China has a black swan waiting up river

[JulieW]

I think this article in the Age points out a large potential in China for civil unrest. It also shows, by wealth disparity and corruption, just how unstable is any reliance on China in the medium to long term.

The wealthiest 70 members of China's legislature added almost $US90 billion to their bank accounts in 2011. That increase is greater than the combined net worth of all 535 members of the US Congress, the President and his cabinet and the nine Supreme Court justices. Why start a technology company, study science or work in finance when the riches are to be found by rising within the party?
http://www.theage.com.au/business/t...es-wealth-joins-the-party-20120824-24s0q.html

that sort of corruption creates radical solutions, in a country that has already had quite a few radical solutions in the past. There is nothing to stop the proletariat rising again if they see Emperors starving them.

Hu's decade in power has delivered rapid growth, but few of the reforms needed to elevate the masses from subsistence wages. China hasn't figured out how to be more than a one-trick economy driven by exports, cheap labor and unsustainable levels of investment. It hasn't loosened up on internet or media freedoms, raising questions about how a nation innovates while limiting access to Google. It hasn't devised a strategy to cut pollution. It hasn't made its leaders more accountable.

To China bulls, the Bo case suggests progress on this last front. Bo committed unspecified economic crimes for which he has been humiliated; his wife was punished, so all is well, they argue. The truth is more complicated, of course. Many believe Bo's real crime was his ambition. Bo was the closest thing China had to a political rock star and a spoiler for plans to replace Hu with Xi Jinping. Purging Bo, it might be argued, was all about reinforcing discipline and loyalty and maintaining the status quo in a pivotal year.

That is part of the problem, especially as the world economy deteriorates. China is focused on sustaining growth at 8 per cent or more. That seems to mean giving short shrift to recalibrating a lopsided economy. The same could be said of making the political system more responsive to the needs of the 99 per cent.

If the rich keep getting richer at the expense of the poor, China may actually need to go communist.

 

[Argentum]

The wealthiest 70 members of China's legislature added almost $US90 billion to their bank accounts in 2011. That increase is greater than the combined net worth of all 535 members of the US Congress, the President and his cabinet and the nine Supreme Court justices.


If something is in a trust its not theirs officialy right? its trust's money or was that counted

 

[JulieW]

The wealthiest 70 members of China's legislature added almost $US90 billion to their bank accounts in 2011. That increase is greater than the combined net worth of all 535 members of the US Congress, the President and his cabinet and the nine Supreme Court justices.


If something is in a trust its not theirs officialy right? its trust's money or was that counted

I think Trust is what is betrayed and the money is most likely in foreign bank accounts, Singapore mansions and African farm land.

The point to consider I think, is that China is lauded as the world's boiler room, with a growth rate 'reduced' to 8% or so. With China's inflation raging and this type of corruption and such income disparity, you're looking at a groundswell of protest and in a country that is used to throwing over the old order for the new, it is easy to imagine that China could enter a period of political turmoil which would bring the country, and the world's economies depending upon it, to a standstill.

It also makes me nervous about the talk of a Chinese led international reserve currency. One wonders if the gold purchases are on behalf of the state, or being conveniently melted to one kilo bars so that those 70 politicians have something a little more portable than Yuan.

 

[nowaydude]

Hu's decade in power has delivered rapid growth, but few of the reforms needed to elevate the masses from subsistence wages. China hasn't figured out how to be more than a one-trick economy driven by exports, cheap labor and unsustainable levels of investment.

without these the standard of living in the entire developed world would be dramatically reduced. the rich and well off (us) would not exist without the poor (them). sucks but its true. (im just playing devils advocate)

 

[JulieW]

Hu's decade in power has delivered rapid growth, but few of the reforms needed to elevate the masses from subsistence wages. China hasn't figured out how to be more than a one-trick economy driven by exports, cheap labor and unsustainable levels of investment.

without these the standard of living in the entire developed world would be dramatically reduced. the rich and well off (us) would not exist without the poor (them). sucks but its true. (im just playing devils advocate)

Yes it would, but the developed world is expanding and the 'old' developed world is looking a lot like a collection of banana republics just after their last big dictators were elected. Exploitation has always been the baseline of capitalism and without the balance of altruism, that exploitation looks ugly enough to encourage revolt. Either way we're in for a new world order of some sort, either that or we're looking at the last half century of Rome.

 

[Catseye]

I think this article in the Age points out a large potential in China for civil unrest. It also shows, by wealth disparity and corruption, just how unstable is any reliance on China in the medium to long term.

The wealthiest 70 members of China's legislature added almost $US90 billion to their bank accounts in 2011. That increase is greater than the combined net worth of all 535 members of the US Congress, the President and his cabinet and the nine Supreme Court justices. Why start a technology company, study science or work in finance when the riches are to be found by rising within the party?
http://www.theage.com.au/business/t...es-wealth-joins-the-party-20120824-24s0q.html

Comparing the "net worth of all 535 members of the US Congress, the President and his cabinet and the nine Supreme Court justices" to that of the "wealthiest 70 members of China's legislature" may not be comparing apples to apples, the power structures are different.
In the US the politicians are the bought and paid for servants of the wealthy, they do as they are told by their wealthy bosses.
Perhaps some of this unrest you speculate on will visit the US as well as China?

 

[frogman]

the inequality between the elite and the peasants is one of the reasons that china has such a large standing army
it's not to defend against external aggressors
the ruling elite are acutely aware of internal unrest and are ready to stop it at a moments notice

 

[Clawhammer]

That not Black Swan, it numba 4, beef wif blackbean!

but seriously, the only reason the chinese government & factory owners are channel stuffing is to stave off the inevitable unrest that will tear the country apart when all those workers are faced with returning to a subsistence farm in the polluted coutryside.

 

[bordsilver]

without these the standard of living in the entire developed world would be dramatically reduced. the rich and well off (us) would not exist without the poor (them). sucks but its true. (im just playing devils advocate)

Yes it would, but the developed world is expanding and the 'old' developed world is looking a lot like a collection of banana republics just after their last big dictators were elected. Exploitation has always been the baseline of capitalism and without the balance of altruism, that exploitation looks ugly enough to encourage revolt. Either way we're in for a new world order of some sort, either that or we're looking at the last half century of Rome.

Has someone used your account without your knowledge JulieW? I wouldn't have expected such strange comments from you.

Exploitation is the baseline of capitalism? WTF!?! We're talking about a highly socialist country. Besides I don't know what your definition of exploitation is, but except in cases of actual fraud or threat of violence (which are simply wrong under any form of capitalism) the only force that is wielded to exploit people is by coercive governments with their monopoly on violence.

Capitalism is the system that creates true sustainable wealth for the benefit of consumers within the economy. Socialism forcibly redistributes what wealth there is at the point of a gun and inevitably ends in massive misallocation of resources and consequently LESS true wealth for the average person involved in the economy. You can't exploit free people.

Altruism? What the hell does that have to do with the economic system? Altruism doesn't exist and is simply a propaganda concept used by socialists to rationalise their use of force in certain circumstances. Can people really act in truly selfless ways? People can act in certain ways that benefit other people rather than themselves but to do so requires conscious and deliberate effort. If a benevolent act is truly voluntary then they are still gaining satisfaction from their desire to see someone else happy - hence it is not selfless. There is no way that a rational agent can act in a way that is truly altruistic because that contradicts the fundamental principle of why humans act.

Anyway, even if what you really meant was "benevolent acts to the benefit of others" then either people act in a way that is benevolent to others or they don't. I think humans are (although most more so than some). The economic system has nothing to do with whether benevolence exists. It is irrelevant whether someone happens to be in a society with free markets (and hence with capitalists) or in a 100% centrally planned economy without capitalists. People will still do benevolent acts regardless (although likely to be less in the case of socialist economies due to the large fear of reprisals from going against the wishes of the state).

 

[JulieW]

Bordsilver thanks for pointing out my terminology. Probably not as clear as it could be. Perhaps I should explain.

Exploitation - in the sense of;
to utilize, especially for profit; turn to practical account, to use selfishly for one's own ends.

As in the tendency of capitalists to NOT be their brother's keepers, if you will

Altruism - as in the sense of:
the principle or practice of unselfish concern for or devotion to the welfare of others ( opposed to egoism).

As you point out, somewhat mutually exclusive in the sense of economic models, but as per my description: the mix of capitalism and altruism in aspiring to build a business both for your own prosperity and abundance, but also to provide work for non-entrepreneurs and their families. (example the small business owners who work for nothing to take care of their faithful workers and families in a downturn).

One other: Capitalism: an economic system in which investment in and ownership of the means of production, distribution, and exchange of wealth is made and maintained chiefly by private individuals or corporations.

So my point was that to succeed as a capitalist, you must exploit in some capacity, and without altruism (provided by the morality of 'doing unto others') you end up with exploitation for profit and without morality. Much like Apple allowing working conditions that drive iPhone builders to suicide, or Nike in its previous exploitation of third world workers which set new (low) standards fr the treatment of workers for profit. (they've subsequently cleaned up their act after product boycotts).

Famously Henry Ford paid his workers well 'so they could buy the cars they made'. Not exactly popular at the time for those opposed to wage pushes, nevertheless it was described as 'altruism' when the truth is probably a distance away from it.

I take your point about China being a long way from a capitalist country (probably further than it is from being a democratic one!), but with all the 'isms' attached to their methods their embracing the profit motive is creating the circumstances I was describing - being the potential of revolt against the status quo. Of course some enterprising politician might direct their next 'let a hundred flowers bloom' campaign and quieten the masses long enough to realign the society, and that is probably the best we can hope for given the global effects of their unrestrained embrace of raw capitalism - albeit 'guided' by the Party (where have we heard that before!). After all in China, it appears that despite collectivisation and the cultural revolution, benevolent acts are generally kept in the family.

 

[bordsilver]

Touche. I would say that it is incorrect to use "exploitation" in the pejorative sense as both parties are benefiting from a voluntary trade hence both are profiting and "exploiting" the other.

Re foxconn, nike etc. if the evil owners of the capital were selfishly treating their workforce as slaves the why are there thousands of people queueing to get jobs there? Because the alternatives are even worse (potentially no job and starvation, prostitution etc). Hence you could in fact say 'thanks to the miracle of the market economy thousands of people have obtained better wages and conditions by making iPhones/Nike shoes than they otherwise would'. Rejoice in the improvement in welfare.

Finally, I don't think China has any such thing as "raw capitalism". "Crony capitalism" may be the term you are after.