by MrBill » Tue 25 Oct 2005, 07:08:34
$this->bbcode_second_pass_quote('dhfenton', 'I')t's isn't that the system won't work; it's that the incompetance and corruption at the top pervert the system and cause it to breakdown.
Soviet Union is to Communism as W's "democracy" is to Capitalism.
Incompetant leadership causes the system to fail. If capitalism works so well; how come China owns the United States right now (quite literally)? As China becomes more progressive, their communist model is winning. Communism does not have to equal dictatorship; which has been the problem with most communist regimes to date. If a truly enlighted and representative communist state were to evolve it might be the most successful the world has ever seen. I think China has a chance at that, if they can address their human rights issues. If they don't improve on human rights, I don't see how they can succeed in the long term. They will be the supreme economic power on the planet for decades to come; but the discontent will continue to erode at the state.
One of the great misconceptions of our time and how often does it get repeated?
The US economy is more than 7-times larger than the Chinese economy. If, and I mean if, the Chinese economy continues to grow at 9% per year, it will double in 8-years time, at which time the US will still be no less than 4-times larger, assuming America's econ does not grow, in which case I ask from where will China's growth come from?
The Bank of China owns $800 billion in US treasuries partially as a store of value as there is no place to invest such sums in yuan without causing a massive revaluation of the remnimbi and therefore eroding China's export competitiveness which is about creating jobs. Never the less, that is $800 billion out of $8 trillion of 10% of America's debt, not 10% of America.
Also, bad loans in state-owned and inefficient enterprises in China is estimated to be $600 billion. The Bank of China recently paid $60 billion to commercial banks to help them clean-up their balance sheets. The losses continue due to poor management and over-capacity. Plus, almost all capital and technology in China comes from the West or industrialised world and is not homegrown. Once you eliminate those bad loans, start paying for your real cost of capital, China's external reserves would be more than 60% gone, which means they would have to sell alot of US treasury bills and then their claim against America's assets would also decrease.
I really do not mind chewing the fat about capitalism, the market economy, socialism, communism, facism, etc. It is an interesting conversation to have. But, please do not tell me that China is economically more successful than America or any of the G7 countries. Nevermind that they are a giant country with 1.3 billion people and on a per capita GDP basis they are much poorer and will be for a very long period of time. That is not more successful than capitalism, that is adopting the market economy is a desperate attempt to try to narrow the gap.

The organized state is a wonderful invention whereby everyone can live at someone else's expense.