The China Myth

It's amazing to me that people that should know better are so quick to assume that China will remain an economic powerhouse even though the world is in negative growth. I suspect they don't give credibility, likely due to a hype bubble euphoria which attached superhuman powers to China, to fundamental contradiction that will ultimately cause the Chinese experiment to fail. Simply put, a command economy can't manage the complexities of the current global dislocation. It's too large, fast, and complex for a narrow group of decision makers, regardless how capable they are, to handle. The special conditions that enabled this narrow decision making system to work in the past are now over.

For example, note the large number of analysts that are still predicting that China may drop to 8-9% growth next year.

Comments

[gmoke]

Reading about the massive (to us) lay-offs in China this past week, I was thinking about what that might mean there. From what I've read, China needs 10-12% annual growth rates in order to absorb the new workers coming up each year and the migrants coming into the cities and out of the villages. There are a lot of new expectations and a young, hungry population, a young, hungry, male population with not enough women to go around. Lots of room for frustration levels to grow.

[James Bowery]

Actually, China has a relatively easy route to meaningful reform:

Sun Yat Sen was a student of Henry George and is still revered in both mainland China and Taiwan. Moreover, the mainland Chinese have, at times, adopted assessment mechanisms that are similar to those proposed by Henry George in his land value taxation proposals -- and Hong Kong's highest growth era took place under an LVT system.

All they need to do is go to a single tax on land value paying out with a citizen's dividend -- as proposed by George and Sun Yat Sen -- and they've turned their command economy into a rent-free market democracy.

[James Bowery]

Actually, China has a relatively easy route to meaningful reform:

Sun Yat Sen was a student of Henry George and is still revered in both mainland China and Taiwan. Moreover, the mainland Chinese have, at times, adopted assessment mechanisms that are similar to those proposed by Henry George in his land value taxation proposals -- and Hong Kong's highest growth era took place under an LVT system.

All they need to do is go to a single tax on land value paying out with a citizen's dividend -- as proposed by George and Sun Yat Sen -- and they've turned their command economy into a rent-free market democracy.