More on China being the “new Japan”
- 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.