Becoming China

First things first....


A generation ago conventional wisdom held that as China liberalized, its economy would come to resemble America’s. Instead, capitalism in America is starting to look like China.
Recent examples include President Trump’s demand that Intel’s chief executive resign; the 15% of certain chip sales to China that Nvidia and Advanced Micro Devices will share with Washington; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct.

There are reasons state capitalism never caught on before. The state can’t allocate capital more efficiently than private markets. Distortions, waste and cronyism typically follow. Russia, Brazil and France have grown much more slowly than the U.S.

Chinese state capitalism isn’t the success story it seems. Barry Naughton of the University of California, San Diego has documented how China’s rapid growth since 1979 has come from market sources, not the state. As Chinese leader Xi Jinping has reimposed state control, growth has slowed. China is awash with savings, but the state wastes much of it. From steel to vehicles, excess capacity leads to plummeting prices and profits.

https://www.wsj.com/economy/the-u-s...can-characteristics-f75cafa8?mod=hp_lead_pos9

 

If you have a better way of rationing capital than a mkt, I am all ears. the part you quoted does not claim rationality, FYI. Even the Chicago economists haven't believed in perfectly efficient or perfectly rational mkts since the 1980s.

 

now you're gonna cosplay as pro-capitalist? Not buying it.

 

you did not ans. If you had the cardigan that Cobain wore on unplugged & you needed a lot of money what would you do?

btw. Money typically has three functions with store of value being 1

 

So, we are in agreement, mkts are the best way to allocate capital.

w.r.t. your friend, I only seeing monopolies being the natural state in absence of gov reg.

Here's the deal with monopolies. Cartels, monopolies created via collusion, etc. should be broken up. However, there are also natural monopolies. It is productively efficient for a natural monopoly to exist. A natural monopoly is 1 where the supply curve is monotonically decreasing meaning that the avg unit cost goes down as the number of units produced goes up over the entire range of aggregate quantity demanded.* I would say garbage collection is a good example or mail delivery.

The dilemma is what to do b/c monopolies natural or otherwise underproduce & capture a huge amount of the surplus from trade. That is, they screw the consumers. You gots 2 choices. 1. Break it up & 2. regulate the price (which should automatically reg the quantity produced). #2 is tricky b/c w/o a mkt, what price do you choose? #1 is tricky b/c it means deliberately killing productive efficiency.

* makin' matters even more weird, there are goods that have network externalities. This too can result in monopolies. A phone is a good example. If I own a (old school) phone it is of next to no value if I am the only 1 who owns 1. The value goes up as more people buy them...so, you tend to get exponential adoption. Economists knew that either word or wordperfect was going to go down due to network externalities. They knew Beta or VHS was going to go down. We see this with things like X & other social media. # of users/adopters make the product worth more. I'd classify these as a weird form of natural monopoly. oh, QWERTY keyboards are the classic example.

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Literally learned this in an econ text. Zoologists were baffled by why grizzlies waking from hibernation ate marmots. They demonstrated that catching & eating a marmot was a neg caloric endeavor for the bears & hence, bears with a taste for them should go extinct. Good thing the zoologists weren't policy makers who thought they knew better. (there's more to the story of course, but I'll leave it hanging). My pt. & I am no fan of crypto, but it did create blockchain tech & we shall see....

 

I bought tattoo barbies when it was announced they were gettin rid of em. Still have 'em. diversification bitches!


If you know what you are doing, musical instruments can be a damn good investment.

 

In 1997 I was 25k in debt & made 14k that year. I bought a 2k mountain bike from a pro - Gary....caint recall. I lived in mt bike heaven - Durango CO. Anywho, still ride the bike all the time. The frame is worth 4k now ( i know not a great return, but I've rode the shit outta it & it was not bought as an investment). GT quit making titanium frames & peeps like em.