September 18, 2024

The Economic Record Of Socialism -- China

September 18, 2024/ Francis Menton

China has proudly proclaimed itself to be a Communist country ever since Mao Zedong came to power in the late 1940s. I understand the term “Communism” in the context of a country like China to mean a socialist (state-directed and controlled) economic system with the additional element of political repression allowing no dissent from official orthodoxy.
China’s economic history is a bit more complex than just 75 years of tightly-controlled socialism. Its economy languished (including the usual mass deaths and starvation) for the first 40 or so years of Communist rule.
Next, under party leader Deng Xiaoping and successors from the mid-1980s for about 30+ years, China allowed a substantial private economy to emerge and flourish. During those years it experienced rapid economic growth, and in that very short period of time its economy became the second largest in the world after the U.S. (however, more like 70th place if ranked by per capita GDP).
Then in 2013, current strongman Xi Jinping came to power. In the most recent decade under Xi’s rule, the political repression has been greatly ramped up, the central planners have reasserted their pre-eminence, and the private economy has been gradually strangled.
So how is China faring under its most recent regimen of tightly-controlled socialism, central planning, and state-directed investment?

September 22, 2023

Why Do The Poor Countries Always Stay So Poor?

September 22, 2023/ Francis Menton

It’s now more than sixty years since the independence movement in the late 1950s and early 1960s transformed nearly all of sub-Saharan Africa into independent countries.
Hopes soared for a new era of progress and prosperity. But six plus decades on, with essentially no exceptions (maybe Botswana?), the 49 countries of sub-Saharan Africa are about as poor as ever.

The New York Times treats the subject in a big piece by Patricia Cohen a few days ago on September 18. Sorry if this is behind their paywall, but I subscribe to this stuff so that you don’t have to.
In the treatment at the Times, this is just a case of the sad cruelty of nature, an extreme instance of “bad luck.” But we can learn a good deal about the true source of the bad luck by looking at clues that Ms. Cohen and the Times inadvertently drop in the course of their reporting, without even noticing that they are doing it.

August 22, 2023

August 22, 2023/ Francis Menton

It’s hard to learn what’s going on in China, and it’s getting harder. Data series that show anything unfavorable are suppressed or discontinued, and journalists who might write something negative are increasingly unwelcome. But there is every reason to think that China’s forty-year economic boom at the minimum is stalling out, and indeed its economy may be headed for a major crash.
The Wall Street Journal has two significant pieces on this subject in the last two days: from yesterday, a long front-page news article with the headline “China’s 40-Year Boom Is Over. What Comes Next?”; and today, a lead editorial “The Electric-Vehicle Bubble Starts to Deflate.” (Both are probably behind the pay wall.).
But before discussing those in more detail, let’s review the important background. China’s economy took off in the 1980s when then-leader Deng Xiaoping loosened state controls and allowed a private sector to grow and flourish. Current leader Xi Jinping, who assumed power in 2013, has reversed that policy and increasingly tightened state control and direction of the economy, particularly since his second term began in 2018.
Are there any lessons that we in the U.S. and the rest of the West should be learning here?

February 06, 2022

February 06, 2022/ Francis Menton

In mid-January, the gigantic blowout spending bill going by the Orwellian name of Build Back Better died in the Senate.
Over in the progressive precincts of government and the media, where everyone knows that all human wealth and well-being come entirely from government largesse, it was time to prepare for the bad economic news. Surely, with no massive new government blowout spending and with Omicron surging, the January jobs report would be dismal, likely even showing employment declines.
Therefore, in the run-up to Friday’s jobs report for January, the White House spin machine was in full tornado mode, blaming the impending news of a jobs decline on the virus rather than on the administration’s failed economic policies.

February 07, 2021

February 07, 2021/ Francis Menton

Of all President Biden’s potential legislative initiatives, the first up in Congress is the latest round of so-called “stimulus” — some $1.9 trillion to be borrowed by the government and promptly wasted.
Somehow, we are supposed to believe that this is a good idea. Over at CNN, they call it the “rescue package,” as if the economy is failing, and the only possible route to salvation is borrowing and then immediately wasting this vast sum.
It goes without saying that all the grandees of the left support the plan. After all, these people have gone to the fanciest schools and have the fanciest advanced degrees. They are the “experts,” to whom we must all defer.
Nothing illustrates the foolishness and ignorance of our so-called “experts” better than this “stimulus” bill.

December 02, 2020

December 02, 2020/ Francis Menton

My previous posts on the subject of Biden have mostly dealt with issues of corruption, energy and ”climate,” and to some degree foreign policy. But let’s get to the biggest of all domestic policy issues, which is the overall level of spending and taxation.
As with essentially every issue of public policy, when it comes to overall spending and taxes Biden is just all wrong. There is no nicer way to put it.
Biden has called for massive increases in domestic spending, and also massive increases in taxes. The tax increases he seeks are not remotely sufficient to pay for the increased spending, but would be more than enough to crush the hopes of millions of Americans ever to get a little ahead in life. . . .