"This administration is deliberately choosing non-action in respect of freedom, and democractic values and human rights abroad..."Americans are turning away and they are doing this deliberately. Ordinary Americans have their own creepingly ambitious State to fight against, and the current occupants of that State are singularly unqualified to do anything other than turn away from the struggle for freedom elsewhere in the world. It's worrying and unnecessary.
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Amen.
ReplyDeleteI thought you might find this interesting, not because it discusses China, but because I think it hits on several important issues which worry Americans. I think there is a growing group of Americans who are beginning to understand that owning debt means owning something, in this case, owning the US government and, thus, the state itself. Check it out when you have time: http://online.wsj.com/article/SB10001424052748703883504576186252054344030.html?mod=djemITPE_h
ReplyDeleteCheers Nathan - that's a better informed presentation of the same point I made at your place as to the real scale of the likely economic danger the people of China are facing within a decade. Two things Orlik neglects to mention (not within his strictly descriptive remit) are that interest rate cuts are, at best, an extremely crude and dangerous way of attempting to prevent or retard inflation, and secondly that the effect of inflation (and of methods to curb inflation) upon the structure of capital investment across the economy can be disastrous. This latter point doesn't get enough attention from China watchers.
ReplyDeleteI was recently was met by a classmate--an undergraduate international exchange student from the Netherlands, of all places, whose mother is Chinese--who was arguing in class that the entire world owes its economic stability and growth to China. His argument was that the other major economies have an enormous amount of public debt and that China helps them deal with it. Although this is partially true, given the fact that China purchases US debt, his assertion that China has no public debt (or very little, whatever he was trying to say) is a gaffe of epic proportions, and his way of covering that up--as well as China's own way of covering that up--is with foreign currency reserves. One of my other classmates, himself an exchange student from Poland, tried to argue against him that China has a great deal of banking problems (although if he were more informed, he'd have been able to use Orlik's example). I don't know what undergraduate exchange students are doing in Ph.D.-level classes.
ReplyDeleteI was about to jump in to try to explain that China's banking problem is usually overlooked and most emphasis is put on China's foreign exchange reserves than its enormous public debt (when considering all levels of government as well as the government-owned banking sector), but the Netherlands guy made a ridiculous statement that China has never had any debt and that he prefers numbers to assumptions. That was where I withdrew in order to avoid an argument with an uninformed fool who was just being plain stupid.
I justified my withdrawal with a Chinese phrase, which translates into something like "a water bottle which is full makes no noise at all, while a half-full water bottle is very noisy." I decided to play the full water bottle. Even the professor was shocked by the sheer stupidity--and the class was not even a China-focused class.
Anyway, on your point, yes, I think you are correct regarding the overlooking of some issues. Most China scholars are political science, not economics, experts, which I think is part of the problem. I'm not an expert on banking and finance, but I'm working on it--one reason why I decided to shift more towards a middle ground in my studies, from strictly politics to political economy. Perhaps we could work together on publishing something at some point on just these issues. Although I'm following you interest rate argument, I hope you'll be interested in sharing your thoughts on inflation's effects on capital investment across the economy. I've had this understanding as well, but have been unable to articulate it as of yet.
The place to start is here:
ReplyDeleteThe Theory Of Money & Credit. Download it for free, take it to a printing shop for small change, then take it to school with you and read it during lunch breaks. You'll have it finished in a month or two and be far better off for the investment.
Thank you, my friend. I'm familiar with some Mises, but regret to admit that I have yet to read this. This will be quite helpful.
ReplyDeleteSorry Nathan - that was a hurried comment this afternoon 'cos I was getting ready to go out.
ReplyDeleteOn your classmate: I personally hold to the precept that it's better to challenge wrong ideas openly and immediately whenever I can for two reasons. The first is so that others who may be watching may get more food for thought and the second is that I might get more intelligent reactions than I expected. Also I don't want to have to regret not acting.
On inflation: once it occurs and depending on scale, it can affect both capital and labour in two principle ways; first, inflation distorts prices in a manner resistant to precise prediction, since prices may rise unequally in both timing and size across an economy and this therefore impairs monetary calculation in both the office and the household; second, inflation eats away at real savings thus increasing the pressures (especially among the poor) to borrow or to rush into ill-thought through investments, and, if extended over sufficient time, inflation will decimate living standards. The measure of such consequences will vary according to the scale of inflation and the length of time it takes for the market to adjust (assuming it still can).
Presently, inflation is, at best, considered an unfortunate necessity by many people in government. This stems in large part from political pressures toward over-spending beyond the tax base and beyond bog standard financial instruments. In the worst case, it is a means for the State to monetize its own debts and thus disperse the cost of those debts throughout the subjected population, as was what happened in Weimar Germany and as the U.S. has been doing quietly and on a lesser scale since 2009.
In an ideal world however, both inflation and deflation are merely the "natural" margins for error within which a currency-issuing institution attempts to control the value of its currency against the pressures to over-issue and under-issue. Even in a libertarian nirvana, with privately owned, competing commodity currencies, there would still be a certain amount of inflation and deflation but the scale of this would likely be insignificant, since the threat of competition would keep both pressures in check.
On joint publication: possibly, but you'd have to be more specific. I am especially interested in aims, strategy and tactics by Chinese dissidents and of politically oriented Taiwanese university students. Scholarly journals would not accept anything with the name of a mere 'Mr' like me on it, but the Taipei Times might allow a joint piece if it's one of those days when they've got nothing better to do.