China’s economy is rosy only if you don’t mind that it’s shrinking, corrupt and sometimes deadly
Andy Stern, who led the SEIU to its current status as a statist political powerhouse, has a lengthy op-ed in the Wall Street Journal today, touting the wonders of China’s economic model. His basic point: China’s recent economic surge shows that government should control the economy. To support this premise, he points, not to China’s current economic status, but to its wondrous five year plan:
I was part of a U.S.-China dialogue—a trip organized by the China-United States Exchange Foundation and the Center for American Progress—with high-ranking Chinese government officials, both past and present. For me, the tension resulting from the chorus of American criticism paled in significance compared to reading the emerging outline of China’s 12th five-year plan. The aims: a 7% annual economic growth rate; a $640 billion investment in renewable energy; construction of six million homes; and expanding next-generation IT, clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection—all while promoting social equity and rural development.
Gosh! Propaganda really sounds good when it’s read out loud to an adoring, credulous audience.
Andy Stern
I’d like to introduce Mr. Stern to another article about the Chinese economy, this one by Gordon Chang, a veteran China watcher who’s actually paying attention to the details. Mr. Chang’s take, which is premised upon actual facts, not wishful thinking is a little different. With a wealth of detail, he points out that, as with all socialist experiments, China is running out of economic gas:
On Wednesday, HSBC roiled markets around the world by releasing its Flash China Purchasing Managers’ Index for November. The widely followed indicator dropped from 51.0 to 48.1, crossing the crucial line of 50 that divides expansion from contraction. Most worrisome, it appears that the factory sector is shrinking due to weakness in domestic, as opposed to export, orders.
The drop in the HSBC Index, which normally moves only tenths of a point at a time, is just another sign that the world’s second-largest economy is contracting from one month to the next. The troubling news follows October numbers, which also pointed toward a rapid falloff. There was, for instance, a sharp decline in inflation, collapsing real estate prices, and a big decrease in bellwether car sales. The wheels are coming off the Chinese economy, with indicators dropping faster than virtually all analysts—including me—predicted.
Chinese technocrats have already started to react, applying monetary measures. The People’s Bank of China, the central bank, this month cut its required reserve ratio for 20 co-operative banks to 16.0%, a reduction of a half point. Officials maintained that this move did not represent a change in their tightening policy, but, as Tom Holland of the South China Morning Post points out, the denial “stretches credulity.” PBOC watchers, therefore, see the limited relaxation as a hint that the institution will soon cut reserve requirements, now at historic highs, for all banks.
You can — and should — read the whole thing here, and then go back and compare it’s tight focus on real world economic facts and figures with Stern’s airy-fairy press release on behalf of Communism.
Let me toss one more thing into the mix here, which is James’ Taranto’s masterful take-down of Eugene Robinson’s love letter to China’s heavy-handed economic management:
Washington Post columnist Eugene Robinson is in Red China, where his shoe-leather reporting has turned up evidence that . . . Republicans are stupid. Seriously, that’s the subject of the first of what he promises will be several columns filed from Beijing. Let’s examine his closing argument, which responds to a quote from Rick Perry:
But this ignores the big picture. Yes, China is governed–in an authoritarian, repressive, at times shockingly brutal manner–by a regime that calls itself communist. But communism self-immolated two decades ago. Walk down any commercial street in Beijing and you see storefronts, venders and hawkers selling anything under the sun. Communism is no longer a system in China. It’s just a brand name that officials haven’t figured out how to ditch.
I’m aware, of course, of the shameful human rights violations that the Chinese government commits every day–and of the government’s selfish, corrupt insistence on maintaining a monopoly of power. These atrocities can never be forgotten.
But I’m betting that the burgeoning middle class will find a way to cast off these shackles. The correct response would be to cheer them on.So, to recap: China’s Communist Party has already abandoned communist economics for something that looks very much like American commercialism. Politically, however, it remains a brutal and corrupt one-party state. But that can’t last. Robinson both thinks and hopes that the Chinese people will rise up and change the regime.
OK, now here’s the Perry quote: “I happen to think that the Communist Chinese government will end up on the ash heap of history.”
Perry said the same thing Robinson did, only much more pithily and memorably. How does that make Robinson the smart one?
And just in case anyone has forgotten that the Chinese economy also runs on slave labor (a peculiar thing for a former SEIU head to laud) and criminal corruption, the links I just gave you ought to refresh your recollection.
My bottom line: Feudal, slave and communist economies all function the same way, which is to have a powerful central controls system over labor. It enriches a few, and impoverishes the many, both physically and spiritually. Even if it looks good on paper, it’s bad for the soul.
(Chinese factory photo by High Contrast.)
Cross-posted at Bookworm Room
Reactionaries like Stern should start to read the history of the Soviet Union and its five-year plan under Stalin, which led to the forced starvation of the Ukrainians, known as the Holodomor. Planned economies yield megadeath, as in the People’s Republic of China where Mao was responsible for the death of tens of millions, the greatest mass murderer in history.
What about our 5 year plan and our community organizer in chief, his plans and the beautiful new clean, green society we will all come to know and appreciate?
http://www.sustainablecommunities.gov/
http://www.epa.gov/smartgrowth/partnership/
A house a job and affordable transportation for all, along with necessarily skyrocketing energy costs to ensure its long term viability (lol).
I want clothes too.
And plasma tvs in all the rooms so I won’t miss a play when I have to pee.
“The wheels are coming off the Chinese economy, with indicators dropping faster than virtually all analysts—including me—predicted.”
I predicted this. I mean, how could you not see it? You just have to look at our housing bubble bursting in ’08 to know how it plays out. It is playing out like that in China. They just hide some of the facts wherever they can, because they are so thoroughly corrupt.
When the government controls the economy and they screw it up, do not expect transparency. Again, just look at our own economy and government to see that.
This stuff is just not that hard to see. You guys act like it is some mystery, like you are divining from entrails.
Here are some prognostications for you:
1) Gingrich will be the nominee. Why? Because the people have tried everyone else out. Romney is too unacceptable to many folks. Gingrich is (barely) acceptable to everyone. We will settle on him. Gingrich said as much yesterday. He knows. He can see it. He knows his business.
2) 2-3 months before the election, the market will begin to respond in positive fashion, when it becomes clear that Gingrich is going to win the election, and it becomes clear the Senate is going to go Red.
3) Until then, you should hold your gold. Before the Republican convention, you should sell your gold, and start buying stocks again in the companies which are sitting on lots of cash.
4) By the time Gingrich is sworn in in 2013, the economy will be in full recovery mode. We will start to see regulatory reform, and some tax-code changes. We’ll see huge amounts of drilling permits and the like. We will see ObamaCare repealed. We’ll also see some spending cuts, although not really deep, but some. The dollar will suddenly look really good, at that point. You better be ahead of that curve. Expect massive influx of cash into America, as foreign investors look to America.
5) Expect oil prices to fall dramatically, once the drilling permits get issued. This, too, will do much to spur the recovery. When it comes, it will be sudden and dramatic. You will be amazed at how powerful it will be. As fast as it crashed in ’08, is how fast it will recover. It has been ready to do so since Jun ’09. It has just been held back by Obama and Co. It is a coiled spring.
6) When it becomes clear that the recovery in America is the real thing, other economies around the world will begin to pick up. The slide will stop. Their currencies may then gain some versus the dollar, but the dollar will be king again. Some foreign currencies will be good short-term investments (quick profits). Just look for which countries will be taking actual steps to fix their problems, perhaps emulating the American example.
Get back to me in about 1.5 years, say Jun ’13? (I expect some gratuity.)
A lot of competent money managers (Jim Chanos and Vitaliy Katsenelson are two that come to mind) have been predicting the crashing and burning of China’s economy for a few years. Most of their recent growth has been from infrastructure construction, much of it unneeded (think the “Bridge to Nowhere” and multiply it by a few million.) They have built whole cities in the desert which are unoccupied. Such misallocation of capital cannot go on forever, and what can’t continue eventually ends. The only question in China is what kind of end will be reached, a manageable slowdown or a complete flop that takes the regime down with it, or something in between? Whatever it is, it may turn out to be the irony of the year that Stern has chosen this particular time to declare his love for crony capitalism, especially now that major cracks in the great wall have started to appear.
I visited China for a brief time last March. It was fascinating. While there, I noticed a lot of apartment buildings that appeared empty. There was a lot of construction underway but still, a lot of empty buildings. Then I saw articles on the ghost cities of China (do a Google search on that phrase). It was amazing. The government is spending a lot of money on things but it appears they’re over building by a huge factor.
As I see it, there are three major players in the international economy: the US, China and the Eurozone. We all know the Eurozone is in deep trouble, as is the US. Indications are that China is in trouble, too. Should any one of the three big players fall, it’ll likely take down the other two in a major international recession/depression. The political classes in all three of the big players has spent their countries into bankrupsy. This isn’t going to end well.
Stern comes from the MidWest Academy, a primary center for leftist organization, his kind would have been liquidated in 1927, in the increasingly more Kuomingtang like China,