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11A022
Hu's China
by Jim Davies, 1/22/2011
Its government is fascist, of course, like ours; it has little more to do with communism than ours has to do with freedom. But it used to be communist, and the change has let loose one of the most exciting and beneficial changes in history. Starting in the late 1980s it actually relinquished some of its power, which is extremely rare; instead of owning and operating industry, it allowed a large measure of freedom for anyone who wanted to trade and make money. The result has been spectacular; 8% and 9% annual growth rates, year after year, in a country of 1.3 billion people, four times our own size. Like all fascists they still regulate the process and milk the profits, but no longer attempt to run so much directly. It's a fine demonstration of the inverse relationship between prosperity and government action - a ringing endorsement of laissez faire. A hundred million have been lifted from poverty to the kind of living standards we enjoy, and perhaps beyond; the nation's GDP is close to our own but there are four times more mouths to feed with it so there are still a billion or so in squalor. That disparity produces tension, tension leads to violence, so unless and until all Chinese perceive that the good life is open to all who will work for it, trouble may lie ahead; and that open opportunity only happens when government erects no obstacles. Will Hu's successor be more laissez faire than he? - an open question. Fascists do relax controls sometimes; it happened in Spain and Chile, for example, but those took decades. Chinese may be impatient. Meanwhile Hu's government insists on controlling its currency exchange rate instead of allowing a free float, meaning it is artificially making Chinese goods cheap elsewhere (nice for us) but making foreign goods expensive for Chinese (bad for them, and for US exporters.) Perhaps one reason is that having been paid for their goods only with bits of green American paper, they have tons of the stuff and don't want to do anything that might reduce its purchasing power. Meantime they are printing more renminbis, causing a 5% inflation rate - another source of tension. What a tangled web they weave, when governments practice to deceive. For now, we can note that our President busted a gut this week, to try to make things we buy more expensive.
We have therefore a very bright future to enjoy. I hope to be around to see some of it.
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When Americans have dispensed with government
altogether, trade will boom domestically, no question; but the
growth of trade across foreign boundaries is harder to foretell.
First and foremost, American exporters will naturally insist on
payment in gold, or some equally real form of money. That need
not be an obstacle to trade with Chinese and Indian buyers, for
people in those countries have wisely been buying the metal, but
it could put a damper on trade elsewhere, until those governments
too evaporate a few years later, following our example. No
matter; those two countries make up 40% of the world's
population, which is a big enough market. Provided their
governments don't obstruct the use of gold for payments, and if
they do it will only hasten their dissolution.
