Von Mises, Doyen of the Austrian School of Economics, identified the lynchpin of all socialist and communist states: price calculation. In planned, command economies there is no possible way to ascertain the price of anything. Therefore, the economy grinds down as money and credit is misallocated and malinvested.
My mind ran to the trade fairs in the 1970s in Canton China where we from around the world sat on one side of the table while the Chinese traders sat opposite. To my left Danes and Brazilians, to my right Germans and Nigerians. The Chinese would quote prices, each according to his nationality.
USA prices quoted were always highest. How come, I asked. "USA has the most money." Aha.
The Communists had absolutely no idea what anything they made cost them, but being good Marxists they knew the going prices of their items in every market in the world. Their price books reflected what they learned from objective, empirical observation.
Being a good free trader, realizing that, for whatever reason, China gave Hong Kong the very best prices, we would place our orders with Hong Kong compradors and even with their stiff commissions our net prices were running only 3/4ths of what the Chinese quoted us directly.
China has introduced relatively free trade. But in USA we no longer know what things cost, so fraud is rampant. In Japan, the make mag lev for about $220 million a mile. In China, they do it for about $60 million a mile. The difference is largely waste fraud and abuse in a too controlled market. In USA we cannot even install 1880s technology for what Japan, with generous blandishments, does maglev. If we want to know what something costs, we need only ask what the Chinese would charge to do it.
The trick to sorting this out is to pit the bondholders against the pensioners. As our economies sink, repudiate the bonds that supplied the ability to hoodwink the productive class into paying $240 million a mile for 1880s technology. "We cant pay the bonds, because of public employee pension obligations." The bondholders wittingly scammed us during the boom, and the public employees facilitated the scam. Let them fight it out over the dwindling reserves.
Feel free to forward this by email to three of your friends.
My mind ran to the trade fairs in the 1970s in Canton China where we from around the world sat on one side of the table while the Chinese traders sat opposite. To my left Danes and Brazilians, to my right Germans and Nigerians. The Chinese would quote prices, each according to his nationality.
USA prices quoted were always highest. How come, I asked. "USA has the most money." Aha.
The Communists had absolutely no idea what anything they made cost them, but being good Marxists they knew the going prices of their items in every market in the world. Their price books reflected what they learned from objective, empirical observation.
Being a good free trader, realizing that, for whatever reason, China gave Hong Kong the very best prices, we would place our orders with Hong Kong compradors and even with their stiff commissions our net prices were running only 3/4ths of what the Chinese quoted us directly.
China has introduced relatively free trade. But in USA we no longer know what things cost, so fraud is rampant. In Japan, the make mag lev for about $220 million a mile. In China, they do it for about $60 million a mile. The difference is largely waste fraud and abuse in a too controlled market. In USA we cannot even install 1880s technology for what Japan, with generous blandishments, does maglev. If we want to know what something costs, we need only ask what the Chinese would charge to do it.
The trick to sorting this out is to pit the bondholders against the pensioners. As our economies sink, repudiate the bonds that supplied the ability to hoodwink the productive class into paying $240 million a mile for 1880s technology. "We cant pay the bonds, because of public employee pension obligations." The bondholders wittingly scammed us during the boom, and the public employees facilitated the scam. Let them fight it out over the dwindling reserves.
Feel free to forward this by email to three of your friends.
2 comments:
Author and commentator Gordon Chang has been saying communist China is on the brink of imminent collapse - He has been saying this stuff for years.
http://shanghaiist.com/2012/11/14/gordon_chang_predicts_guess_what_th.php
Indeed, I always figured he had an ax to grind... the incalculable is China is freedom; the vast majority of Chinese are freer than any time since the Tang Dynasty, and even if China goes down economically as the rest of the world does, if China is a free as I think it is, it will recover faster.
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