Static And Half-Full

The Way The Left Views The World

There is the old question, “Do you view the glass as half-full or half-empty?”

Leftists view the world as half-full. Life is static. The pie can never be made larger so we must fight over who gets what and which piece. Do you get a nice juicy piece of fruit with your crust or do you just get some crumbs left over after everyone has eaten?

Since the rise of China, I have been interested in it. I have looked at it from a macro-view. I have never forgotten that China is a communist country. I did a guest stint at CNBC Asia in Singapore back in December of 2007. One comment I recall making was that “The world economy has always turned on the United States. There are those that think it turns on China now. When the US caught a cold, the rest of the world got the flu. Will it be the same with China?” Back then, it wasn’t. Despite the impressive statistics that the Chinese media sent out, the world didn’t rely on China.

China was able to rise on some economic tides it thought it could control. Cheap labor was one. Until they couldn’t anymore. The other Third World Asian countries saw the same thing and competed. That pesky competition thing is one facet of economics Marxism has a big problem with. China offered cheap credit. It extended all kinds of credit for development. Remember, communist countries run on full employment. Everyone has a job. “The community” if you recall. Everyone’s needs are supplied equally by the government.

Credit though has capitalistic iron laws of economics tied to it. You can stretch the rubber band for so long until it breaks. China is showing signs of breaking. Its edges are fraying. At some point, credit wants some cash flows to pay it back. When you build buildings that are unoccupied and roads to nowhere, it’s hard to get cash flow.

China used property development to try and build societal wealth but bricks and mortar aren’t wealth. It’s what goes on inside them that builds wealth.

I think the COVID issue in China was partly due to this economic fraying. Xi needed time to figure things out. Covid helped but Covid also put him in a deeper economic box. Covid also hit the rest of the world at a perfect time so China could get breathing room. It hit America during an election cycle and upended Trump. Trump saw China for what they truly were. China didn’t need an American President that understood their end game. They needed one to cooperate with them.

Xi has demonized successful entrepreneurs. Jack Ma is a case and point. According to the Financial Times article I linked to above, in one entrepreneurial studio most have left and gone home to become “civil servants”. You can only have a large cadre of civil servants if you have a very large capitalistic producer class supporting them.

Entrepreneurship sees the world as half-full and sees an expanding pie. Successful entrepreneurs raise standards of living. China has billions living in abject poverty while the members of the Communist Party have jobs, status, and food.

Demographics are also crushing China. They don’t have enough young people. Without them the economy cannot grow.

Capitalism should not be controlled. Guardrails are sometimes nice but there should be no speed limits. China tried to replicate the parts of capitalism it felt could integrate into it’s communist system, but the iron laws of economics and finance are starting to bend China to their will.

This is going to be ugly with a lot of worldwide repercussions because unlike 2007, China has integrated itself into the worldwide economy where it makes a difference. The one saving grace is the goods that China manufacturers and sends to the rest of the world are easy to make other places. However, it takes a lot of time to rebuild those manufacturing ecosystems so they are as efficient.

It goes without saying, but you only build manufacturing ecosystems upon a foundation of access to cheap energy, and educated people. America is pursuing the wrong course when it comes to energy policy and if you read this report by Wirepoints it shows how shockingly terrible the United States government run education model is.

If we don’t alter course quickly our society and economy risks running down the drain with China for a while.