Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

"No matter how vast your knowledge or how modest, it is your own mind that has to acquire it." Ayn Rand

05 December 2011

Obama Friend Advocates Chinese Central Planning

Andy Stern, who until recently headed the SEIU labor union and made weekly visits to see Obama, has just recently written an opinion piece for the Wall Street Journal in which he strongly advocates Chinese central economic planning as the winning economic model of the future.  He informs us, from his perch as a senior fellow at Columbia University's Richman Center, that
the conservative preferred, free-market fundamentalist, shareholder-only model -- so successful in the 20th century -- is being thrown onto the trash heap of history in the 21st century.
 Given that this does not correctly characterize the economic system we actually had in the 20th century because it clearly forgets the anti-trust effort by Teddy Roosevelt and the tampering with free markets by Wilson, Hoover, Franklin Roosevelt, Truman and the many Presidents and Congresses throughout and since, we can only wonder what a real free market would have accomplished.  Unlike Stern's implication, the present stagnation of the system we now have can hardly be taken as an indicator of free market failure. 

Apparently, both he and his friend Obama believe that even with a private sector saddled by the EPA, FDA, IRS, SEC, FAA, FCC, NLRB, FDIC, FHA, Fanny Mae, Freddy Mac, government student loans, the Energy Dept., the HHS Dept., the Transportation Dept., the Agriculture Dept., the Interior Dept., HUD, Education Dept., ObamaCare, Sarbanes-Oxley accounting, Dodd-Frank Too Big to Fail Regulations, the Federal Reserve, farm subsidies, ethanol subsidies and mandates, renewable energy subsidies and mandates, export subsidies, and many more controlling and planning agencies, subsidies, and mandates, we are still essentially an out-of-date free market economy.

This does not even note the similar controls and interferences of state and local governments, all of which have been growing madly over time, especially in the last decade before the Great Socialist Recession started due to the housing and debt market bubble encouraged so vigorously by the federal government against the housing restrictions and expense-adding practices of many state and local governments.

Andy Stern tells us that the Chinese model of single-party top-down control is much better.  He does not tell us a thing about how one can square that model with our concepts of individual rights and constitutional limitations on government.  He does not do this, because as a power-lusting aristocrat of academia and labor union leadership, he has no concern about such issues.  He objects to our spending time thinking about the next election when we should be adopting a Chinese system of government controls.  The Chinese do not waste time on elections.  No, the government takes care of the people.  After all, he saw cranes everywhere building buildings for government and for public housing.  Never mind that the pointless growth for growth's sake directed by Stern's popular local communist leaders in China is about to collapse in a pile of debt and useless "investment" that will make the Japanese planned economy failure of the 1990s look small in comparison.

He swoons over the next Chinese five-year plan (their 12th five-year plan) which aims for 7% annual economic growth, $640 billion invested in renewable energy, building six million homes, investment in IT, clean-energy vehicles, biotechnology, and high-end manufacturing and environmental protection.  Somehow, though most of the prior Chinese 5-year plans were abject failures, Stern is sure they have figured out how to beat a free market while promoting social equality and rural development.

In reality, the rural Chinese are restricted from moving to the cities and rural China languishes neglected and in a high state of unrest.  Almost all investment in those areas which have seen investment is controlled by the Communist Party and if you want their money, you had better be well-connected to the Party.  American renewable energy companies are heavily dependent upon government subsidies and mandates to use the expensive and unreliable renewable energy.  In China they are supported with subsidies, with the added problem that Chinese renewable energy companies have no local markets and are heavily dependent upon the failed hypotheses in the West that we are about out of oil, gas, and coal and that CO2 emissions from fossil fuels are going to cause environmental catastrophe.

The Chinese high-speed rail system does not work well and is losing money badly despite many potential riders, who cannot afford the service however.  Similarly, the high speed rail systems Obama and Biden have backed will not have enough riders and will have to be heavily subsidized or they will have virtually no riders.  The IT bubble we had burst in the early 2000s was really a combination of IT, optical communications, and biotechnology, all of which were heavily pushed by the federal, state, and local governments in the United States without proper regard for the development of actual markets.

The Chinese have the GDP growth advantages of starting at a very under-developed level and can play rapid catch-up by copying the technology already developed in the West and especially in the United States and they have a very large population.  It is not reasonable to laud their system as the equal of ours when their per capita GDP is still so low compared to ours.  Their GDP growth numbers may be largely meaningless in any case.  There are reports of complete cities built with the effort counted toward GDP, but which are unoccupied and of low-quality construction.  You have to ask how much of the Chinese dry-wall exuding noxious fumes of H2S went into their home market construction.  One has to pay attention to the surveys that say that successful entrepreneurs want to emigrate to the West in huge numbers.  There are many reports of companies seeking high rates of growth getting in way over their heads with borrowed money and owners running to escape their creditors.  Remembering that their creditors are essentially one and the same as the Communist Party, this is the equivalent of running from the Mafia loan shark in many cases.

The return on investment for much of the construction in China does not look good.  This is not a surprise.  The Chinese Communist Party's five-year plans do not pay much attention to return on investment and that will mean their claimed growth will not be sustainable.  They are not planning anywhere near as well as the Japanese did and yet the Japanese plans failed.  At the moment, Chinese exports are falling due to a combination of depressed buying power in the West and more inexpensive labor competition from Southeast Asian and Latin American countries.  The Chinese currency, while still undervalued, is appreciating.  The Chinese also face a major problem with their rapidly aging population, thanks to their ill-conceived one-child policy.

Oddly, Andy Stern expresses no concern about the miserable working conditions of Chinese workers and their very low pay.  He is not infuriated that they are not allowed real labor unions.  He is not bothered by the recent increase in strikes and labor disputes, which the Chinese Communist Party uses the police to suppress.  Apparently, Andy Stern desires communism more than labor union representation.  We must remember Obama saying he always sought out Marxist professors, that Van Jones was a Communist Party member, and that Obama's Communications Director Anita Dunn had wet dreams about Chairman Mao.  Her husband, Bob Bauer, served as Obama's personal lawyer, then his White House Counsel, and now serves as a Democrat Party adviser on election and campaign finance law.  Obama's Manufacturing Czar Ron Bloom is another admirer of Mao.  Mark Lloyd, the Diversity Czar of the FCC, admires socialist Venezuelan Hugo Chavez for his control of that country.

Obama and most of his friends are essentially Marxist-Leninists.  Most of America's labor union leaders are Marxist-Leninists, as is Stern, and this makes one very uneasy about the 36.2% of government workers being led by such union leaders.  Obama and his friends, including those in the labor unions, want a top-down imposition of value choices and controls supported by a huge central planning bureaucracy which can supply a home with power for many an academic Marxist-Leninist and their well-indoctrinated graduates.  They want to impose this system with a flurry of Executive Orders, because it is too messy to have to win elections and fill Congress with one's supporters.  The present, hardly free market system, is still much too free for their taste.  Andy Stern is truly Obama's close friend and ally.  He has made his agenda very clear in his Wall Street Journal Opinion.  He has also revealed Obama's plans in the process.

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