Wednesday, May 28, 2014

China Grows, America Stagnates, Europe Declines

For the past few years, most Western “China experts” have predicted China’s Imminent Collapse (CIC).  They cite heavy investment, high savings, dependence on exports, rapid credit creation, property bubbles, declining trade surplus, capital controls, corruption, and so on.

While down from 9-10% growth rates in previous decades, China still grows at 7.5-8%.

How can this be?

The recipe consists of  hard work, rigorous study, personal and national ambition, trial-and-error policies, with an overriding emphasis on growth and jobs.  Sound policies coupled with competent leaders have unleashed the productive potential of the Chinese people, which had been suppressed by the ultra-leftist policies of Mao Zedong.

As China grows, America stagnates and Europe declines.  American businesses and individuals are heavily taxed and regulated, and successful individuals and enterprises are denounced for being productive and seeking profit.  Meanwhile, the number of individuals on government disability has passed 10 million and 5% of the adult population has dropped out of the labor force. A third of university graduates live with their parents.  K-12 education shows no improvement.

European prospects are downright depressing.  It’s ironic that Frenchman Thomas Piketty’s book on  “Inequality” has become a global best-seller, surpassing 300,000 sales.  Amazon can barely keep the book in stock.  Piketty calls for 80% marginal tax rates on high-income earners and redistribution of wealth to reduce inequality.  If adopted, these measures will worsen Europe’s failing “social market economy.”  In the European Parliament elections of late May 2014, voters rejected Piketty’s ideas in France, Britain, Denmark, and other European Union countries.  European leaders are mouthing tax cuts and less regulation as solutions to decline.

Europe is a continent of monuments, museums, churches, and castles served by high-priced hotels and restaurants, hardly a foundation for growth and jobs.  Good thing that Chinese tourists are visiting Europe in ever-rising numbers.  (The proprietor of Thoughtful Ideas, who travels frequently to Europe and speaks passable Chinese, has been watching this trend for years.)

At 7% growth, China’s economy will quadruple in 20 years, far surpassing the combined output of America and Europe.  Who would have thought this possible 30 years ago?