Friday, October 24, 2014

China: Laboratory for Capitalist Wealth Creation

It’s a thoroughly unpleasant fact.

If we compare the welfare spending in today’s China with that in today’s America, as Joe Hoft does, we are forced to conclude that China is more capitalistic, America more socialistic.

You are perhaps thinking that China has accomplished what it has accomplished without liberal democracy and with an apparent disrespect for human rights. Such would be true.

And yet, it is also worthwhile to point out that democracy and human rights are not Chinese cultural values. As history has shown, China prefers social harmony and social order.

If American democracy means a burgeoning welfare state and the dissipation of wealth, China does not want any part of it.

Author of Falling Eagle-Rising Tigers, Hoft outlines the problem. And rest assured, for America it is a major problem:

When Deng Xiaoping took over China in the late 1970’s, China was a very poor country.  One of the first things that Deng did was to allow individuals to acquire and maintain property.  This capitalistic approach started one of the greatest economic transformations in world history.  More people in China have been lifted from poverty in a shorter span of time than ever before in human history.

China still has its problems, but while the US is moving more and more towards a welfare state, China is moving more and more towards prosperity.  Deng (Xiaoping) rejected any possibility of importing the welfare state into China.  He insisted that the enhancement of welfare should be coordinated with the development of production.  Other Chinese leaders have reiterated Deng’s approach.  Today China’s welfare spending is low but it is increasing.

China may be leading the world in economic growth and wealth creation, but America vastly outdistances its competitor in spending on social programs:

According to the Ministry of Human Resources and Social Security of the People’s Republic of China, the total amount of outflows for China’s social programs in 2011 was $287 billion USD.  On the other side of the Pacific, the US spent somewhere between $1.7 and $2.1 trillion USD in 2011 on health, welfare and pension (old age) benefits.

When comparing the US numbers to China’s the results are very clear.  The US spent nearly seven times as much on social programs in 2011 than China.  According to the World Atlas as of 2010, China had a population of 1.3 billion people and the US had a population of 310 million. Based on these numbers, China had more than four times the number of people living within its borders than did the US in 2010.  The result of this comparison is to point out that the US conservatively paid 30 times more per capita to its citizens in the form of social benefits than did the socialist country China in 2011.
Keep in mind, today’s great liberal thinkers believe that all of our problems can be solved by more social programs. If they see a problem—like injustice—that fails to fulfill their ideals, they insist that the government must immediately solve the problem with yet another program.

As America marches backward toward a socialism that has consistently failed, China has become the laboratory for capitalist wealth creation.

Hoft writes:

When we think of an example of a socialist country we probably think of China based upon its recent history with communism and when we think of a capitalist country the US is probably the first country that comes to mind.  However, if the definition of a socialist country is primarily based upon the amount of dollars spent on social programs, then the US is clearly the socialist country and China is the capitalist country.  Even if you do not agree with this, it is hard not to see that the line between what is a socialist country and what is a capitalistic country has become blurred.

Today communist China is becoming more capitalistic and the US is becoming more socialist.  As a result, socialist China is becoming more prosperous and the US is approaching a fiscal cliff.  Poverty is being reduced in China and poverty is on the rise in the US under Barack Obama.


Sam L. said...

The Vietnamese love capitalism, too.

n.n said...
This comment has been removed by the author.
n.n said...

The limits of socialism (i.e. minority capital control) is when it sponsors corruption of recipients and distributors. It can work in a homogenous society with strict social controls, and size constraints (e.g. population, land).

The proper order of socialism is family, friends, and community, in that order. The alternative is a multi-trillion dollar welfare economy where there are people who are homeless, indigent, unidentified, and corrupt.

Ares Olympus said...

re: As a result, socialist China is becoming more prosperous and the US is approaching a fiscal cliff.

While I agree about overall debt in the U.S. economy, federal, state, municipal, corporate, and personal, that we're collectively living beyond our means, I have no evidence decreasing social spending is possible or helpful, and in fact the opposite is going to occur, that economic instability including some sort of "fiscal cliff" will push for more social spending as a cheaper alternative to violent revolution.

And back to China, what they've done in the last 20 years is certainly mind-blowing, but I have no sense they exist in any sort of "capitalistic economy" except for the fact they're printing new money much faster than we are, if that's the definition of capitalism???

You can see by last cound US has 492 billionaires to China's 152.

Wealth creation is a tricky thing, and much of it is "paper wealth" that only exists when people sell their assets, and if there's no buyers for your asset at its pretend price, you're not really a billionaire, especially if you have debt, and have to someday pay back that debt by selling assets in a buyers market.