Posts Tagged ‘china’

Chinese GDP to surpass US by about 2016 or so

Friday, August 14th, 2009

We are already seeing some people heading off to China and opportunity: “Shut Out at Home, Americans Seek Opportunity in China”

According to the CIA, not always a reliable source, China’s 2008 GDP is about 7800 000 000 000$, US 2008 GDP is about 1429 000 000 000$.  Since China is growing about nine percent faster than the US …

In many important respects it has already surpassed the US.  Innovation in the US is very rapidly drying up, while we are seeing dramatic and important innovations coming out of China – for example improvements in the synthesis of liquid fuel from coal, the new CBHD (High density DVDs at low density prices), and critical advances in the most esoteric of the pure sciences, General Relativity.  They are on the leading edge in heavy industry, consumer goodies, and basic pure research.

Although Mainland China is in part still a centralized command economy based on terror, pillage, and murder, in other important ways it is vastly more capitalist than the US. It absorbed capitalism from Hong Kong, which was a lot closer to the hard core capitalism of Manchester and the Industrial Revolution than the diluted and castrated capitalism of the US and Europe, therefore can expect rapid growth rates that catch up to Hong Kong and Singapore, thus massively surpass the US and Europe.

It is often said that America has rule of law and China does not, yet we have lost track of the difference between rule of law and rule of lawyers:  Reflect on the numerous outrageous patent-the-wheel lawsuits and the destruction of the light plane industry when lawyers discovered they could sue people who build planes for not building them as wisely and well as lawyers and courts supposedly would have.  The car industry and the vaccine industry nearly went the same way, requiring federal interventions that suspended what we are now calling rule of law for some industries, but not others.

A big Chinese advantage is that their political elite is less arrogant and less out of contact with reality.  It is willing to acknowledge that government interventions can fail, can have bad results.  When government intervention fails cataclysmally in the US, then that branch of the government is immediately given more wealth, power, and prestige, that area of the economy promptly becomes more socialist.  When government intervention fails in china, then that branch of the government eventually loses wealth, power, and prestige, that area of the economy becomes less socialist.  Thus remaining socialism in China are those parts of socialism that are functioning well, while newly expanded socialism in the US, for example accounting, finance, and perhaps soon health care, is failing disastrously.  The American governing elite is solidly immersed in a cloud of lies and denial, rationalizing away, or simply lying barefaced, about all their failures.  The Enron case led to increased government intervention against truthful accounting, rather than diminished government intervention against truthful accounting, the disastrous losses from affirmative action lending led to an increased takeover of the finance industry, and we are likely to soon see the same in health care.

The Chinese elite still tends to the traditional chinese and communist view that the political elite are the genuinely productive ones, and the entrepeneurs are parasites, and if they were to act on that view, they would return China to the poverty and chaos it has long endured.  Because of this continual threat, the entrepeneurial class in China is to a substantial extent overseas based and cyberspace based.  Chinese companies are largely run through servers located in tax havens, but such non violent defenses could easily fall to a sufficiently determined attack.  Meanwhile, however, the US government is engaged in a sufficiently determined attack on tax havens, having recently successfully pressured the Swiss to deny financial services to Americans, blissfully unaware of the increasing dependence of the American economy on entrepeneurial skills and knowledge mediated through such havens.  Interpreting the golden goose as a parasite, as a challenge to their authority and a rejection of their superior wisdom, they prepare to slay the golden goose.

The success of globalization

Tuesday, August 12th, 2008

Massive globalization — a major move towards free market capitalism — has brought over a billion people out of poverty, while sixty years of socialist chaos and violence has failed to convince most of the world that central planning is a very bad way to run any economy.“Ruble” symbolizes pretend money, unconvertible into goods, much as “Finland” symbolizes submission to a hostile power, and “Peso” symbolizes inflation.

Globalism has done what socialism promised to do and failed to do: It has lifted those parts of the third world that adopted it out of poverty. If you have been shopping for a subnotebook, this should be obvious. Globalization means that if you are using a subnotebook, you are using a subnotebook designed and built in a country that recently used to be third world and used to be socialist, but which has moved substantially towards free market capitalism.

Socialism aimed to create an alternative to normal economic transactions, an alternative that would avoid such banes of capitalism as business cycles, windfall profits, and unemployment. Socialists expected to that their benevolence, wisdom — and absolute power backed by the most brutal extremes of savage violence — would bring the poor out of poverty, but instead chained the poor into serfdom and slavery.

Socialist transactions usually involved crises, shortages, unfullfillable quotas, and the continual threat and frequent reality of violence.

To do what they were commanded to do, administrators under socialism had to do what they were forbidden to do — the plan functioned, in so far as it did function, through an illegal underground black market economy. To enable the military plan to be fulfilled, troops lurked on the road to intercept and seize goods planned for other purposes. Civilians substituted the black market for the plan, and the military substituted pillage for the plan.

The Soviets created a Potemkin village of normality, thinly concealing a chaotic and violent reality that people were forbidden to notice.

Socialists interpret trade and business as fraud and violence, which gives them continual cause for war, especially war on their disarmed and frightened subjects. The failure of socialism was and is blamed on internal and external enemies. Somehow, capitalism was continuing, so more violence was required. If poverty is caused by wicked capitalists, and poverty continued, then obviously capitalism must be continuing, and must be hunted down and crushed.

“Globalization” is that Walmart and China are entwined, that American business phones are manned by Indians in India, and as a result of globalization, a major part of the third world, most importantly India and China, are now becoming first world.

Globalization is a success, a success as obvious and spectacular, as socialism was a spectacular and dreadful failure.

Lots of planning and state intervention remains — and lots of violence and chaos remains. But to the extent that do we have globalization, it has succeeded spectacularly. Its crises are the crises of success. If Chinese were still trudging around barefoot in the mud and snow, we would not have the present energy crisis.

There is still a lot of state intervention and state owned enterprises, in China and elsewhere, but there is now a lot less of it, and what there is accepts capitalism, rather than trying to fix capitalism. No more “iron ricebowl” in China.

China still has extensive state owned enterprises, but they no longer have monopoly privileges – they are subject to competition, and required to make a profit. If they lose money, the management is fired. If they continue to lose money, everyone is fired – which is one hell of a lot less socialist than America’s Amtrack, and features business cycles, windfall profits and unemployment, all the things that socialism and state intervention was justified as remedying. The resource crisis has led to huge windfall profits by Chinese resource businesses, and of course lots of Chinese state owned enterprises have shut down for inability to turn a profit, leading to unemployment, plus the whole economy is coordinated through just in time contracts organized by firms run from outside China, through private contracts with global businesses, not through a government plan. The Chinese economy is run through virtual private networks managed by overseas servers, the servers largely located in places such as Bermuda, which virtual private networks and servers are the nerves and sinews of globalization.

And to the extent that such intervention has been dramatically reduced, and transformed in ways that make it less disruptive of capitalism, transformed in ways that accept the unpredictable outcomes of free market competition, and the winners and losers that such competition produces, the poor have become vastly better off.