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China: Looks Like Capitalism to the Naked Eye, But It's Not
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Economist James Galbraith, Lloyd M. Bentsen Jr. Chair at UT Austin, has written a brilliant review of two books -- the first The End of Poverty by Jeffrey Sachs and the second The Global Class War by Jeff Faux -- in the latest American Prospect.
Read the entire thing -- very well worth the education about the Sachs global development juggernaut as well as the contours of his personality but also about economic development trends on this continent via Jeff Faux.
I found this bit on China particularly intriguing, revealing more about Galbraith I think than either Faux or Sachs:
China has adopted markets without capitalism; it has not had broadly open, speculative markets for capital assets and land.The result is that you usually have to make something in order to get rich. So companies produce and produce, flood the markets with goods, accept low profit margins, improve quality, and hope to strike gold by exporting to the West.
If they have losses, as they often do, these may be covered by borrowing from China's rotten, state-owned banks, protected by capital control. Workers thrive on the glutted market for goods. Meanwhile, the richer local governments finance themselves with land rent and spend the proceeds on infrastructure at an incredible pace.
The system looks like capitalism to the naked eye. But it is not capitalism; it's an outgrowth of what was there before. What was communism has become, one might almost say, Galbraithian -- private affluence, with much less public squalor than one finds elsewhere in the Third World.
In an important closing, Faux realizes that North American integration is irreversible. He therefore argues that North America should now aim for a deeper union -- something approaching the European model. He looks at modern Europe through rose-colored glasses, seeing there a bastion of social democracy and solidarity that the average resident of, say, the Paris suburbs would not recognize.
But the point is correct: A United States of North America, with its openness to expansionary budgets and easy money, and with 69 million Mexican voters, would very likely be more democratic and more prosperous than the present-day European Union, and also not more corrupt than the current crowd in Washington, D.C.
Moreover, two aspects of the European model -- free migration and a common currency -- would help solve many of Mexico's deepest development problems, as the euro and low interest rates have done, remarkably quickly, for Spain.
Of course, to go that far, one would have to protect the interests and address the sensibilities of our neighbors to the north. And to do that, I have long favored naming the new North American money along the lines chosen in Europe. With special deference to our friends in Quebec, it should be called the Amer.
Interesting views. I'm just back from Orlando where I had a terrific dinner discussion last night regarding America's stakes in getting its global portfolio in better shape than the last four years. We discussed China, Iraq, Iran, Israel, us, and just about everything else with a very informed group comprising the Orlando Area Committee on Foreign Relations.
Now back to the battle front. . .
-- Steve Clemons
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Let's see, Lindsey Graham told the Chinese, "Americans are committed to taking on whatever battles seem imperative -- China's cheap currency along with al-Qaeda." Chuck Schumer said, "it wasn't your typical Chinese food...no sea slugs no jellyfish." Tom Coburn said, "my model of leadership is a man by the name of Jesus." China is laughing hysterically at this very minute at America and we have our grandiose Senate to thank for that little foul up. The Chinese could care less about what America thinks about their finances. Suppose the Chinese should decide to call in all of that U.S. debt the Chinese have been supporting. Talk about your imminent threat.
Yes China is laughing but mainly about their brand of 'economic warfare' that they can fight and likely win ( with patience and persistence ) on multiple fronts and on their terms.
The big losers won't be US Global 2000 companies who appear to be investing more overseas than in in America - it will mainly be the American middle class where many will see an erosion in their standard of living.
The irony is that the Bush admin has been priming the pump for this eventuality since 2001 with a great assist to the complicit 4th estate who forgot how to do their jobs.
Mnay of these deaf, dumb, and blind people are in for a rude awakening of sobering new reality.
Amer, in french, means Bitter...
Both Galbraith's 'Affluent Society' and 'The Culture of Contentment' are books worth reading. Although Galbraith never published anything close to the quality of 'pure' economists such as Friedman, he has always had a very keen eye on global social economic developments. Provided the United States adheres to its tradition of both democracy and open markets and is willing to integrate on a political level with its neighbours, this might not be fantasy:
"But the point is correct: A United States of North America, with its openness to expansionary budgets and easy money, and with 69 million Mexican voters, would very likely be more democratic and more prosperous than the present-day European Union, and also not more corrupt than the current crowd in Washington, D.C."
From a realistic point of view, world wide most people will opt for a development path along EU lines. Most people will choose for mild protectionism, (slightly) less affluence and more social cohesian.
I have long agreed that the unification of the NAFTA nations was a done deal. The normal progression from an agricultural society to an industrial one includes taking the non-productive peasants and moving them into the towns where they can be made productive.
One problem with this is history and language between the U.S. and Mexico. The industrial cities that need labor are all in the U.S. and Canada and the non-productive labor is in Mexico. The European Union has shown that it can be done, however.
I give it a generation - tops. The wall the conservatives want will be as useless as the Great Wall of China. That is inevitiable.
As for China - that's a Hell of an interesting development model. It will hit a wall when political instead of economic factors misallocate really large chunks of capital and an bad economic turndown occurs. The post real-estate-bubble Japanese economic doldrums was an example, but this looks like it could be even more risky. But capital shortage world-wide is not a real problem. Lack of investment opportunities is right now.
Mix that with peak oil and Global Warming, and I'd say the world is in for an interesting ride for the next half-century or so.
True North American integration will never happen.
Right now Canadian advocates of deeper integration have had to do so under the radar. In the current climate even most Canadian conservatives are wary of doing anything which George W Bush might agree with. Sorry. Clinton might have managed it. Not this guy.
Uh hmmm. You mean people didn't know this? I am befuddled by their ignorance if they didn't. There isn't a free market in China. Who ever thought that there was?
And Chinese Communism was, in turn, an amalgam of Chinese society and the need to sweep away rogue feudalism. What did we expect to emerge from a society of mandarins, emperors, and a central government that collected taxes in grain, subsequently used to ameliorate famines.
Similarly, the Chinese are well known in Asia for extending a "trade empire" without sending troops abroad, for many centuries.
Back in about 1947 Jack Belden observed that the Chinese had no trace of an independent judiciary, which Belden considered to be an essential in the formation of a functional democracy.
Can anyone honestly say this has changed?
Instead of 3 nations merging, how about 3 turning into 2? The blue states can merge with Canada and the red states with Mexico. That way blue staters can address healthcare, education, guns, land use, global warming, stem cell research, fuel economy, international treaties, and preemptive war issues in ways that are impossible right now.
And, the red staters can continue to allow wealth to dramatically pool at the top, spy on everyone, forbid unions, drop worker safety regulations, allow businesses to pollute the air and water, enjoy cars without catalytic converters, and influence elections with intimidation at the polls and faulty voting equipment.
Stanley, but what are you going to do about the continuing illegal immigration (and emigration, too, knowing the mindset of the folks in the new Confederacy) from Red American into Blue America? Nobody but the aristos will want to live in the new Red America (and they'll be fighting amongst themselves over whether to recognize Spanish as an official language).
"In an important closing, Faux realizes that North American integration is irreversible. He therefore argues that North America should now aim for a deeper union -- something approaching the European model."
Oh goodie ..more esortic theory from people who have to make a living thinking up newer and even more unworkable theory after theory to keep their pay checks coming.
But go for it...sounds like just the thing to start the revolution we need.
"With special deference to our friends in Quebec, it should be called the Amer."
I'd rather call it the cookie.
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