Why China Does Capitalism Better Than the U.S.

[onehandle]

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 creating 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 here more people are falling into poverty than are being raised out of it - the 43 million Americans officially designated as living in poverty in 2009 was the highest number in the 51 years that records have been kept.)

Beijing is also doing a far more effective job than Washington is 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 Fukukyama in Tuesday's Financial Times under a headline stating that the U.S. had nothing to teach China. "State-owned enterprises are back in vogue, and were the chosen mechanism through which Beijing administered its massive stimulus."

Chinese leaders are more inclined today to scold the U.S. - its debtor to the tune of close to a trillion dollars - than to emulate it, and Fukuyama notes that polls show a larger percentage of Chinese people believing their country is headed in the right direction compared to Americans. China's success in navigating the economic crisis, says 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."

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http://news.yahoo.com/s/time/08599204323500

[ProSense]

1. Interesting.

<...>

China is the extreme opposite, of course: It can ride roughshod over the lives of its citizens. For example, 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 individual corporations the power to veto or shape government decision making to suit their own bottom line 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 currently be more adaptive than the Land of the Free.

Here's another perspective:

In China, Cultivating the Urge to Splurge

By DAVID LEONHARDT

<...>

The rise of China can often seem inevitable. It is the world’s most populous country, now reclaiming its long-lost power. Its economy recently passed Japan’s as the second-biggest in the world, leaving economists to debate whether China was on pace to overtake the United States by the year 2025 or 2030. Yet China’s rise has been anything but inevitable. Consider other poor countries — in South America, Africa and even Asia — with vast pools of cheap labor, which nonetheless have not been able to grow rapidly. Or consider other once-socialist countries, mostly in Eastern Europe, still suffering from a post-Soviet hangover. Even look at India, which is often paired with China as the great growth story of modern times. As recently as 1990, India had a comparable per-capita income to China. Today, China’s is more than twice as high. So having a lot of cheap labor or moving toward a market system, or even both, does not guarantee the phenomenal growth China has experienced.

That growth — among the most rapid in human history — has been a result of strategy and good fortune. The Maoist period was brutal and repressive, but despite the terrible famines and the Cultural Revolution’s assault on education, China did emerge with an unusually literate and healthy population for a poor country. Toward the end of that period, even before the one-child policy, a baby boom ended, creating a relatively small group of children and elderly to be supported by a large group of able workers. Into this fertile economic ground, Deng Xiaoping and his fellow reformers planted the seeds of a market evolution. Workers gained an incentive to succeed, while central planners, unconstrained by democracy, made the investments to turn China into the world’s factory.

This model is part of something that has been called the Beijing Consensus, and it is understandably appealing to other poor countries. Yet in many respects it is not new. Politics aside, China’s story is the classic one of economic development: investments in physical capital and education make a society more productive and are combined with a huge shift of people from farms to factories. England, Germany, the United States, Japan and South Korea have all followed the model over the last 250 years. The economist Gregory Clark, author of “A Farewell to Alms,” calls it the only story of economic development.

And this same story explains why China’s continued rise is no more inevitable than its recent rise. From far away, China may look like an unstoppable colossus. From the inside, it looks more vulnerable. Indeed, Chinese economists, business executives and Communist Party officials are debating, sometimes passionately, just how vulnerable it is. “In the short and medium term, there should be no problem,” says Yu Yongding, a prominent economist. Among other things, the government has built up enough savings to spend its way out of most problems over the next several years. “But there are fundamental contradictions in the Chinese economy. We can waste our strengths in one or two decades. If we exhaust these strengths, then we’ll be in a big trouble.”

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[old mark]

2. K&R- One reason is simple-when corporate execs engage in fraud or

dangerous practices they can be shot...

mark

[rurallib]

3. I'd forgotten that. Within days of being arrested, too

no appeals, no years and years of litigation

[old mark]

10. ...and in a sports stadium, which seems to be some sort of comment right there...nt

[krispos42]

17. 19 Wall Street CEOs caused more economic damage than 19

fundamentalists with boxcutters. The fundies are dead. The CEOs got a government bailout, bonuses, and golden parachutes.


THAT is why we manage capitalism so poorly; mismanagement is profitable and in fact desirable.

[leveymg]

4. One thing I am sure of: neither country practices capitalism in the traditional sense.

China's form of command economy is no doubt more disciplined and tightly directed than ours. The economic systems of China and the U.S. are both corporatist in structure and operation, which is a nice word for fascist. They have vestiges of socialism, we retain some remnants of shareholder-directed management and private ownership. The big global banks and central financial authorities run the game in both systems.

Same claims about the superiority of command economies were made during the '30s.

[Orangepeel]

5. more slave labor? fewer safety regulations?

:shrug:

[snagglepuss]

12. Exactly. The article is bullshit. The story is that China does fascism better than

most.

[ShadowLiberal]

21. You miss the point, China is building a strong economy for their future, we are not

The point of the article is that China is beating us in two places, both short term, by getting their stimulus right, and in the future, by investing money in areas in the economy that are projected to grow worldwide in the future. China is also investing in a more educated workforce, while we let our education system continue to degrade.

You don't need weak safety regulations and slave labor to build a strong economy, you just need investment and a well educated workforce, and the united states is failing in both areas.

[OHdem10]

6. China proved Stimulus works great. They were the first to recover

First they were immediate in their decision making.
Having an authoritarian system, they can change plans
on a dime. They do not have to go through Congress and
an opposition party.

They put a huge amount of money into stimulus. Naturally
they quickly recovered and are back into growth mode.

Our Stimulus off the bat was too small and the Republicans
were able to get out their message that the stimulus failed.
Of course this was the big lie. It worked but only kept
us from going over the brink. If the stimulus had been as
large as Romer Summers and Geitner wanted, our story might
be different. Thank our Congressional Republicans and
some Blue Dogs for our slowness in recovery.

Yes the Chinese had the advantage, but we could have done
better.

[Enrique]

7. their miners die by the thousands

ours only die by the dozens.

Hitler did capitalism real well too, as many Americans at the time pointed out.

[ladjf]

8. While the Chinese do have their own big problems, the fact that

they don't have to contend with a dysfunctional two-party political system is a huge advantage in the decision making and program developments. Any system would be better than ours which ,effectively, is doing almost nothing positive.

[treestar]

9. Their government has so much more power than ours

And that is not a good thing.

There was something a while back on some train they have that we couldn't do because each state has power and the legislative bickering would make it impossible.

I'll take the trade off.

[Jeneral2885]

11. It is because

no matter which party in power, Democrat or Republican all of America stilll believes in neoliberalism despite having suffered from crisis after crisis. No America is ever open to the fact that there is no such thing as a free market.

Read Chang, H-J, 2010, 23 Things they dont tell you about capitalism

http://www.hajoonchang.net

[dionysus]

13. the slave labor and polluting rivers till they're neon red\green?

:shrug:

[Blue_Tires]

14. China doesn't have to deal with environmental protections, living wages,

workplace safety or quality control, either...

[DCBob]

15. Another aspect of this is that the new middle and upper class Chinese are incredible consumers..

I have spent some time in the region and its no doubt they are hooked on fashion, cars, gadgets, gambling, etc. It seems once they got out of the chains of poverty and communism they have become shopping and spending machines. This will likely do them in at some point because at the rate they going it is not sustainable.

[Cali_Democrat]

16. corporate fascist media bullshit praising slave labor in China

Make no mistake about it, if US workers were willing to accept slave wages like Chinese workers and there were less safety regulation like China, we would have created a lot more jobs recently.

It all about how much workers are willing to get paid. US workers want to be paid more than Chinese so multinational corporations move their factories to China where they can pay slave wages.

[Brickbat]

18. Slave labor, lack of environmental regulations, total disregard for safety regulations, a pick-and-

choose -- or pay-to-play -- approach to education, and contempt for the greater good. That's how China's capitalism works. The end.

[vaberella]

19. Destroying the earth and displacing millions of people from their home to work for industry.

Genius form of capitalism. Actually it's capitalism at it's best.

[golfguru]

20. China has created more millionaires than UK has in total in just 2 decades

and UK has been at it since WWII ended. Looks like China is allowing
people to actually get rich!

http://www.telegraph.co.uk/finance/globalbusiness/5625742/China-has-more-millionaires-than-UK-for-the-first-time.html