all under the aegis of what is now called socialism by the right wing. This large government presence didn’t hold America back one damn bit. In fact, if it didn’t create the middle class, it certainly helped preserve it.
Unfortunately, these people wearing tricorne hats and waving “Don’t Tread On Me” flags have learned the wrong lessons from Ronald Reagan. Our economy will indeed come back in the next couple of years, but it will likely be because we take up where we left off (pursuing all the bad habits Dutch left us)–by selling IOUs to each other, insuring them, and trading monopoly money and putting that in place of productivity. We can also hold our breath and wait for a new asset bubble. But what they don’t realize is that China (and oil-rich nations with lots of petrodollars) are going to continue to fund it, because we refuse to pay for the things we demand. Some of us want roads. Some of us want firemen. Some of us want to build bombs. But whoever it is in charge, Americans love to spend other people’s money. If I thought the Tea Party would address that issue, I might take sides with them. Unfortunately, they won’t. The “Leave Me Alone” party wants it all for free and won’t tell you the truth about any of these issues. They wave the flag and scream that they are victimized–somehow while they are also stomping on people’s heads.
And elsewhere, the highly productive Chinese will be earning their strong economy and handing our asses to us.
this is a relatively well thought out piece, although you come to many illogical conclusions. You should bring this discussion to places where a discussion could take place without blogosphere censorship – like my site, which I won’t name as I’m not here to self-promote.
It’s too bad you have to approve all the messages first, rather than let the conversation flow. Kinda anti-first amendment, no?
quick censorship isn’t really censorship. embarrassed I am…;)