As Gilder notes "In a just system of growth, business must be open to bankruptcy as well as to profit. When government puts its thumb on the scales of justice, manipulating money through guarantees and other exercises of power designed to stimulate economic growth or protect assets, it stultifies this learning process." He says that like it's a bad thing -- which it is -- but politicians are falling all over themselves to do it.Wretchard is always worth reading.
Such a system can determine who gets a bailout from the Fed and who gets a diploma from de Blasio's diversity schools but generates little information about who can turn a profit and which students will be the next Einstein. By destroying the measuring stick, defining money as a function of government decisions and competence as a consequence of political correctness, the Western elites have created an artificial, gradually shrinking world.
Wretchard: China's Communists vs. Western Elites
It's closer than it ought to be.
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It strikes me that as China becomes less export-oriented and more focused on internal consumption (inevitable, whatever the tariff situation, although high US tariffs will accelerate the change), Chinese companies are going to face less of a real market test. If you're making products or components for Apple or Ford or GE or Wal-Mart, then the buyers are going to insist on certain minimum quality standards. If the transaction is between Chinese companies, then political involvement may make it like interdivisional "sales" in a large US company.
Peter Drucker wrote about two foundries: one at a company where it produced strictly for internal consumption, and one that was also allowed to sell its work on the open market. Guess which one had a better track record for innovation?
I’m currently reading The Reckoning, by David Halberstam. He compares the US and Japanese auto industries after WW2. His findings were similar to those David Foster describes in Drucker’s writing.
Note that Bernie, who will unreservedly condemn America's elite any day of the week, defends China's elite.
Bernie Tries To Praise Communist China, Accidentally Praises Capitalism
"China is a country that is moving unfortunately in a more authoritarian way in a number of directions," Sanders told Hill.TV's Krystal Ball. "But what we have to say about China in fairness to China and it's leadership is if I'm not mistaken they have made more progress in addressing extreme poverty than any country in the history of civilization, so they've done a lot of things for their people."
What Sanders did not acknowledge was that free-market principles are what allowed China to lift millions of its citizens out of poverty. Forbes reports:
Apparently Bernie didn't notice that it wasn't Socialism that reduced poverty in China.
Much of Maoist China's traditions comes across in their web novels. Very easy source to catch up on differently biased source material compared to Western "translations".
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