Articles Tagged As “Capitalism”:
2503.\\ California Writ Large
The meltdown of the world's 7th largest economy has long roots and was long coming. California's model of socialism is the path America as a whole has decided to take. For the nation it will end the same way it is ending for California, total disaster and risk of complete dissolution. Like so many social engineering experiments before it, when human nature is written out of the equation any utopian scheme will collapse.
TAGGED AS: California, Capitalism, Socialism, Taxes, Utopia
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PERMANENT LINK2498.\\ The Coming Collapse of China
I've long held the belief, based on my studies at college, that China would one day collapse of its own weight. The forces at work in that part of the world for the past 3000 years aren't likely to change overnight, nor have they changed since the Communists took power 60 years ago. Even more unchanging is human nature. This collapse, brought on by loosening central power, is no different in its dynamics than any other time in China's history when similarly authoritarian control was loosened just enough for the entire thing to come unwound. Add to this loosening of CCP power an immense uptick in the materialism and driven self-interest of the various regions of China and you have the ingredients for a massive splintering of the nation into a modern version of Warring States.
A recent article by Gordon Chang in Forbes detailed how the Chinese Miracle may in fact be totally fraudulent (you should read Gordon if you are remotely interested in the future of Asia). An article in the Politico today backs that up. As does the movements of various hedge fund managers and investors including the one who correctly identified the phoniness of Enron. Now granted, figuring out a company is cooking the books is different than figuring out a secretive nation is cooking the books. But the point is that not all is as it appears to be in the Middle Kingdom.
Which brings me back to my own, long held, prediction. If China collapses or begins to, the leaders will try anything to remain in power. This includes whipping up nationalism by manufacturing a war with America over Taiwan or the South China Sea or imported chicken.
In any event, if China collapses they will stop financing our debt. This will hurt us. If China collapses and tries to take it out on America, this will hurt us. Either way we should prepare for a rough go of it where China is concerned.
Of course, our only concern as a nation at the moment is whether someone is going to give us health care for free, not the imminent collapse of the international order.
TAGGED AS: America, Asia, Capitalism, CCP, China, Communism, Economy, Finance, Forbes, Gordon Chang, Politico, Totalitarianism, War
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PERMANENT LINK2472.\\ The Smartest Man in America
Every time I read Thomas Sowell I have an increasing admiration and appreciation for his intellect. He's a philosopher in an era of sophists. He's an excellent writer and his knowledge of how the economy really works makes Friedman look like Herbert Hoover.
His latest column, entitled Magic Numbers in Politics, is a devastating critique of the current vogue of political theory that markets are evil and the root cause of the financial crisis was insufficient Statism.
Aside from being a Capitalism 101 lesson that every politician should read, it is a repudiation of the notion that the market caused the financial crisis and that the solution is Barny Frank running your life.
The best bit:
If everything is connected to everything else in a market economy, then it makes no sense to have laws and policies that declare some given goal to be a "good thing," without regard to the repercussions, which spread out in all directions, like waves that spread across a pond when you drop a rock in the water.
Amen. Now, how do we fix it?
TAGGED AS: Capitalism, Communism, Economy, Philosophy, Thomas Friedman, Thomas Sowell
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PERMANENT LINK2352.\\ Maxine Waters is a Liar
She's on America's Newsroom right this minute claiming that people were 'tricked' into signing mortgages. She's also asserting that nobody understands what is in a contract such as a mortgage and so you can't blame people for the housing crisis. Somehow it is because of deregulation, she claims, not Barney Frank and ACORN pushing subprime loans and encouraging people to put zero down that we've had a housing bubble. Deregulation caused a bubble? I think she means that manipulating the housing markets from a Congressional committee caused the bubble. The principle of the market has been working just fine for several hundred years, thank you very much.
She's a liar, a fraud and she has terrible hair. She clearly fits in with her district. But more importantly, this is just one more piece of evidence that she's off her rocker. See this gem from over the summer.
TAGGED AS: Capitalism, Congress, Economy, Liar, Liberals, Maxine Waters, Politics
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PERMANENT LINK2348.\\ W.W.A.H.D. ?
The notion that bureaucrats should be involved in manipulating the free market is noxious. That being said, the prospect of economic panic, credit drying up, a domino effect of failing institutions and the rest of the world gloating at our problems compels me to support an effort to extend financial protection at taxpayer expense.
We've done this type of thing before, of course: the Savings & Loan collapse of the late 80s, the collapse of Chrysler in the late 70s, the Home Owner's Loan Corp of the 30s and 40s, the JP Morgan rescue of the 1907, the panics in the 1870s, 1841, 1819 and 1809. Of course, the granddaddy of all rescues was the original one in 1792 engineered by arguably my favorite founder, Mr. Hamilton. You can go read about it if you like.
But would Mr. Hamilton be happy by the current approach? Having studied the man in some detail, I suspect not. Hamilton supported public debt and strong central government in the furtherance of American economic power. He wanted to supplement and complement the principles of Adam Smith, not restrain them or legislate them. He would not have recognized the concept of restrained, third-way market capitalism that seems to be creeping around the globe.
The notion that the Federal government should be involved in the economy was a given to him, as it is to us today. But that involvement was not to function as an economic entity somehow superior to the invisible hand, regulating, restricting, governing it. The role of the Federal government, he would say, is to enable the American worker to start a business, sell his wares, sell his services, produce his product. To the extent that a bailout enables positive economic activities and doesn't restrict the economy through microscopic regulatory control, then it is a good thing. If the Fed presumes to know better how to govern the economy than Capitalism itself, then a bailout is a bad thing.
So where do we sit? To be honest, I don't know. Injecting liquidity into the system in order to prop up otherwise failing institutions seems to be a bad use of taxpayer money. It substitutes the judgment of bureaucrats and legislators (campaigning for re-election) for the judgment of the market. That should scare anyone who has ever seen government judgment in action (i.e. the DMV, FEMA, the IRS). Should we trust the people with a 10% approval rating to legislate a $14 trillion economy? I suspect not. Alexander Hamilton, I can assure you, would be aghast.
At the end of the day, what would Hamilton do? I believe he would look at companies that are failing because of the risk they incurred and suggest that they be allowed to fail and not nationalized or otherwise artificially propped up. He would view Government Sponsored Entities such as Fannie and Freddie with disdain and recoil at the notion that trillions of dollars worth of housing was being exposed to high risk because everyone was overconfident in the unlimited support and blank check guarantee from the Federal Government (aka the American Taxpayer). The government should not be loaning money to credit risks and acting as a mortgage lender and backer, he would say. The government should act as an enabler to allow people to own houses they can afford and not guarantee mortgages to those who cannot.
The very concept of risk-reward, the foundation of capitalism, is threatened with the bill currently being tossed about on Capitol Hill. Restricting market capitalism at this juncture would not be something Mr. Hamilton would favor. It didn't work in 1932 and it won't work now. The solution is to unleash the market forces, not further legislate them.
TAGGED AS: Alexander Hamilton, Capitalism, Congress, Economy, Politics, Socialism
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