Why China Does Capitalism Better than the U.S.

[Richard]

Fukuyama was wrong last time...and this time?

And so it goes...

Richard

Why China Does Capitalism Better than the U.S.
Time, 20 Jan 2011

One of the great ironies revealed by the global recession that began in 2008 is that Communist Party–ruled China may be doing a better job managing capitalism's crisis than the democratically elected U.S. government. Beijing's stimulus spending was larger, infinitely more effective at overcoming the slowdown and directed at laying the infrastructural tracks for further economic expansion.

As Western democracies shuffle wheezily forward, China's economy roars along at a steady clip, having lifted some half a billion people out of poverty over the past three decades and rapidly created the world's largest middle class to provide an engine for long-term domestic consumer demand. Sure, there's massive social inequality, but there always is in a capitalist system. (Income inequality rates in the U.S. are some of the worst in the industrialized world, and more Americans are falling into poverty than are being raised out of it. The number of Americans officially designated as living in poverty in 2009 — 43 million — was the highest in the 51 years that records have been kept.)

Beijing is also doing a far more effective job than Washington of tooling its economy to meet future challenges — at least according to historian Francis Fukuyama, erstwhile neoconservative intellectual heavyweight. "President Hu Jintao's rare state visit to Washington this week comes at a time when many Chinese see their weathering of the financial crisis as a vindication of their own system, and the beginning of an era in which U.S.-style liberal ideas will no longer be dominant," wrote Fukuyama in Monday's Financial Times under a headline stating that the U.S. had little to teach China. "State-owned enterprises are back in vogue, and were the chosen mechanism through which Beijing administered its massive stimulus."

Today Chinese leaders are more inclined to scold the U.S. — its debtor to the tune of close to a trillion dollars — than to emulate it, and Fukuyama noted that polls show that a larger percentage of Chinese believe their country is headed in the right direction, compared with Americans. China's success in navigating the economic crisis, wrote Fukuyama, was based on the ability of its authoritarian political system to "make large, complex decisions quickly, and ... make them relatively well, at least in economic policy."

These are startling observations from a writer who, 19 years ago, famously proclaimed that the collapse of the Soviet Union heralded "the end of history as such ... That is, the end point of mankind's ideological evolution and the universalization of Western liberal democracy as the final form of human government."

Fukuyama has had the good grace and intellectual honesty to admit he was wrong. And he's no apologist for Chinese authoritarianism, calling out its abuses and corruption, and making clear that he believes the absence of democracy will eventually hobble China's progress. Still, as he noted in the Financial Times, while they don't hold elections, China's communist leaders are nonetheless responsive to public opinion. (Of course they are! A party brought to power by a peasant rebellion knows full well the destructive potential of the rage of working people.) But the regime claims solid support from the Chinese middle class, and hedges against social explosion by directing resources and investment to more marginal parts of the country.

China's leaders, of course, never subscribed to Fukuyama's "end of history" maxim; the Marxism on which they were reared would have taught them that there is no contingent relationship between capitalism and democracy, and they only had to look at neighbors such as Taiwan, South Korea and Singapore to see economic success stories under authoritarian rule — although the prosperity thus achieved played a major role in transforming Taiwan and South Korea into the noisy democracies they are today. Nor were Beijing's leaders under any illusions that the free market could take care of such basic needs as education, health care and infrastructure necessary to keep the system as a whole growing.

But Fukuyama also made a point about the comparative inability of the U.S. system to respond decisively to a long-term crisis. "China adapts quickly, making difficult decisions and implementing them effectively," Fukuyama wrote. "Americans pride themselves on constitutional checks and balances, based on a political culture that distrusts centralised government. This system has ensured individual liberty and a vibrant private sector, but it has now become polarised and ideologically rigid. At present it shows little appetite for dealing with the long-term fiscal challenges the U.S. faces. Democracy in America may have an inherent legitimacy that the Chinese system lacks, but it will not be much of a model to anyone if the government is divided against itself and cannot govern."

Money has emerged as the electoral trump card in the U.S. political system, and corporations have a Supreme Court–recognized right to use their considerable financial muscle to promote candidates and policies favorable to their business operations and to resist policies and shut out candidates deemed inimical to their business interests. So whether it's health reform or the stimulus package, the power of special interests in the U.S. system invariably produces either gridlock or mishmash legislation crafted to please the narrow interests of a variety of competing interests rather than the aggregated interests of the economy and society as a whole. Efficient and rational decisionmaking it's not. Nor does it appear capable of tackling long-term problems.

China is the extreme opposite, of course. It can ride roughshod over the lives of its citizens (e.g., building a dam that requires the forced relocation of 1.5 million people who have no channels through which to protest). But China's system is unlikely to give corporations the power to veto or shape government decisionmaking to suit their bottom lines at the expense of the needs of the system as a whole in the way that, to choose but one example, U.S. pharmaceutical companies are able to wield political influence to deny the government the right to negotiate drug prices for the public health system. Fukuyama seems to be warning that, in Darwinian terms, the Chinese system may be more adaptive than the land of the free.

http://www.time.com/time/world/artic...sletter-weekly

[uplink5]

The problem with Chinese capitalism is that it doesn't require Democracy. It is becoming the manufacturing capital of the world with a capitalist economy and an authoritarian government. I guess one question then is does Democracy need capitalism to survive? I believe the answer would be yes since you'd be hard pressed to find one that doesn't practice capitalism. That said, it would appear that Mr Fukuyama thinks the US's form of capitalism doesn't necessarily provide enough "protection" for individuals to take risks with their opinions.
So much for the free market....hmmmmm?

I would argue that Chinese capitalism is a great thing...for the winners. One problem for the loosers though is that profitable assets too easily and too often end up back in the governments hands, turning the risk takers-into eventual loosers. They'll still make money, before they loose their money making machines. Once the economy started going into the toilet in 2008, masssive amounts of government investiment and lending put these troubled industries squarely into the govenments coffers. Sound familiar? I wonder who got the ideal from whom?

Then we have the flat-out siezures of successful businesses....

Read an example of this here:

Grabs such as this or "protections" by the government have been made accross the board from internet based companies, mines, and airlines. Small mom and pop joints seem to be safe for now but, if it starts getting ugly again, we'll see....jd

[Texas_Shooter]

China's capitalism works so well because the authoritarianism. No Union or Labor Groups to drive up the wages. No real healthcare system (not enough skilled personnel). No Environmental Protection Agency. No environmental laws to prevent rapid expansion in industry. Less bureaucratic mumbo jumbo. Not to mention all the people that they have to put to work.

America needs to switch to that type of economy again. Less services economy and more of a production economy. Unemployment would go down. Trade deficit would slowly disappear and we could get to economy that was similar to that of after WWII.

Problem is...who do we sell our stuff too?

[Texas_Shooter]

Originally Posted by Broadsword2004

Is China's Bubble Close to Popping?.

Yes. You can only grow so fast. There bubble is bigger then the ten year bubble that America experiences. The Chinese government can only pump so much into its economy to keep it going. Eventually it will pop and that it is when will start to have problems.

We do manufacture tons of things but, we do not manufacture like we used too.

[akv]

Mr. Karon is either an incurable optimist, or napped through world history. China through the ages repeats a cycle of open trade and prosperity, revolution due to income gap, then poor isolationism. Perhaps it will be different this time, though the Brooklyn Bridge is always on sale too...

America has her flaws but this comparison is beyond laughable, no disrespect towards "superior chinese tiger mothers", but anyone who lauds the merits of Chinese leadership is well served to recall the five year plans or the war on sparrows.

What has changed in the geopolitics of China, to foster a belief in true secular change instead of the apex of the cycle yet again? Too many people, to little arable land, massive income gap, it's a perpetual powder keg.

[Texas_Shooter]

Originally Posted by akv

What has changed in the geopolitics of China, to foster a belief in true secular change instead of the apex of the cycle yet again? Too many people, to little arable land, massive income gap, it's a perpetual powder keg.

Second that prediction.

[silentreader]

Originally Posted by scooterdude713

China's capitalism works so well because the authoritarianism. No Union or Labor Groups to drive up the wages. No real healthcare system (not enough skilled personnel). No Environmental Protection Agency. No environmental laws to prevent rapid expansion in industry. Less bureaucratic mumbo jumbo. Not to mention all the people that they have to put to work.

America needs to switch to that type of economy again. Less services economy and more of a production economy. Unemployment would go down. Trade deficit would slowly disappear and we could get to economy that was similar to that of after WWII.

Problem is...who do we sell our stuff too?

Let's not throw out the baby with the bath water. Instead of posting a long response, I'm just going to post a story about the Cuyahoga river in Ohio, which caught on fire 3 times in that post WWII golden age...

On June 22, 1969, an oil slick and debris in the Cuyahoga River caught fire in Cleveland, Ohio, drawing national attention to environmental problems in Ohio and elsewhere in the United States.
This Cuyahoga River fire lasted just thirty minutes, but it did approximately fifty thousand dollars in damage -- principally to some railroad bridges spanning the river. It is unclear what caused the fire, but most people believe sparks from a passing train ignited an oil slick in the Cuyahoga River. This was not the first time that the river had caught on fire. Fires occurred on the Cuyahoga River in 1868, 1883, 1887, 1912, 1922, 1936, 1941, 1948, and in 1952. The 1952 fire caused over 1.5 million dollars in damage.

On August 1, 1969, Time magazine reported on the fire and on the condition of the Cuyahoga River. The magazine stated,

Some River! Chocolate-brown, oily, bubbling with subsurface gases, it oozes rather than flows. "Anyone who falls into the Cuyahoga does not drown," Cleveland's citizens joke grimly. "He decays". . . The Federal Water Pollution Control Administration dryly notes: "The lower Cuyahoga has no visible signs of life, not even low forms such as leeches and sludge worms that usually thrive on wastes." It is also -- literally -- a fire hazard.

Because of this fire, Cleveland businesses became infamous for their pollution, a legacy of the city's booming manufacturing days during the late 1800s and the early 1900s, when limited government controls existed to protect the environment. Even following World War II, Cleveland businesses, especially steel mills, routinely polluted the river. Cleveland and its residents also became the butt of jokes across the United States, despite the fact that city officials had authorized 100 million dollars to improve the Cuyahoga River's water before the fire occurred. The fire also brought attention to other environmental problems across the country, helped spur the Environmental Movement, and helped lead to the passage of the Clean Water Act in 1972.

Is that really the sort of America we want to return to? China and industrial America should not be our model as we move into the future... innovation is the key, not some misguided attempt to turn back the clock.

-SR


Edit to add: 2009, The Cuyahoga River; Past, Present Future

The fish are the ongoing and
future story: In the 1960s,
virtually no fish were found
between Akron and Cleveland.
Today, there are more than 40
species up and down the river.
Later this year, an
ever-increasing fish population,
along with aquatic insects, in
the river may allow the
Cuyahoga to meet EPA
guidelines for the first time
since the law was put in plac

[akv]

As the Soviets found out before you can have stability, they need to get past the below first, Communism is just the most recent flavor of a centuries old tradition of totalitarian rule. You can jump to the other end of the spectrum too, have massive government control with privatization as well, a la Fascism, though that didn't turn out so well for the German and Italians either. I'm not sure what China is at this moment, but I know what she isn't.

Our Republic, freedoms, and capitalism are as everything a work in progress, but compared to the Chinese, GET REAL.

( I can't remember the source)

This is the lie of communism. It's supposed to create an egalitarian society where everyone is working together for common goals. Instead it creates a society where people are forced to publicly subscribe to different ideals than their actual ones. Deprived of market mechanisms, interactions between the state and citizens, or among citizens, are based on force (or the threat of force) and exchange of "favors"...generally involving something punishable by law. Interactions based on "favors" bring in opportunity for deceit, or the threat of force. They mean that everyone is a criminal waiting to be caught. People who are not burdened by feelings of honor, remorse or fairness thrive in such environments better than those who are.

Under capitalism, interactions between citizens can generally be openly-negotiated, assigned financial value, recorded, and even enforced by civil courts. Openness translates into honesty, because I can tell everyone about my interactions with you (without fear of punishment).

[Richard]

Support capitalism, not capitalists?

Richard

[Texas_Shooter]

Everyone loves capitalism when the capitalist are reaping in the money. Its when the capitalist start to trample on the average Joe is when the democracy kicks in and helps out by balancing it with government regulation. That's what happen with John D. Rockefeller, Andrew Carnegie, and J.P. Morgan. The EPA, labor laws, and Unions helped shape the country that we live into today by showing those men and other presidents and CEO's that you can not trample on the average Joe anymore. Sometimes they take it to far with their Unions and ask for too much (I.E. pensions and what not, along with unemployment benefits).

But in the grand scheme of things America has the better end of the stick. We have a slower much more controllable growth where China on the other hand can only sustain so much growth before it starts to slow down and then...

Originally Posted by akv

Too many people, to little arable land, massive income gap, it's a perpetual powder keg.

[tonyz]

FWIW - the link below may be of some interest.

Transparency International publishes an annual Corruption Perceptions Index, which tracks the level of government corruption in 180 countries. Transparency International defines corruption as - the abuse of public office for private gain. The rating scale ranges from zero to 10. Zero is thoroughly corrupt and 10 is clean.

Look at the Asia Pacific region - resource and publications – Corruption Perceptions Index.

http://transparency.org/regional_pag...ific/resources

[Dusty]

Originally Posted by scooterdude713

Everyone loves capitalism when the capitalist are reaping in the money. Its when the capitalist start to trample on the average Joe is when the democracy kicks in and helps out by balancing it with government regulation. That's what happen with John D. Rockefeller, Andrew Carnegie, and J.P. Morgan. The EPA, labor laws, and Unions helped shape the country that we live into today by showing those men and other presidents and CEO's that you can not trample on the average Joe anymore. Sometimes they take it to far with their Unions and ask for too much (I.E. pensions and what not, along with unemployment benefits).

But in the grand scheme of things America has the better end of the stick. We have a slower much more controllable growth where China on the other hand can only sustain so much growth before it starts to slow down and then...

China can grow exponentially given our national resources, which IMO is their obvious long range goal.

[Texas_Shooter]

Oh that is one more reason China Capitalism is a shade better then us. Their state owned Oil Companies CNOOC, CNPC, and Sinopec have no problem paying off officials in third world countries to get the oil that is needed to run their country, while on the other hand the SEC pushed the Foreign Corrupt Practices Act which prevents are executives from doing that.

[ZonieDiver]

Originally Posted by scooterdude713

Oh that is one more reason China Capitalism is a shade better then us. Their state owned Oil Companies CNOOC, CNPC, and Sinopec have no problem paying off officials in third world countries to get the oil that is needed to run their country, while on the other hand the SEC pushed the Foreign Corrupt Practices Act which prevents are executives from doing that.

Dude, do you wear a helmet when you ride that scooter?

[GratefulCitizen]

China does capitalism better than any nation in history...
At least that's the case for the 426 square miles of China known as Hong Kong.

Freedom of religion, near laissez-faire economy, and a legal system based on English Common Law.
It's a wonder the place hasn't devolved into total anarchy!

The creative abilities of unleashed human minds are more important than resources and a powerful central government.