Free-market "failures" and South American socialism

[futures_shark]

Quote from dddooo:

What I am suggesting is that China is not an open economy, it has never been an open economy and it will never be an open economy. Opening up to the west has nothing to do with "open economy", "free market" or "free trade", you're confusing these concepts. They deal with the west the way the see fit, they only do what they believe is in the interests of the Peoples Republic of China, they could not care less about free market theory and practice.

Let me try again. In the past, China was isolated. Now they are a major trading partner with most of the world. Where did that growth come from? Was it internal? I think not.

It would be interesting to know how much of that 10% growth was due solely to foreign direct investment.

The score has been improving over time; as in more open now than before but still not good.

 

[dddooo]

Quote from futures_shark:

Let me try again. In the past, China was isolated. Now they are a major trading partner with most of the world. Where did that growth come from? Was it internal? I think not.

Let me try again too. Trading with other nations and "free market" have nothing in common. China does trade with the west now and it's very beneficial for them but China does not practice "free market". We do but they don't which makes it even more profitable for them at our expense.

You started this thread and it's not about international trade which we all agree is always good, it's about the "virtues" of the free market and free trade and China defies the theory, while they trade with other nations, they are not a free market economy by any stretch of imagination, nevertheless they're doing real well.

 

[futures_shark]

Quote from dddooo:

Let me try again too. Trading with other nations and "free market" have nothing in common. China does trade with the west now and it's very beneficial for them but China does not practice "free market". We do but they don't which makes it even more profitable for them at our expense.

You started this thread and it's not about international trade which we all agree is always good, it's about the "virtues" of the free market and free trade and China defies the theory, while they trade with other nations, they are not a free market economy by any stretch of imagination, nevertheless they're doing real well.

Any time two entities do business without being coerced to do say they have engaged in free trade, even if the business transactions are highly regulated. They freely chose to do business with each other.

Communist China has opened up to foreign direct investments. And businesses are freely choosing to invest there.

China is not defying the theory at all. They are alowing one sided trade into the country which is fueling the high growth rates.

I said socialism doesn't work.
You say it does and China is the proof because they have been growing at 10%

Correct?

Where did this growth come from? It came from China opening it's economy to foreign investment. Money has been flooding in to China because whatever they changed it has made the risk /return very favorable and capitalist business entities have been investing heavily.

I'm trying to make the point that even though the govenrment is communist there is a lot of capitalism going on over there. The two are not mutually exclusive.

 

[dddooo]

Quote from futures_shark:

I said socialism doesn't work.
You say it does and China is the proof because they have been growing at 10%

No, that not what I am saying. I am saying capitalism works but "unbridled capitalism" does not. I am saying international trade works but "free market/trade" policies don't always work (sometimes they do, sometimes they don't).

I am saying China benefits a lot by becoming more capitalistic and trading with western nations, it benefits by accepting foreign investments and allowing american businesses to open factories in china and hire chinese workers. I am also saying it benefits even more by not practicing free market/trade.

See, I am not equating international trade with free market/trade, capitalism with unbridled capitalism, I don't see socialism as the only alternative to unbridled capitalism and isolationism/protectionism as the only alternative to free market. There is a lot of room between those extremes.

 

[gortaur]

I dont suspect that any of you has ever been to China to be able make any judgement calls. I actually consider the chinese economy much more open than the US one. It is so easy to open up a factory in China (I know because a cousin of mine opened up a shoe factory). All this growth that you are seeing in the country is a direct result from opening up and liberalizing the economy. I would even argue that there are more comunists today on US college campuses than in the Chinese communist party. Having a one party system is actually more beneficial for capitalism consider that you wont face law suits if you want to build a nuclear or coal powerplant, if there is a highway planned the government would displace the population without much fuzz about it. Also a one party system, because of the absence of elections, prevents other people from voting themselves into your pocket like in the states. Chinese officials look like genuises compared to their western counterparts. The questions of energy supply in a world approaching peak oil are matters of the state and cannot be left to market forces.

Lets look at the failed states of Latin America for a moment. There is actually a little known fact but South America used to be extremely wealthy in the 1st part of the 20th century. In countries like Peru and Argentina the per capita income was much higher than in most european states at the time. They were so wealthy that many japaneese emigrated to Peru in the 50s I think that Peru actually had a japanese president from 95 to 01 .Guess what they were completely free market economies.
After the end of WW2 things went terribly wrong and economies of the region desintegrated in an orgy of socialist redistribution "do good" programs, hyper inflations,military coups,political instability and US intervention.
Another extreme example is Britain which after the end of WW2 applied mainly socialist policies and saw its standards of living decline compared to the rest of the world until the 80s and M.Tatcher. Scandinavian countries wich are also very socialist in every way saw their standards of living relative to GB decline from 1980 to 2005.

Conclusion socialism always brings a relative decline in the standards of living.

Lets not forget the words of Friedrich von Hayek "the goverment is always eager to take credit for the success of the free market and is always willing to blame its failuires on the market

 

[GlobalFinancier]

Lemme clear up some misconceptions of China.
1) There are relatively extensive economic fveedoms(in more devleoped areas). These will continue to grow.
2) There is a poorly regulated capital market.
3) Poverty is being solved by the market slowly.
4) Stateowned enterprises do not contribute that much to the economy anymore. Shanghai is 40% private.
5) The fvee-market reforms led to the growth. I believe most of the growth is from "inertia", or excess production whatever...
BTW, in the 1970s, China turned from a cotton exporter to a cotton importer.
After the fvee market reforms, in 1980s, we became an exporter again.
Three words: FVEE MARKET WORKS.

 

[GlobalFinancier]

Quote from dddooo:

"China ... continues to utilize quotas and licensing and "retains regulatory control over imports via commodity inspection, registration requirements and quarantine rules."

"China's top income tax rate is 45 percent. The top corporate tax rate is 30 percent. "

"the government retains much of the apparatus of a planned economy and owns major corporations in the energy, banking, telecommunications, steel, car manufacturing, food, and home appliances sectors."

So what authority does WSJ have anyways?
1) We do not have capital gains tax(15% max at Fed level for US)
2) We do not have social security tax(6.2% for US with employer matched contribution)
3) We do not have Medicare tax(like what, 2%?)
4) We do not have sales tax(could be 8% in some areas)
5) We do not have state/provincial taxes(who knows how many, 0% in Florida, high in NY and Calif)
6) We do have a 20% tax on interest from banks
7) These stateownedenterprises are slowly being privatized.
8) Exxon paid more than 30% in corporate taxes last year.
9) Lots of redtape etc exists, but it's better than before. And we have 300,000 millionaires. People are getting wealthy. The most recent guy was a billionaire in dollars who did computer games.
And finally... you can invest in Chinese stock markets now without being a QFII(qualified foreign institutional investor)
And lots of businesses have owners that were educated in MBA schools in the US, and others have domestic MBAs(lower quality, but still, they do know something)
The study is probably biased by other notsogood stuff. You need to visit the country to see what it's really like.

 

[dddooo]

Quote from gortaur:

Chinese officials look like genuises compared to their western counterparts.

I agree although probably for a different reason - Chinese officials apply "whether it's good for China" test to their actions, American officials apply "Whether it's consistent with the free market" test to theirs. Chinese officials let western companies open factories, invest in their economy hire chinese workers - it's part of the free market and it's good for them. Chinese officials manipulate currency, control import/export, implement tariffs and import restrictions because it's good for them and they could not give a damn that these actions go AGAINST the free market. American companies fire thousands of american workers and move to China and yet they sell their products in the US. The chinese government will never let a chinese business fire chinese, move to another country and yet continue selling their products in China. The owner of the company will probably end up in jail on treason charges.

Quote from gortaur:

Conclusion socialism always brings a relative decline in the standards of living.

That's true but so does unbridled capitalism which China is not practicing. The contention of the original article was that "the free market" in South America did not lead to prosperity, not socialism.

Quote from gortaur:

Lets not forget the words of Friedrich von Hayek "the goverment is always eager to take credit for the success of the free market and is always willing to blame its failuires on the market

Lets not forget the words of DDDOOO either "FREE MARKETEERS are always eager to take credit for economic successes and are always willing to blame economic failures on the government."

Isn't that exactly what's hapenning, the failures of the free market in South America are blamed on the governments, the success of the Chinese economy is attributed to the free market when it's quite obvious that Chinese economic policies have nothing to do with the free market.

 

[dddooo]

Quote from GlobalFinancier:

So what authority does WSJ have anyways?

If you got an impression that I was criticizing China you're absolutely wrong, it's exactly the opposite. I simply pointed out that a country can be a huge success without becoming a free market economy. Yes of course it has to trade with the rest of the world but based on what's good for the country, not based on some abstract free market principles. On the other side a lot of countries trying to implement free market principles do fail, just like it happened in South America.

 

[futures_shark]

Quote from dddooo:

...
That's true but so does unbridled capitalism which China is not practicing. The contention of the original article was that "the free market" in South America did not lead to prosperity, not socialism.

That is most certainly NOT the contention of the original article. Did you even read the article or did you just read the title?

The article explains how the supposedly free-market reforms failed because they weren't truly a free market reforms,but more big government.