“Soft despotism is a term coined by Alexis de Tocqueville describing the state into which a country overrun by "a network of small complicated rules" might degrade. Soft despotism is different from despotism (also called 'hard despotism') in the sense that it is not obvious to the people."

Wednesday, October 13, 2010

Point, Counter-point: Quirk's perturbed response to an EB thread on China


Love you guys but I would sure hate to have you on my team negotiating with the Chinese.

Going in assuming the other guy holds all the cards is hardly the way to compete. Sure the U.S. has problems but would you exchange them for those of the Chinese?

Buck up. As has been pointed out all the U.S. problems have been self-inflicted. Part of it by ideals most of the nation accepted for the last half century. Now the errors have been recognized. It won’t be easy turning this big mother around but it can be done. But that merely refers to U.S. problems. What about China’s problems?

Low-costs? There is already unrest building in China from a populace demanding better wages. Some business is already being moved back to Mexico, even in small instances, back to the U.S. As China’s economy grows, the cost competitiveness issue will grow.

People? If China changes to more a consuming nation than an export nation the people problem may mitigate. However, that would also tend to mitigate the problems we have with China. More, whereas the U.S. needs between 100,000 to 200,000 new jobs per month to keep up with population growth, the Chinese need 24 million per year.

Population Demographics
Certainly not good for China. By 2030, given the effects of China’s one-child policy, their population will be contracting and remember population growth is half the GDP equation. At the same time the U.S. population starts to get younger again (around 2030) Chinas will continue to get older. Few worker benefits causing their population to be one of savers rather than consumers.

Natural resources?
Why is China buying up oil, minerals, food? Because they don’t have many. But oil is fungible. As long as there is oil out there the U.S. will get their share.

Water? China has a lot of water resources in the south; however, because of population density most of it is highly polluted. In the north, the water table is disappearing. They now have to drill hundreds of feet to reach it. Because of their push towards urbanization, water is being diverted from the countryside to the cities. The per capita water usage in the cities is much higher (I think at least double) the per capita usage in rural locations. To equalize water availability in north and south will require a tremendous effort and cost. Water is already a point of conflict between China and its neighbors especially with regard to the rivers flowing out of Tibet.

What does China have that we actually need? Rare-earth metals? As has been pointed out here, ironically, the earth is rich with rare-earth metals. The reason the business has been ceded to the Chinese is the processing cost and the fact that the Chinese really don’t give a damn if their people are affected by the radioactivity often concurrent with that processing. Rare-earth metals, like many other things, a short term problem if the Chinese want to keep pushing.

Will China catch up before they start going into decline. They increased military spending by 68% in 2009. Even at that, they spent only about a seventh of what the U.S. did. In order to increase military spending they will have cut back on other domestic spending including infrastructure.

They import food. The north is constantly being hit by drought. Desertification is spreading rapidly in the northwest.

Pollution You don’t want to know.

No doubt central control allows the government to set priorities and implement them quickly. That can be very efficient. However, consider the other side. A banking system that is opaque. A system stacked for business profit to the detriment of the worker. They have a protectionist policy towards foreign investment. (In my opinion something the U.S. could use more of.) However, I’m assuming there is a limit to how much foreign investors will put up with. And it appears bubbles (real estate) are not confined to democracies.

Alliances/New World Order
Possible but hardly to be assumed. Most of China’s alliances I have seen have been based on mutual self-interest and can quickly degrade or even disappear in the face of Chinese bullying. Recent examples where relations have soured somewhat, Australia and Japan. While most of the partners in that part of the world want the advantages offered by trade with China. Many of them also fear China becoming the key player there and continue to push for the U.S. to maintain a counterveiling force there.

A new world order? Tell that to Vietnam, Japan, South Korea. Is it better to have Israel or Iran as a strategic partner? Anyone who assumes all the nations of the Far East will automatically fall under China’s sway hasn’t paid attention to the national rivalries that have existed there for millennia.

The Chinese are close to the point where they will care less and less what we think or what we try to do. We are less and less relevant to them.

Less and less may be true. However, less and less is a relative term. We are still the big target on their radar and will be for decades.

The Chinese will do what they want, at a time and place of their choosing.

Up to the point where we stop treating them with a deference they don’t deserve.

Just wait and see, the Chinese are going to rally the third world and set themselves up as the new financial center providing the financing, the markets, the capital and the technology to a new world order.

The Chinese will not become a financial center until their banking system is completely overhauled. Marketing and capital systems? Probably, just because of commercial issues tied to the size of their economy. Not necessarily a bad thing.

Technology? They still have to prove it. Number of engineers? No doubt a strength. Innovation and technology? Not so much.

There will be a Chinese military and defense alliance as well.

Probably the least of my concerns.

China will undoubtedly be a major U.S. competitor over the next two decades. However, there is nothing inevitable about this becoming a Chinese century. How they progress vis a vis the U.S., in my opinion, will depend more on U.S. actions than on theirs.

Frankly, if India could ever get rid of their bureaucratic drag they have on their economy I could almost bet on them overtaking China.


  1. "How they progress vis a vis the U.S., in my opinion, will depend more on U.S. actions than on theirs."


    If we don't reverse the cultural and educational disaster, stop the mass immigration of low skilled non-assimilators, and eradicate suicidal PC nonsense, don't much matter what China or anybody else does:
    We'll be fucked.
    Big Time

  2. Some of the Chilean wymin look pretty good too, but it's cold and they're all bundled up.

  3. The guy that dug the hole and got there first is a 38 year old guy from Pennsylvania that started his own company.

  4. Oil is fungible, but as resident expert Rufus constantly reminds:

    We are by no means in the catbird seat, and the economy is no immune to price spikes.

    GD Liberals.