Can China Change? A Lot?

Why China will never be as rich as America

[...] The odds are against China ever becoming a rich nation by U.S., European, or Japanese standards. Since World War II, South Korea is the only large country to get rich for the first time. Once promising up-and-comers like Argentina and Thailand have fallen victim to the "middle-income trap," stuck in an economic halfway house between poverty and first-world wealth. China is a likely addition to that list, according to my AEI colleague Derek Scissors:

It would not be unusual if there were cities in China with income levels similar to, say, France. It would be highly unusual for China as a whole to reach French levels of income. … The single most likely result is that China will share the fate of many other economies and fall far short of being wealthy. [AEI]

That's why the Chinese Professor ad was actually pretty stupid. It imagined an American economy that eventually loses out to China's because Uncle Sam embraces big government. But it is actually China that is increasingly favoring state intervention over market reforms as the path to greater national prosperity. And it isn't working out so well for them. China needs to shrink the state sector if it is to have any chance of generating broad-based wealth. And if a more market-driven capitalism drives a new era of economic growth for China, it also means a China where there is a lot more economic freedom — and probably political freedom, too — than exists today. And that would be a great thing for global prosperity and peace — not something for economic populists to rage against.

To quote Ronald Reagan, "Never say never." If the state sector backs off enough to allow market-driven growth, and that resulted in more political and economic freedom, we could see very big changes in China indeed. Read the whole article for embedded links and more.

     

Are their different "flavors" of capitalism and socialism? What should we choose?

Is the pope stirring the pot for the communists?

In Fiery Speeches, Francis Excoriates Global Capitalism

[...] Having returned to his native Latin America, Francis has renewed his left-leaning critiques on the inequalities of capitalism, describing it as an underlying cause of global injustice, and a prime cause of climate change. Francis escalated that line last week when he made a historic apology for the crimes of the Roman Catholic Church during the period of Spanish colonialism — even as he called for a global movement against a “new colonialism” rooted in an inequitable economic order.

The Argentine pope seemed to be asking for a social revolution.

[...]

Francis has defined the economic challenge of this era as the failure of global capitalism to create fairness, equity and dignified livelihoods for the poor — a social and religious agenda that coincides with a resurgence of the leftist thinking marginalized in the days of John Paul II. Francis’ increasingly sharp critique comes as much of humanity has never been so wealthy or well fed — yet rising inequality and repeated financial crises have unsettled voters, policy makers and economists.

Left-wing populism is surging in countries immersed in economic turmoil, such as Spain, and, most notably, Greece. But even in the United States, where the economy has rebounded, widespread concern about inequality and corporate power are propelling the rise of liberals like Senator Bernie Sanders of Vermont and Senator Elizabeth Warren of Massachusetts, who, in turn, have pushed the Democratic Party presidential front-runner, Hillary Rodham Clinton, to the left.

[...]

Even as he meets regularly with heads of state, Francis has often said that change must come from the grass roots, whether from poor people or the community organizers who work with them. To Francis, the poor have earned knowledge that is useful and redeeming, even as a “throwaway culture” tosses them aside. He sees them as being at the front edge of economic and environmental crises around the world.

In Bolivia, Francis praised cooperatives and other localized organizations that he said provide productive economies for the poor. “How different this is than the situation that results when those left behind by the formal market are exploited like slaves!” he said on Wednesday night.

It is this Old Testament-like rhetoric that some finding jarring, perhaps especially so in the United States, where Francis will visit in September. His environmental encyclical, “Laudato Si’,” released last month, drew loud criticism from some American conservatives and from others who found his language deeply pessimistic. His right-leaning critics also argued that he was overreaching and straying dangerously beyond religion — while condemning capitalism with too broad a brush.

“I wish Francis would focus on positives, on how a free-market economy guided by an ethical framework, and the rule of law, can be a part of the solution for the poor — rather than just jumping from the reality of people’s misery to the analysis that a market economy is the problem,” said the Rev. Robert A. Sirico, president of the Acton Institute for the Study of Religion and Liberty, which advocates free-market economics.

Francis’ sharpest critics have accused him of being a Marxist or a Latin American communist, even as he opposed communism during his time in Argentina. His tour last week of Latin America began in Ecuador and Bolivia, two countries with far-left governments. President Evo Morales of Bolivia, who wore a Che Guevara patch on his jacket during Francis’ speech, claimed the pope as a kindred spirit — even as Francis seemed startled when Mr. Morales gave him a wooden crucifix shaped like a hammer and sickle as a gift.

[...]

The French economist Thomas Piketty argued last year in a surprising best-seller, “Capital in the Twenty-First Century,” that rising wealth inequality is a natural result of free-market policies, a direct challenge to the conventional view that economic inequalities shrink over time. The controversial implication drawn by Mr. Piketty is that governments should raise taxes on the wealthy.

Mr. Piketty roiled the debate among mainstream economists, yet Francis’ critique is more unnerving to some because he is not reframing inequality and poverty around a new economic theory but instead defining it in moral terms. “Working for a just distribution of the fruits of the earth and human labor is not mere philanthropy,” he said on Wednesday. “It is a moral obligation. For Christians, the responsibility is even greater: It is a commandment.”

Nick Hanauer, a Seattle venture capitalist, said he believed Francis was making a nuanced point about capitalism, embodied by his coinage of a “social mortgage” on accumulated wealth — a debt to the society that made its accumulation possible. Mr. Hanauer said that economic elites should embrace the need for change both for moral and pragmatic reasons.

“I’m a believer in capitalism but it comes in as many flavors as pie, and we have a choice about the kind of capitalist system that we have,” said Mr. Hanauer, now an outspoken proponent of redistributive government policies like a higher minimum wage.

Yet what remains unclear is whether Francis has a clear vision for a systemic alternative to the status quo that he and others criticize. “All these critiques point toward the incoherence of the simple idea of free market economics, but they don’t prescribe a remedy,” said Mr. Johnson, of the Institute for New Economic Thinking.

Francis acknowledged as much, conceding on Wednesday that he had no new “recipe” to quickly change the world. Instead, he spoke about a “process of change” undertaken at the grass-roots level. [...]

This pope has a strong history of being an advocate for the poor. I get it, and don't think anything is wrong with that. It's just that he seems out of touch with the modern world and how it works. He has spend so much time working with the poor, that it's all he sees; with out a more balanced understanding of the larger whole, and no clear plan for change... what is he doing?

Stirring up revolution against people who create wealth, calling for the redistribution of wealth, without any sort of plan as to how that should be done... how is that any different from the Communism of the past, that has wrought so much death and destruction? And when will the Vatican put it's money where it's mouth is, and return all the gold and priceless treasures they've ripped off from around the world?

Instead of cursing the darkness, why not light a candle? Why not focus on the more positive aspects of capitalism and how it can be used to lift people out of poverty, be used wisely and compassionately, steer the conversation in more constructive ways, rather than just painting all capitalists with a tar-brush and stirring the pot for communist revolutionaries? I think perhaps this pope, however well-meaning, doesn't have the broader perspective or the brain-power to be able to do that.

Here at home, we have Bernie Sanders and followers, wanting us to drink his flavor of Kool-Aid:

How Bernie Sanders plans to win, and change Washington

[...] In an interview on CBS' "Face the Nation" Sunday, Sanders said that the president ran "one of the great campaigns in the history of the United States of America" in 2008, but he also made a mistake by trying to negotiate fair compromises with Republicans and their leadership in Congress.

"The truth is Republicans never wanted to negotiate, all they wanted to do is obstruct," Sanders said. "What I have said throughout this campaign is electing Bernie Sanders as president is not enough. Not going to do it. We need a mass grassroots movement that looks the Republicans in the eye and says, 'If you don't vote to demand that your wealthy people start paying their fair share of taxes, if you don't vote for jobs, raising the minimum wage and expanding Social Security, we know what's going on, we're involved, we're organized, you are outta here if you don't do the right thing.'"

He plans to build that grassroots coalition by bringing more people into the political process and focusing heavily on poverty and income inequality.

"I'm going to be going around the country not only to blue states...but to red states, conservative states. We're going to go to Alabama, we're going to go to Mississippi," Sanders said. "I think the message that we have is resonating. People are going to get involved in the political process, we're going to drive turnout up and when we do that we win." [...]

He sounds like he's the one that doesn't want to negotiate anything. I'm always amazed when Democrats become outraged that the Republicans don't just roll over and play dead. As if it's a crime to disagree with them.

I agree with one of the comments below the article; we don't need any ONE group of people telling us all what to do and how to live.

Also in the comments, someone holds up Denmark and Germany as examples of socialism that "works"; should we, could we not follow them as examples of the way civilized people should live?

That's the progressive dream. It's tempting to say yes. If it works, why not?

Those particular countries have been very careful to maintain a balance between wealth re-distribution and fostering the conditions for the creation of wealth. And perhaps that IS the civilized thing to do. I just have doubts that the pope or Bernie really understand that balance. It's easy to advocate the redistribution of wealth. But if the people who create wealth no longer have the motivation to do so, the redistributed funds dry up, and when there are no more, then everyone ends up poorer.

Most of the nations around the world have overspent more than they have created. Until they demonstrate that they understand the balance between spending and wealth creation, I would not encourage their redistribution efforts. It will only end badly. Such stupidity CAN only end badly.

I've posted previously about the likely future of world economics and the needed flexibility of the new economic reality of the global economy in the Brave New World we are becoming. A good deal of "workable" socialism or socialist ideas may be built into it. If it works, then so be it. Perhaps it will be true progress. It's just that, where will it lead us, unless we are VERY careful?

Every communist I've ever known (and I've known quite a few) has told me that socialism is not an end goal in itself; it's merely a stepping-stone to communism. Socialism gets people used to the idea that the government has the right to redistribute wealth and control people's lives for "the greater good". Once the people become dependent on the government for their needs, then democracy and capitalism and be abolished as "unnecessary", and the government can own and run everything. Which is essentially, one group of people telling everyone else what to do and how to live.

But, people could get "stuck" on socialism that "works"; they get too comfortable, and stop "progressing". The communist's answer to that is to overload the system till it no longer works; destroy the balance, keep spending until the system collapses. Capitalism can then be declared "dead", and replaced with communism. By then the people will be so dependent on the government and so fearful that they will gladly trade freedom for security. And if history is any indication, they will end up with neither.

Communists are fond of saying that "real" communism has never been tried. But that's not true, it has been tried, many times, and every time it's killed a lot of people. That kind of control goes against human nature, and the only way to enforce it is to kill lots of people. If we don't learn that lesson from history, we may be destined to continue repeating it. There may be different "flavors" of capitalism and socialism. But there is only one flavor of communism, and it's always deadly.

Perhaps we are destined for some flavor of socialism to dominate the Brave New Word our future is becoming. I can only say, it's a slippery slope. Perhaps it can be managed, but it would mean being forever vigilant of the dangers. Are we, the human race, up for it? Time will tell.



     

Not another NYT opinion piece on "inequality"?

Yes. And no. It starts by talking about Thomas Pikety's book "Capital in the Twenty-First Century", which everyone is talking about and buying, but also not actually reading, apparently:

An Idiot’s Guide to Inequality

We may now have a new “most unread best seller of all time.”

Data from Amazon Kindles suggests that that honor may go to Thomas Piketty’s “Capital in the Twenty-First Century,” which reached No. 1 on the best-seller list this year. Jordan Ellenberg, a professor of mathematics at the University of Wisconsin, Madison, wrote in The Wall Street Journal that Piketty’s book seems to eclipse its rivals in losing readers: All five of the passages that readers on Kindle have highlighted most are in the first 26 pages of a tome that runs 685 pages.

The rush to purchase Piketty’s book suggested that Americans must have wanted to understand inequality. The apparent rush to put it down suggests that, well, we’re human.

So let me satisfy this demand with my own “Idiot’s Guide to Inequality.” Here are five points: [...]

I can't repeat the five points, without reproducing the whole article here, so you'll have to follow the link.

I don't normally post about these kinds of articles, because they are often filled with "class warfare" rhetoric and drivel. And this NYT opinion piece has it's share of that as well. It's ironic that the author chooses to call it the "idiots guide", when I think some of the things he says are pretty idiotic (especially the option about rich people and expensive cars. Isn't it possible that rich people by expensive cars, because they like them and can afford them? Duh!).

But the article does have some moderate views, and does have a lot of embedded links to back up it's arguments. So while I may not agree with the article as a whole, it doesn't mean that it doesn't touch on some interesting facts or ideas. I'm not against rich people. But if indeed only the rich are getting richer, it's worth looking at why, and understanding why and how. I don't believe in communist revolutions redistributing the wealth. But a rising tide that lifts all boats IS preferable to one that only lifts yachts. Most reasonable people would have no argument with that.

     

Where Keynes got it wrong, and why

And what we might glean from the "why":

Paul Mason: what would Keynes do?
The revolution in IT and how it is transforming our world in ways that even economists are struggling to understand.

In 1930, while the world was still reeling from the impact of the Wall Street crash, John Maynard Keynes published a remarkable essay: in “Economic Possibilities for Our Grandchildren” he imagined a world where, as he put it, mankind’s “economic problem” has been solved. By 2030, barring unforeseen wars and given the population did not rise too fast, a combination of technological advance and rising wealth could leave enough for everybody.

This would be quite a big change, he pointed out, because the entire history of humanity has been determined by there not being enough for everyone.

“For the first time since his creation,” Keynes wrote, “man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

[...]

Keynes imagined and fought for a society based on liberalism and aesthetics. The market would eventually provide for all and create a confident, socially adventurous leisure class, whose purpose was to understand and create beauty – and to work as little as possible. That view had been dented by the First World War and would now be shattered by the Depression. So the “grandchildren” essay stands as almost the last utterance of Keynes’s pre-Depression world-view.

[...]

So, as with all insights into the future, Keynes’s essay is full of misunderstandings about the present. (In 1930 the great wave of bank insolvencies that triggered the Depression lay 12 months ahead. Herbert Hoover was in the White House, no developed country had yet left the gold standard, Ramsay MacDonald was still in Downing Street and the Nazis held just 12 of the 491 seats in the Reichstag.) Its underlying tone is: don’t worry, these are growing pains; the market will – with the help of governments – create the solution. And that was wrong.

Yet there is something breathtakingly far-sighted about the “grandchildren” essay. At its heart is the proposition that one day:

• capitalism will grow into something else;

• if that happens the cause will probably be technology;

• we will have a major psychological problem adjusting our lifestyles to a situation where money is not important;

• the love of money will come to be seen as a disease;

• economics will become as mundane as dentistry.

Keynes looks into the future using three yardsticks: the rate of technical innovation, the growth of population and the growth of capital through compound interest. He estimated that productivity would safely grow at least 1 per cent per year, and that capital would grow by 2 per cent per year. If so, it was safe to assume that by 2030 the standard of living in advanced countries could be four to eight times what it was in 1930 – and if technology improved faster, eight times could be an underestimate.

[...]

The idea was that technological progress would create fresh demand, so that even as the price of today’s goods got cheaper (because of productivity) there would always be new, more complex human needs created that require higher-valued things and a higher-skilled workforce to create them. That has been capitalism’s get-out-of-jail card for 200 years, confounding Malthus, Ricardo and Marx, each of whom in his own way believed there were limits to capital.

It happened spectacularly in the Progressive Era, the second industrial revolution, when Victorian-era cities were suddenly populated with Arts and Crafts-style pubs, cinemas, libraries, automobiles, electric lighting . . . prompting Virginia Woolf to declare that “on or about December 1910, human character changed”. And sure enough human character is changing again, under the impact of technology. This third industrial revolution is having a different effect, however: certainly there are more complex needs being created, but it’s not obvious how they will be commercialised.

“Information wants to be free,” said the hippie-ideologue Stewart Brand – to which the open-source movement added: “free as in freedom”. If physical goods are getting cheaper the drivers of demand are of course energy (which has to get dearer) or services. But services, too, can be automated. And so what we may be left with is the nightmare the French writer André Gorz envisaged: that just as it tried to privatise water in the 1980s, capitalism is forced to privatise and commodify simple human interaction. That just as we have sex work now, we might have affection work, sympathy work, anti-loneliness work in the future.

[...]

The present situation breeds not only a widening inequality of wealth but an inequality of power not seen in Keynes’s time except in Fascist Italy or Stalin’s Russia. I think it may all end in tears again – with unchecked oligarchic governments such as those of Vladimir Putin and Recep Tayyip Erdogan repressing their population with tear gas and arbitrary detention, while the democratic-world elite stands by, once again convinced that its economic interest lies in supporting dictators against their own people, and increasingly prepared to use repression, surveillance and arbitrary power against their own populations.

If we avoid this dire outcome, it will because the forces for good, for understanding and knowledge and restraint are also being strengthened by technology. I think we should imagine new technology creating the world of abundance Keynes longed for, but it is likely to be decoupled from the question of pure GDP growth and compound interest.

It won’t happen by 2030. It will not be the transition Marxists imagined, led by the state suppressing market forces, but a transition based on the controlled dissolution of market forces by abundant information and a delinking of work from income. I call this – following economists as diverse as Peter Drucker and David Harvey – post-capitalism. In making it happen, the main issue is not economics but power, and it revolves around who can envisage and create the better life.

Keynes’s critique of Marxism was that by basing itself on the working class it asked too much of the intelligentsia. He wrote in 1925: “How can I adopt a creed which, preferring the mud to the fish, exalts the boorish proletariat above bourgeois and the intelligentsia, who, with whatever faults, are the quality of life and surely carry the seeds of all human achievement?”

Well, now (thanks to education and technology), we have a mass intelligentsia: yes, for sure, spoon-fed tick-box learning on degree courses whose intellectual level Keynes would have scorned. But they have shown themselves willing to stand somewhere between the mud and the fish, and able to create science and art and ideas that make this a thrilling time to be alive. It was they who launched the Arab spring, the Quebec spring, Occupy, Taksim Square and the Russian democracy movement.

When I look at the picture of the miner’s relative and the man kicking him, I find it hard to prefer the fish to the mud. I suspect that Keynes, placed for one hour in a Rolex store, or in any of the yachting ports where British politicians frequent the vessels of Russian oligarchs, might also begin to find this whole “fish v mud” thing not so useful. But we have gone beyond the proletariat and the bourgeoisie. We have an educated demos alongside an underclass, and we are all toiling in a social factory where every act of production, consumption and leisure sucks us into a system of value creation based on debt, finance, monopoly.

By 2030, according to the Oxford Martin School, 47 per cent of all US jobs, mainly in retail and services, will be automated. Automation used to mean the replacement of physical labour by machines; now it means the replacement of mental labour by software – and software is just a machine that never wears out and costs nothing to reproduce. Unless whole new industries based on whole new sources of economic demand grow up, the purchasing power of the majority will fall; and ultimately there is only so much money you can print, and only so many asset bubbles you can stimulate, until it comes to a full stop.

Keynes imagined a future where rising wealth led to falling inequality. Instead, economic wealth has grown more slowly than he imagined but physical and information wealth has grown faster and begun to detach itself from the value system. The moment is coming where we have to recognise this and redesign society as boldly as Keynes’s generation did in the mid-1940s.

I think a modern-day Keynes would be obsessed with how to decouple work from income, production from price, organisation from ownership. We know what he achieved in practice: a workable system that revived global capitalism. But he also dreamed of something better than a system based on the pursuit of money. [...]

Yeah, dreamed is exactly the right word. And what is this: "That just as we have sex work now, we might have affection work, sympathy work, anti-loneliness work in the future." WTF?

This article does have some interesting parts, and parts of it seem to be backed up with some pretty good arguments and observations. But it's got it's weak spots too.

The author says "Even as we grapple with the aftermath of our own Wall Street crash, we are facing a new problem: the rise of information goods whose abundance is probably the indirect cause of – and solution to – our current state of low growth, high inequality and growing social unrest." And tries to explain why. Some of his arguments are convincing. But others, not so much. And I have to say, I'd like to hear more about how the abundance of information goods is "the solution to".

He does an excellent job of explaining the failures of Keynes predictions, but then seems to go on praising Keynes's vision as some how achievable anyway, due to some vague "post-capitalist" society that we need to become.

I don't object to the discussion of this. But I've heard plenty of people fantasize about a "post-capitalist society", yet they never show you the beef; it just sounds life a fantasy. And since Keynes HAS been proven wrong about so many things, you have to wonder if it isn't a mistake to keep holding on to the future-fantasies he envisioned as well?

This article identifies a lot of problems, but it seems unfirm and vague about solutions. I can't get excited or enthusiastic about vague references to a "post-capitalist" society, without it being explained how such a society would actually work. It's been tried before, with dismal, even deadly, results. So any talk about a "post-capitalist" society should, IMO, provide the details and prove itself to be something other than another deadly experiment in social engineering.


   

Did Communists take over South Africa?

Not so easy to answer. Yes and no? Perhaps more no than yes?

Jenkins: When Communists Took Over South Africa

[...] Two decades later Mandela's ANC has indeed become a party of revolutionaries turned business owners and financiers.

In their well-researched 2012 book "Who Rules South Africa?" the journalists Martin Plaut and Paul Holden found that three-quarters of cabinet members had outside business or financial interests as did 60% the regime's 400 members of parliament. They also report that, in 2011, South Africa's auditor-general found that in the impoverished Eastern Cape, ancestral home of Mandela and many other top ANC leaders, 74% of government contracts went to companies owned by state officials and their families.

At the moment, South Africa's likeliest next president is Cyril Ramaphosa, a former militant union leader and Mandela protégé who serves as ANC deputy president. According to Forbes, Mr. Ramaphosa is worth $625 million—three times Mitt Romney's wealth. [...]

If South Africa continues to have free elections, I wonder how long Ultra-rich ANC members will continue to get elected?

I'd posted exactly one year ago, about a split in the ANC being a possibility. This article explains some of the history and reasons why that may happen.
     

Russian Shopping, in the Western Style

Malls Blossom in Russia, With a Middle Class

MOSCOW — Shoppers who find that 250 stores aren’t enough can go ice skating, watch movies or even ride a carousel, all under a single roof.

While it sounds like the Mall of America, this mall is outside Moscow, not Minneapolis.

“I feel like I’m in Disneyland,” Vartyan E. Sarkisov, a shopper toting an Adidas bag, said recently while making the rounds of the Mega Belaya Dacha mall.

Instead of bread lines, Russia is known these days for malls. They are booming businesses, drawing investments from sovereign wealth funds and Wall Street banks, most recently Morgan Stanley, which paid $1.1 billion a year ago for a single mall in St. Petersburg.

One mall, called Vegas, rose out of a cucumber field on the edge of Moscow and became, its owners say, larger than the Mall of America if the American mall’s seven-acre amusement park is not counted in the calculation of floor space.

A few offramps away on the Moscow beltway, another mall scored a different kind of victory: the Mega Tyoply Stan shopping center drew 57 million visitors at its peak in 2007, well ahead of the 40 million annual visits reported by the Mall of America.

As American malls dodder into old age, gaptoothed with vacancies, Russia’s shopping centers are just now blossoming into their boom years, nourished by oil exports that are lifting wages.

“It’s 1982 all over again in Russia,” said Lee Timmins, the country representative of Hines, a Texas-based real estate group that is opening three outlet malls in Russia, referring to the heyday of the American mall experience. Russians, he said, love malls.

The mall boom illustrates an extraordinarily important theme in Russian economics these days. The growing crowds at malls, and the keen interest in Russian malls on the part of Wall Street banks, are signs that the emerging middle class that made up the street protests against Vladimir V. Putin in Moscow last winter is becoming a force in business as well as politics. [...]

Moscow alone has 82 malls, two of them the largest in Europe. The article goes on to explain how the growth of malls is paralleling the growth of a large middle class with disposable income, and how and why it's happening. And the political ramifications. Interesting stuff.

Russia has a long history of mall-like structures, like their traditional GUM (department store). But the modern malls are the next generation, being driven by modern considerations and modern capitalism, with a Russian flavor.
     

Utopian Socialism and the damage it inflicts

The Dangerous Return of Utopian Socialism

Jeffrey Sachs is senior economist at the UN and author of the bestseller "Common Wealth" and the controversial Time essay "The Case for Bigger Government". In a recent interview in the Brussels newspaper De Tijd Jeffrey Sachs blames “unbridled American market capitalism” for the financial crisis and pleads in favor of the Swedish social model as an alternative. His ideological argument is revealing for the dominant utopian-socialist mind at the top of the UN.

The Swedish social model, which Sachs would like to introduce, has not the only the largest Size of Government of Western World, but also the weakest economic performance of the OECD. In 1970, Sweden still was the fourth wealthiest nation in the world. Thirty years later, Sweden had fallen to rank 17 with catastrophic social consequences. In the meantime the U.S. consistently managed to remain the second or third for more than half a century. So there is not much socio-economic wisdom to be learned from the Swedish Social Model.


Sachs also argues that "unbridled capitalism" is the cause of the current crisis. The reality is that during the last twenty years central planning progressively intruded Western economies who now bear the burden of governments spending 40% to 55% of GDP. Entrepreneurs face ever more crippling restrictions, licensing schemes, quotas and price and quality controls. Businessmen endure tens of thousands of pages of new rules and regulations each year, all written in a lawyers slangy that totally undermines the legal certainty of the free market and which transformed business into a gamble on the next political caprice and on judicial interpretations of the legal jargon. Size of government, computerized control and dirigisme has now reached a level plan economists of the Soviet Union could only dream of. Not the capitalistic system failed, but excessive dirigisme is to blame for the crisis. [...]

The article also looks at and factors in Monetary Policy, the New Monetary system, Kyoto and Emission rights, and the Market oriented Alternative. Utopian socialism is the culprit, not capitalism.


In another article, George Handlery sums it up well:

[...] Government directed and politically inspired planning and democracy do not mix well. Those condemned by government pressure or their self-inflicted errors to drink the mixture of political power and economic dominance are likely to choke while ingesting it. The foul taste comes about because the plan will be misguided and because its correction will prove to be more than difficult. That will be because concentrated political and economic power will lack the checks and balances that the ability to correct errors presumes. Political power will be devoid of checks and balances because the difficulties of the economy to deliver its promises will create a resistance that will have to be suppressed. Furthermore, the separation of economic and political power is a precondition of lived liberty. Once this separation of powers is undermined, the resulting centralized power will become openly tyrannical. That will happen because dictatorship will be possible and, due to various deficiencies, most necessary.

Whole Foods and "Conscious Capitalism"

John Mackey, CEO of Whole Foods:

The Conscience of a Capitalist
The Whole Foods founder talks about his Journal health-care op-ed that spawned a boycott, how he deals with unions, and why he thinks CEOs are overpaid.

[...] "Before I started my business, my political philosophy was that business is evil and government is good. I think I just breathed it in with the culture. Businesses, they're selfish because they're trying to make money."

At age 25, John Mackey was mugged by reality. "Once you start meeting a payroll you have a little different attitude about those things." This insight explains why he thinks it's a shame that so few elected officials have ever run a business. "Most are lawyers," he says, which is why Washington treats companies like cash dispensers.

Mr. Mackey's latest crusade involves traveling to college campuses across the country, trying to persuade young people that business, profits and capitalism aren't forces of evil. He calls his concept "conscious capitalism."

What is that? "It means that business has the potential to have a deeper purpose. I mean, Whole Foods has a deeper purpose," he says, now sounding very much like a philosopher. "Most of the companies I most admire in the world I think have a deeper purpose." He continues, "I've met a lot of successful entrepreneurs. They all started their businesses not to maximize shareholder value or money but because they were pursuing a dream."

Mr. Mackey tells me he is trying to save capitalism: "I think that business has a noble purpose. It's not that there's anything wrong with making money. It's one of the important things that business contributes to society. But it's not the sole reason that businesses exist."

What does he mean by a "noble purpose"? "It means that just like every other profession, business serves society. They produce goods and services that make people's lives better. Doctors heal the sick. Teachers educate people. Architects design buildings. Lawyers promote justice. Whole Foods puts food on people's tables and we improve people's health."

Then he adds: "And we provide jobs. And we provide capital through profits that spur improvements in the world. And we're good citizens in our communities, and we take our citizenship very seriously at Whole Foods." [...]

Mackey's "conscious capitalism" doesn't sound very different from "enlighten self-interest". Whatever it's called, I like it. It has a proven track record in the real world, and it's sustainable. We need more people like John Mackey.


Also see:

Were unions behind Whole Foods boycott?

Enlightened, affordable healthcare, that works

     

The resurgence of Europe's "spine"

It seems that local governments along Europe's historic "spine" are attempting to assert themselves. From Paul Belien at the Brussels Journal:

What’s Going Right in Europe – How Localism Might Save the Continent

[...] While France succumbs to North Africans and Germany to Turks, the parties from Old Lorraine, the spine of Europe, are preparing to fight for the preservation of their own identity. Owing to the massive immigration by people from an entirely different culture, many ordinary Europeans no longer feel at home in their own countries. Home is that cosy, often small, place where people feel safe among those whom they know and trust. The fight for the preservation of Europe is a fight for one’s own home, village, town, city, provence. That is why it is a localist issue.

Resistance to Islamization is not a matter of ideology, as one prominent American “anti-Jihadist” seems to think. The successful resistance in Europe has a provincial and an ethnic basis. It is about the right of the Europeans to hand their traditions, their identity, their cultural heritage down to their children so that the latter can continue to enjoy Europe’s ancient freedoms. The spirit of Old Lorraine has survived for 1,200 years. “Populist” parties in Flanders, Switzerland, Lombardia, Cologne and Alsace and other regions along the spine of Europe are popular for the simple reason that they are not prepared to let twelve centuries of capitalist self-reliance, self-governance and limited government fade away simply because foreigners are moving in with a spirit adapted to Arabian desert life. [...]

(bold emphasis mine) The article has some interesting figures on illegal immigration in Spain and Italy, the numerous amnesties that have been repeatedly granted over the years to assimilate them, and the political ramifications of that, but the article's not primarily just about immigration.

Belien goes into a detailed history of this European spine, where he claims capitalism in Europe had it's origins, and describes it as a place "...where citizens are still influenced by centuries of independence, self-reliance and adherence to a local identity that opposes centralizing authorities in far-away capitals."

It's interesting history, and it's interesting how he uses it as argument against Robert Spencer's argument that Jihadism should be fought as an ideology. I think there are merits in both points of view. Ethnicity and ideology are often closely linked, so it's not just a simple either/or scenario.

What I don't quite see is, how this spine of Europe is going to manage to exert any political power in the European Union, which seems hell-bent on ignoring or crushing such citizens. Yet there is also resistance to the EU from Ireland and other places, as discussed in one of the links below. It will be interesting to see where this goes.


Related articles at the Brussel's Journal:

Europe’s Fate and Turkey’s Progress

Freedom Fighters in Ireland, the Czech Republic and Germany Oppose EU Treaty
     

Bill Gates: "I got mine, so now capitalism sucks"

Ok, that's not EXACTLY what he said, but considering how he made his fortune, some may say the sentiment's the same. It sounds rather hypocritical to hear him grouse about capitalism now. From Lawrence Kudlow:

Capitalism Doesn't Work, Mr. Gates?

Bill Gates, bloviating at the World Economic Forum in Davos, Switzerland, is issuing a clarion call for a "kinder capitalism" to aid the world's poor. Gates says he has grown impatient with the shortcomings of capitalism. He thinks it's failing much of the world. This, of course, from a guy who's worth around $35 billion (give or take a billion).

Don't you just love it?

A guy without a college degree who invented a new technology process in his garage that literally changed the entire world, a guy who took advantage of all the great opportunities that a free and capitalist society has to offer and got filthy rich in the process, is now trashing capitalism and telling us it doesn't work. What chutzpah.

For all his do-good preaching, Gates is ignoring the global spread of free-market capitalism that has successfully lifted hundreds of millions of people out of poverty and into the middle class over the last decade. Think China. Think India. Think Eastern Europe. (Maybe even think France under Nicolas Sarkozy.) Gates wants business leaders to dedicate more time to fighting poverty. But the reality is that economic freedom is the best path to prosperity. Period.

[...]

Gates says he has witnessed steep income and cultural inequities in his travels around the world, in particular to Africa. But for this he should blame the absence of capitalist principles, not capitalism itself. Even the most compassionate corporate executives are not going to bring prosperity to impoverished countries with statist economies. Until Africa's nations undertake the market-oriented reforms that have boosted China and the other Asian Tigers -- like South Korea and Taiwan -- they will continue to rank at the bottom of the world prosperity scale.

The Heritage Foundation/Wall Street Journal 2008 Index of Economic Freedom reveals how free-market economics is spreading like wildfire, while state-run socialism is on the decline. And it's no wonder why. The free-market countries are prospering mightily, while the least-free economies are mired in poverty. We're talking North Korea, Cuba, Zimbabwe and Iran. Also noteworthy is Venezuela. As the neo-socialist Hugo Chavez attempts to adopt Fidel Castro's failed economic model, he's sinking his nation toward Cuba-type poverty.

Economist Mark Perry, on his Carpe Diem blog site, reports that both the U.S. share of world GDP and its global stock market capitalization are shrinking. But this isn't a bad thing at all. It doesn't mean that America is heading downward. On the contrary, it means that newly freed economies are heading up.

The reality here is that the rising tide of global capitalism is lifting all boats that employ it. Capitalism works. It's a good thing. It's the key to unlocking a nation's prosperity. In fact, free-market capitalism is the greatest anti-poverty program ever devised by man. [...]

George Soros, also at the Davos forum, is predicting that the era of capitalism is coming to an end. I have no doubt that he would like that. I'm sure it's a major reason why he funds so many left wing groups and practically owns the Democrat party. I'm sick of these exceedingly wealthy people who decide that once they've got theirs, capitalism has to be limited, so they can use their wealth to Lord it over the rest of us.

The entire article is worth reading, as it talks about what capitalism has done in China and India and many other places... and why it ought to be encouraged, not diminished.