The view in most of the world is that China is indestructible. Shrugging off the crises multiplying elsewhere, China seems to surge from strength to strength, its spectacular growth marching on no matter what headwinds may come. It appears inevitable that China will overtake a U.S. mired in debt and division to become the world’s indispensable economy. Those businessmen and policymakers looking to the future believe China’s “state capitalism” may be a superior form of economic organization in dealing with the challenges of the modern global economy.
My answer to all of this is: think again.
I don’t doubt for a second that China will be a major economic superpower with an increasingly influential role in the global economy. In many respects, it already is a superpower. But that doesn’t mean the economy is free from problems, a good number of them created by the very statist system lauded by pundits in the U.S. and Europe. And in my opinion, if China doesn’t change course, and in a big way, the country will experience an economic crisis.
I’ve been thinking about China’s economic future, and the likelihood it will face some sort of terrible collapse, for some time, but I have until now been reluctant to come out with my views so strongly. The reason is that it is very difficult to tell what’s really going on in the Chinese economy. Data is sparse or unreliable. And China is in certain ways unique in economic terms — has history ever witnessed a giant of such massive proportions ascend so quickly in the global economy? Valid precedents are hard to find. Then there is the issue of timing. It is easy to say China will have a crisis; it is almost impossible to say when that might happen. Next month? Next year? Next decade? The fact is China could continue as it is for some time to come. So, in other words, when you make the type of prediction I just have, you have a good chance of getting it just plain wrong.
But the more time I spend in China, the more convinced I am that its current economic system is unsustainable. Yes, economists who specialize in China can give you all sorts of reasons why the country is supposedly different, and thus the regular rules of economics don’t necessarily apply. But one simple thing I always say about economics is that you can’t escape math. If the numbers don’t add up, it doesn’t matter much how big your economy might be or how fast it is growing or how heavy a role the state might play. And China has lots of numbers that just don’t add up.
George Gilder, whose new book publishes today, is one of the original pillars of Supply Side economics. As stated by Discovery Institute, which he co-founded, “Mr. Gilder pioneered the formulation of supply-side economics when he served as Chairman of the Lehrman Institute’s Economic Roundtable, as Program Director for the Manhattan Institute….”
He was the living writer most quoted by President Reagan. And he is back with his most brilliant work yet — one of potentially explosive importance if taken to heart by our political and policy thought leaders. It is a radical guide, with surprising insights on almost every page, to the creation of a new era of vibrant prosperity.
As reviewer Paul Brodsky, a professional investor in New York City, perceptively notes,
"Lewis Lehrman is one of a very small group of contemporary gold advocates able to successfully bridge the gap separating practical conservative intellectualism from fleeting, half-baked idealism. His CV lists great success across many fields including education (degrees and teaching fellowships from Yale and Harvard); industry (past president of Rite Aid); politics (narrow loser to Mario Cuomo in the 1982 New York governor’s race); finance, (past Morgan Stanley managing director); private sector entrepreneur (founder, L. E. Lehrman & Company); public sector advocate (founder, Lehrman Institute); historian (author, Lincoln at Peoria: The Turning Point); and recognized philanthropist (awarded the National Humanities Medal by George W. Bush in an Oval Office ceremony). ... Only someone erudite and elegant in demeanor could hope to pull it off . In an irreconcilably over-leveraged world where irritated bond vigilantes question economic sustainability and angry Tea Partiers protest the immorality of it all, Lehrman’s views are considered and his convictions carry weight. He brings gravitas to his cause, and he does so from within as a member of the club."
Before the Fed: JP Morgan Summons the Bank Presidents
"Finally, on the night of Sunday, November 2, Morgan summoned the presidents of the major New York banks to his new library, at the corner of Madison Avenue and Thirty-sixth Street, an Italian Renaissance-style palace he had built next door to his house to showcase his collection of rare books, manuscripts, and other artwork. Its marble floors, frescoed ceilings, walls lined with tapestries and triple-tiered bookcases of Circasian walnut, crammed full of rare Bibles and illuminated medieval manuscripts, made it an incongruous setting for a meeting of the banking establishment. Once the moneymen had gathered, Morgan had the great ornamental bronze doors to the library locked and refused to let anyone leave until all had collectively agreed to commit a further $25 million to the rescue fund."
— Liaquat Ahamed, Lords of Finance (Penguin Books, 2009, p. 54)
Lately we have been engulfed by headlines reporting financial turmoil on every continent, in almost every nation, large and small. The commissars of central planning who so marred the history of the 20th century have been replaced by central banks in the 21st. In Cyprus, the new leadership now dares to confiscate citizens’ wealth with a one-time tax of up to 60 percent on bank deposits above 100,000 euros. Self-interested prime ministers blame continental monetary policies for instigating the currency wars that they themselves surreptitiously carry on.
America recently celebrated — well, maybe we didn’t celebrate – the 80th anniversary of Franklin Roosevelt’s action to end to the gold standard. But America is also celebrating – well, maybe not everyone is celebrating – the 100th anniversary of the legislation creating the Federal Reserve System.
As Lewis E. Lehrman...
Constitution.org provides an extensive and thoughtful Memorandum of Law by Larry Becraft, Esq., of Huntsville, Alabama, on Article I, Section 10, clause 1 of the US Constitution.
Sir William Blackstone courtesy of Wikipedia
One of many interesting matters the Memorandum treats is Blackstone's Commentaries, a book that was a fixture in the...