More on China being the “new Japan”

China being the “new Japan” is a claim I have made multiple times before. The pattern is/will be the same:

• First, China will emerge and American will feel threatened;
• China will then seem ubiquitous if only because people are looking for it more often;
• China will purchase things that seem quintessentially “American,” and the jingoist rhetoric will heat up;
• Economic manipulation will cause China’s economy to look comparatively better than ours, increasing calls for statist intervention;
• China will blow up;
• Nobody will care anymore.

We are almost to the end of this cycle. China’s books are so bloated with fake money and unsustainable corruption, the blowup is inevitable (though no one knows when). However, that has not stemmed the tide of calls for statist intervention along the lines of the “China model.”

And so I present an article (admittedly old, which I had bookmarked and forgotten about), by Ross Kaminsky about how the Chinese model is the wrong model for the United States, notwithstanding certain calls for imitation. Here is an excerpt, but as always, you should go ahead and read the whole thing.

The professional left in America and their chattering-class useful idiots have followed a consistent pattern for a century: sympathizing with tyranny in their musings over how to implement policies fueled by jealousy and an undying fear of economic liberty.

There has hardly been a better example in recent years than Andy Stern’s Wall Street Journal December 1st op-ed entitled “China’s Superior Economic Model.” In his article, Stern approvingly quotes Intel Corporation co-founder and former CEO Andy Grove who stated in a 2010 Business Week article that there is “emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better.”

…As someone who was studying economics in college in the mid-1980s, I endured countless comments about how American corporations’ narrow focus on “next quarter’s earnings” (as if that were true) was congenitally inferior to the longer-term view supposedly taken by Japanese companies.

Over the next several years, the Japanese bought Rockefeller Center (from my alma mater, Columbia University), CBS Records (purchased, renamed, and still owned by Sony), and the famed Pebble Beach golf course.

Harvard professor Ezra Vogel published (actually in 1979) a book called Japan As Number One: Lessons for America, in which he argues, as a reviewer for the Economistmagazine put it, “that the United States should give itself a political and cultural heart transplant.

…In 1995, the Mitsubishi Group, which had purchased Rockefeller Center, forced the project into Chapter 11 bankruptcy, losing nearly two billion dollars for their efforts. And a few years later, as GolfDigest‘s Mark Seal put it, when Peter Ueberroth put together a group to buy Pebble Beach for less than the Japanese had paid for it, the deal “bankrupted a Japanese boom-time golden boy, and, most recently, sent an army of Japanese bankers back home with little to show for their seven years of superlative stewardship but their good names.”

Since then, Japan has turned in not just one but two “lost decades” with its persistent near-zero interest rates frequently being described as “pushing on a string.” According to a recent Heritage Foundation study, “In 2010, the Japanese economy looks to have been smaller than it was in 1992, an incredibly poor result. It is not just a matter of a decline in output; it is also a remarkable decline in total wealth.

…So when you hear people — especially non-economists with political agendas — long for the statism that characterizes most of America’s economic competitors, listen with great skepticism.

That, in a nutshell, is exactly the kind of progression I am talking about. If you are interested in bubbles as a phenomenon, or at least a further explication of the Japanese bubble (and many others), I would recommend “Devil Take the Hindmost,” by Edward Chancellor.

And then I would recommend some reflection on the current state of Chinese “state capitalism,” as if such a thing could possibly exist in the long term.

A Word from Wisconsin, and My Fundamental Problem with Unions

By now, all of my readers are likely to be apprised of the situation in Wisconsin, vis-a-vis public sector unions.  If not, the brief story is that new governor Scott Walker and the newly Republican state congress are attempting to pass a law outlawing collective bargaining rights for certain public sector workers, except over limited wage increases.  Naturally, this has led to much hissing, spitting, and general venomousness. 

Because when I want a raise at work, the first thing I do is march on the Capitol…

Everyone knows that we are out of money.  Wisconsin is trying to plug a $3+ billion budget shortfall.  And everyone knows that the public sector unions are a huge part of the problem.  They are institutionalized corruption.  First, they collect dues from their members, then they funnel those dues to politicians, then once said politicians are elected, they receive overly generous and completely unsustainable benefits packages, leading to more dues collected, and so on. 

That’s why teachers’ union members cannot be fired, even if they have sex with children; that’s also why police union members cannot be fired, even when they drive drunk and beat their wives; that’s also why so-called public safety officers have run up seven-figure legal bills defending civil suits over their abuse of citizens – with no consequences. 

But really, it’s all about a “living wage.”  Yeah…that’s the ticket.  (And for no good reason, the Wisconsin bill excludes the police!)

Much has been made about the nature of public sector unions, as opposed to their private sector brethren, but I don’t see it.  Yes, I understand how electing the people you are going to “negotiate” with for your next pay raise is the very definition of a conflict of interest, but that obscures the fundamental problem.  In my opinion, there is very little difference.

The reason why I find so little difference between public sector and private sector unions is because neither one operates outside the aegis of the government.  Sure, one group gets their overinflated paychecks signed by the state comptroller, and the other group gets their overinflated paychecks signed by a corporate officer, but both groups’ paychecks got overinflated in the same way.

The union labor movement, public and private, has been amazingly thorough in ensconcing themselves in the highest levels of the power elite.  And that is exactly why unions are not viable without specific governmental intervention.  For example, a majority of states still don’t have right-to-work laws, and thus they allow unions to force membership on anyone unfortunate enough to get a job in a union shop, whether they want to join or not.  In this context, it is simply silly to assume that private sector unions are any different than public sector unions.  After all, the coercion carries the force of law whether you work for the state or not. 

Is there any doubt that Detroit would be better off without such labor laws choking off the auto industry’s competitiveness?  Of course there is no doubt – but the private sector unions have Michigan’s government in a stranglehold, and they are not about to loosen up.  Neither is this some David vs. Goliath fight.  For all the talk about the Chamber of Commerce’s influence on the 2010 elections, the labor movement would prefer you not to know that, when it comes to spending on government lobbying and electioneering, unions are the “big dog,” and it doesn’t matter whether they are public or private.

And the labor movement doesn’t just influence elections – the people they elect often pass laws perpetuating the union’s influence far beyond election day.  And they have been hard at work increasing the labor movement’s scope, to the point of absurdity.  For example, did you know that in the highly publicized “labor” battle between millionaires and billionaires NFL players and team owners, federal labor law forced the taxpayers to pick up the bill for this mediation, simply because these overprivileged millionaires belonged to a union?  I can think of better uses for my tax dollars, thank you.

Did you know that the government can label a company a “sweatshop” for being non-union and thus prevent it from working on county projects?  And to give you an indication of the fairness of the process involved, consider this gem of a quote from your friendly local legislator:

“(Union organizers) would not be sitting there if something wasn’t going on,” Councilman James R. Ellenbogen, D-Banksville, said in announcing his support to an audience filled with union activists and company employees. “This is not a court of law, but I’m a working guy and I believe what they say.”

So slander is totally fine, just as long as you’re ”a working guy”?  You can call one of the few remaining steel companies in the United States a sweatshop simply because “something’s got to be going on”?  And then you have the temerity to wonder why there aren’t any sizeable steel companies in the United States anymore?

Of course, none of this changes the overarching principle.  It does not matter whether your union represents government workers or not.  Your union exists because of the government.  Remove the intervention and you’ve removed the problem.

Then again, that is not an acceptable solution to the labor movement – they like their special privileges, thank you very much.  But it would be far more fair to those who are currently on the outside looking in.

A History Lesson from New Amsterdam

I happen to be reading a comprehensive American history at the moment (Conceived in Liberty, by Murray Rothbard), and because of my personal heritage, I was drawn to the history of Dutch rule in North America, specifically in what we now call the “middle colonies” of New York, New Jersey, and Delaware.  New York, formerly New Amsterdam, was foremost among them.

Dutch-American history is generally not taught, in favor of Anglo-American history, and with good reason.  New Amsterdam, Fort Orange, Fort Good Hope, Breukelen (Brooklyn), New Amstel, and other Dutch settlements were short-lived and poorly-run, and as Americans we owe far more of our national character to our British ancestors.

However, this does not mean we cannot learn anything from our Dutch forebears.  Contrary to the liberality that we normally associate with Holland, and which liberality was totally accurate to describe the “Republicans” of 17th century north Holland (now The Netherlands), the North American colonies under Dutch control were settled mainly by elements of the rigid, theocratic “Orange Party,” centered in the southern provinces (now Belgium), and allied closely with the Calvinist church.  As a result, these settlements were anything but free.  It is my contention that this ensured their quick demise.

So why was it that the Dutch settlements were so relatively thinly populated, as compared to English settlements in Massachusetts Bay, Plymouth, and Virginia?  Frankly, it was high-handed autocratic rule - a kleptocracy.  Beginning with Peter Minuit, followed by Willem Kiefft, and culminating in the governorship of Peter Stuyvesant, Dutch rule was immediately and obviously contrary to the interests of the Dutch settlers. 

Thus, although it is taught that the Dutch colonies were “conquered” by the English sometime around the second Anglo-Dutch War (1664 or so), it turns out that the Dutch were never conquered at all.  They preferred to accept English rule in return for treaty promises of freedom of religion, retention of prior property rights, freedom of trade, freedom of immigration, freedom from conscription, and a guarantee against billeting of soldiers in their homes.  New Amsterdam, over the strenuous objections of kleptocrat Peter Stuyvesant, simply surrendered.

So what does this have to do with us?  Well, for one, it gives us some indication of how to build an unhealthy, vulnerable society, against which the populace will be inclined to revolt.  After the removal of former governor Kiefft due to citizen objections to his high-handedness, Stuyvesant was installed and proceeded to do more of the same.  However, and I’m quoting Rothbard here:

…Stuyvesant elaborated a sophisticated refinement.  After enmeshing the economy in a network of restrictions and prohibitions, Stuyvesant in return for heavy fees sold exemptions from these regulations.  In short, Stuyvesant saw that the key to walth for a government ruler is to create the opportunity for monopoly privilege (for example, by outlawing and regulating productive activities) and then to sell these privileges for what the traffic can bear.”

Sound like anything familiar?  How about unions, especially those in the public sector?  President Obama got labor union support for PPACA, bought and paid for through exemptions for unions – for example, the Cadillac tax.  Bush and Obama both wooed the labor vote (and perhaps more importantly, the labor money) by basically handing over GM to the unions, despite well-established precedent of creditor priority.  And every state that does not have a right to work law “outlaws and regulates productive activities” by forcing union labor on the populace.  Federal laws require the use of union labor, to the detriment of those willing to do the work without special privilege.

In any case, the evidence supports the idea that the modern union is absolutely not a vehicle for moderating disputes between powerful corporations and their workers.  It is merely a vehicle for extraction of political privilege. 

Of course, I will not go so far as to accuse our politicians of graft (Stuyvesant was forcibly retired, but he managed to amass a vast fortune that kept him comfortable until his death), but the basic point is less wealth than it is power.  Our political parties, both Democrat and Republican, have long understood – as did Peter Stuyvesant – that the best way to create an artificial constituency is to place restrictions on everyone, and then grant freedom to the chosen.  In this way, the chosen will always support you, and the restricted will always look for ways of becoming one of the chosen.

(Note to those who have been wondering why I haven’t posted in a while.  I’m not giving up; I’ve just been very busy.  Keep checking back!)

More poetic justice courtesy of health care “reform”

Over at Reason, Peter Suderman reports, in an article called Labor Union Health Fund Drops Children’s Health Coverage, Blames Obamacare: 

How do you know when your fancy new progressive health law ain’t working so well? Even health funds run by big labor unions blame decisions to drop kids’ coverage on the law’s new health insurance burdens:

“One of the largest union-administered health-insurance funds in New York is dropping coverage for the children of more than 30,000 low-wage home attendants, union officials said. The union blamed financial problems it said were caused by the state’s health department and new national health-insurance requirements.

The fund is administered by 1199 SEIU United Healthcare Workers East, an affiliate of the Service Employees International Union….The fund informed its members late last month that their dependents will no longer be covered as of Jan. 1, 2011. Currently about 6,000 children are covered by the benefit fund, some until age 23.” [emphasis added]

Of course, everyone loves free health care until they have to pay for free health care.  Pardon the pun, but it looks like this labor union will be getting a taste of its own medicine.