US Financial Crisis/Bailout, China's Role

pla101prc said:

rather than telling me how the other "2000 years of history" arguments sounded stupid to you, which i am not interested in knowing, you might wanna focus on the issue at hand and debate using logic.

i am not blind i can see that you are trying to distinguish economic freedom from political freedom. but you fail to understand that this so called economic freedom can have political and social ramifications. you take it as some sort of magic formula that would suddenly sort out all of these problems that everyone has been looking for the solutions of for thousands of years. economic freedom is something that China is prolly gonna try in the near future. but dont expect corruption to be eliminated like that. corruption came from power, so wherever power goes corruption tags along. so if you give the power to the market corruption will plague the market, much like what we are seeing in the United States. economic freedom is necessary to a certain degree, but for a developing country like China, i would feel safer if the central government retains a significant control over the economy.

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Well excuse me. It was you who first used the 2000 years of history to defend China's bureaucracy. If you don't want others to comment on your argument, you shouldn't have brought it up.

Your suggestion that China ought to "try in the near future" shows an inherent lack of understanding of the term. The Chinese government has been granting its people more economic freedom since Deng opened up the country to foreign investments in the late 70s. In case you haven't noticed, commercial enterprise in China is driven now largely by private initiative, with private capital or savings. The percent of government owned enterprises have diminished drastically since the late 90s. And as a direct result of the government allowing the market to function on itself while sitting on the sidelines, the Chinese economy has skyrocketed. These are trends that would not have been possible if we had done what you are proposing, which is to have the government dictate the dealings of the private enterprise.

So what has made the Chinese coast and Hong Kong so successful? Without a doubt, it is the liberal governance of local officials, whom have been ordered by the central government to stay on the sidelines. That's why the places of the old economic zones took off so fast. Likewise, the reason that the provinces inland have not been so fortunate is a direct function of the complex web of power and bureaucracy and corruption that most enterprises, foreign or domestic, would not like anywhere near, despite the presence of sizeable markets and cheap labor. After all, for these enterprises to commit their capital for business operations in jurisdictions ruled by those corrupt leaders, they run the real risk of government interference and constant demand for paybacks and bribes. The phenomenon that government officials has been using their power as a weapon against corporations is a real disincentive for commerce that is unseen, but without a doubt, has resulted in tremendous human loss and societal loss. The officials thought they were getting free lunches. Well guess what, there are no free lunches in this world.

Again, China's economic engine needs fine-tuning. We are not talking about overthrowing the CCP. We are just proposing that the bureaucracy leave the market alone. BTW, your point about Western corruption doesn't make much sense either. The failure of the banks is a practical form of failure, just like how gas stations go out of business or how a wheel of a car needs replacement. Failures don't equate to corruption. So don't confuse the issues here.

crobato said:

Do you understand what you are talking about? The portion of the yearly tax taken from the low to middle income groups, do not amount to a fraction to what the same person will spend in just one month of top quality private school. Many private schools have fees over several hundred dollars per month, how much total tax a low or middle incomer pays for a year?

Progressive taxation also means that who is actually paying for those schools, are the high income groups. So in effect, that is true wealth distribution.

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Would vouchers result in some of the money paid by the top earners going to support the education of the poor? Sure. But I would prefer any promotion of equal opportunity over equal outcome any day of the week. Again, I am shocked that the very people who make a living by preaching the virtues of helping the poor and leveling the playing field using the money of the rich would be so opposed to the idea of using that money to support the education of the poor. Yeah, we'll take Mr. Six Figure's money to send a welfare check, but you want money to send your kids to a better school? No [censored] way.

Yes, well, UPS is the one charging about 30 bucks to have something one pound shipped from California to Hawaii. USPS would have charged around 3 dollars.

If it were not for USPS, I don't think eBay or Amazon would survive. USPS is what I ship when I buy from both. In fact the whole mail order industry still depends on USPS mostly.

And because of USPS, mail order companies get their business and pay state and Federal taxes.

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Ok, so some people use UPS and some use USPS. The whole point is that there ought to be competition so people can choose which one fit their needs the best.

For that matter, both your tax dollars and your private dollars are also used to pay for salaries of dead weight even in corporations and corporate executive with their compensation packages. President of General Motors is paid a lot more, at least 10X (20x?) more than the President of the United States.

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Well excuse me, but your tax money wasn't going to pay for anybody's CEO until the government changed that. Normally, executive compensation, or compensation of any kind, are payed by the company's internal profits and equity. If anyone ought to complain, surely it would be the shareholders, whom are after all, the ones paying for it, not you, who have not invested one penny in this hypothetical company. Again, I find complaints like this funny.

FugitiveVisions said:

So what has made the Chinese coast and Hong Kong so successful? Without a doubt, it is the liberal governance of local officials, whom have been ordered by the central government to stay on the sidelines. That's why the places of the old economic zones took off so fast. Likewise, the reason that the provinces inland have not been so fortunate is a direct function of the complex web of power and bureaucracy and corruption that most enterprises, foreign or domestic, would not like anywhere near, despite the presence of sizeable markets and cheap labor.

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FALSE. Economic zones took off so fast because they have more than a decade of head start, adding to this is that the improvished interiors have been totally ignored during Jiang Zemin's era. Economic zones also have an inheritant advantage in that they are near the coast, where the cost of export is lower due to the easy access to ports.

FugitiveVisions said:

Again, China's economic engine needs fine-tuning. We are not talking about overthrowing the CCP. We are just proposing that the bureaucracy leave the market alone.

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No. You are proposing that, no one else is. And quit using and misrepresent other's position. It doesn't give your increase freedom decreases corruption argument any weight.

FugitiveVisions said:

Would vouchers result in some of the money paid by the top earners going to support the education of the poor? Sure. But I would prefer any promotion of equal opportunity over equal outcome any day of the week. Again, I am shocked that the very people who make a living by preaching the virtues of helping the poor and leveling the playing field using the money of the rich would be so opposed to the idea of using that money to support the education of the poor. Yeah, we'll take Mr. Six Figure's money to send a welfare check, but you want money to send your kids to a better school? No [censored] way.

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Lets put it in another way. Historically, all education has been indeed private, right from the very beginning in ancient times when the concept of education was invented. Guess what? Education resulted in being the enclave of nobles, aristocrats and the elite. Nothing more created, strengthened and fostered the Rich-Poor gap than the education gap.

So what finally broke this cycle that went on century after century after century. It was American Public Education.

Without public education, there would have been no middle class. There would have been no closure in the knowledge gap between the economic strata.

In China, one of the fundamental factors of its success was a high literacy rate, brought about by public education. Go check with every other industrialized country, like Japan or Germany, and no matter what the faults of their public school system was, they are a fundamental factor to each country's growth.

You want to try your experiment on a country that would rely entirely on private education? Go ahead and I bet you the class and social divide in that country will only grow to serious proportions.

Ok, so some people use UPS and some use USPS. The whole point is that there ought to be competition so people can choose which one fit their needs the best.

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I truly cannot think how the modern mail order industry, how eBay and Amazon would come into being without the USPS. UPS and DHL are more like commercial courier systems as opposed to general mass market mail. UPS and DHL is not in the same league or market as USPS. If I want to send a Rolex to a customer from London to Beijing as a business gift, I would use UPS. But if I'm ordering all sorts of stuff like comic books from eBay, I go USPS and pay $2 dollars for the delivery instead of $25.

Well excuse me, but your tax money wasn't going to pay for anybody's CEO until the government changed that. Normally, executive compensation, or compensation of any kind, are payed by the company's internal profits and equity. If anyone ought to complain, surely it would be the shareholders, whom are after all, the ones paying for it, not you, who have not invested one penny in this hypothetical company. Again, I find complaints like this funny.

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The CEO's compensation and others, are going to have some effect on the bottom line pricing of the merchandise. Still the point is not about how money is used, it is whether corporations, well some corporations, are more efficient than the government, and from the way it seems, many corporations are not.

crobato said:

Lets put it in another way. Historically, all education has been indeed private, right from the very beginning in ancient times when the concept of education was invented. Guess what? Education resulted in being the enclave of nobles, aristocrats and the elite. Nothing more created, strengthened and fostered the Rich-Poor gap than the education gap.

So what finally broke this cycle that went on century after century after century. It was American Public Education.

Without public education, there would have been no middle class. There would have been no closure in the knowledge gap between the economic strata.

In China, one of the fundamental factors of its success was a high literacy rate, brought about by public education. Go check with every other industrialized country, like Japan or Germany, and no matter what the faults of their public school system was, they are a fundamental factor to each country's growth.

You want to try your experiment on a country that would rely entirely on private education? Go ahead and I bet you the class and social divide in that country will only grow to serious proportions.

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Again, you are inadvertently evading fundamental issue here. No one is arguing for a system by which only the rich get to send their kids to the best schools. If you check what I said, I said that to the extent that we ought to have any redistribution in wealth and income, it ought to be made to promote the equality of opportunity, not the equality of outcome. I am in fact in favor of redistributing some of the wealth of the rich so that the people who were born in a disadvantaged situation would have the opportunity to break out of the cycle of poverty. The fundamental issue is that the government, and perhaps you yourself, are opposed to this idea in favor of preserving the status quo, where parents have no choice but to spend their money in the form of taxes on failed schools when they would much rather use that money, plus a subsidy, to send their kids to better schools. That's the issue.

I truly cannot think how the modern mail order industry, how eBay and Amazon would come into being without the USPS. UPS and DHL are more like commercial courier systems as opposed to general mass market mail. UPS and DHL is not in the same league or market as USPS. If I want to send a Rolex to a customer from London to Beijing as a business gift, I would use UPS. But if I'm ordering all sorts of stuff like comic books from eBay, I go USPS and pay $2 dollars for the delivery instead of $25.

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And again, no one is arguing for abolishing the USPS right now, so I don't know why you keep going back to statements whose purpose is only to support its existence. The issue is that there was a time when the USPS was a monopoly in the service of delivering mails, when it was even more inefficient than its loss-making operations of today. The privatizing of the industry has benefited consumers, and that's the road I want to see China to take.

And you keep going back to the price issue. Surely you understand that when USPS makes a $5.3 billion loss, the taxpayers are picking up the tab, right? $5.3 billion dollars comes out to be about $20 bucks for every single person in the country, regardless whether they use USPS at all, or if they are even old enough to stand upright to walk to the postal service. In other words, your 'cheap' mail is being subsidized by every single taxpaying citizen in this country. Free rider problems, anyone?

The CEO's compensation and others, are going to have some effect on the bottom line pricing of the merchandise. Still the point is not about how money is used, it is whether corporations, well some corporations, are more efficient than the government, and from the way it seems, many corporations are not.

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In a free market, the impact of CEO's compensation on pricing depends on the labor market and on the goods market. The price of the product or service could only go up as much as consumers would tolerate it. Likewise, the compensation level at any level is related to the supply and demand. The shareholders are the ones paying, so I find it hard to fathom how anyone who's not invested a single penny could complain about that.

As far as the efficiency of the government, I would like you to perhaps name one government in this world that has consistently pursued the kind of interventionist and central planning policies that you advocate, that has had a longer longevity than JP Morgan. To settle the fundamental issue of the debate, which is the argument over the efficiency of the interventionism gov't vs. the less interventionism gov't, it seems to me that it would make sense for the other side to produce some empirical evidence in their favor.

All this discussion is pointless.

Don't you guys realize the US is doomed? Nobody in the Govn't is going to avert the financial depression. And with the economic collapse, there will be a massive social breakdown ending in violent chaos . I really do see this as the end of the United States.

You guys don't realize it yet, still thinking that there are things the Govn't can and will do. But it's already too late.

Better leave the country, or arm yourselves. The next 36 months will be terrible.

FugitiveVisions said:

Again, you are inadvertently evading fundamental issue here. No one is arguing for a system by which only the rich get to send their kids to the best schools. If you check what I said, I said that to the extent that we ought to have any redistribution in wealth and income, it ought to be made to promote the equality of opportunity, not the equality of outcome. I am in fact in favor of redistributing some of the wealth of the rich so that the people who were born in a disadvantaged situation would have the opportunity to break out of the cycle of poverty. The fundamental issue is that the government, and perhaps you yourself, are opposed to this idea in favor of preserving the status quo, where parents have no choice but to spend their money in the form of taxes on failed schools when they would much rather use that money, plus a subsidy, to send their kids to better schools. That's the issue.

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And you keep on saying this again and again, without figuring out how much private schools cost in proportion to how much of the taxes you paid for is going to public schooling. And for that I would say, the public school proportion to the taxes of the lower and middle income is far less than that of sending your kids to private school, where the costs of sending one per month would greatly exceed that tax proportion for the entire year. Progressive taxation is doing that for the lower and middle income groups, along with taxes on corporate and other sources of revenue.

I don't knkow where you get the idea that the government is forcing you to send your kids to public school. They're not.

And again, no one is arguing for abolishing the USPS right now, so I don't know why you keep going back to statements whose purpose is only to support its existence. The issue is that there was a time when the USPS was a monopoly in the service of delivering mails, when it was even more inefficient than its loss-making operations of today. The privatizing of the industry has benefited consumers, and that's the road I want to see China to take.

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I never seen China stopping DHL and UPS from operating in China, do you? And besides, DHL and UPS is not actually a mail service, they're a courier service. USPS is still a virtual monopoly.

And you keep going back to the price issue. Surely you understand that when USPS makes a $5.3 billion loss, the taxpayers are picking up the tab, right? $5.3 billion dollars comes out to be about $20 bucks for every single person in the country, regardless whether they use USPS at all, or if they are even old enough to stand upright to walk to the postal service. In other words, your 'cheap' mail is being subsidized by every single taxpaying citizen in this country. Free rider problems, anyone?

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Not at all, compared to the overall benefit of the economy and the US mail order business where the taxes collected would far more than compensate for that revenue lost.

In a free market, the impact of CEO's compensation on pricing depends on the labor market and on the goods market. The price of the product or service could only go up as much as consumers would tolerate it. Likewise, the compensation level at any level is related to the supply and demand. The shareholders are the ones paying, so I find it hard to fathom how anyone who's not invested a single penny could complain about that.

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And so why is the CEO of Toyota gets paid far less than the CEO of GM?

China Business
Dec 5, 2008


Page 1 of 3
CHINA AND THE GLOBAL CRISIS
Denial as the storm gathered
By Henry C K Liu

China's response to the current global financial crisis is predicated on the reality of the international situation and the separate responses of other major economies around the world.

It took more than a year for US President George W Bush, in whose country the decades-long credit joyride finally imploded in August 2007, to belatedly acknowledge that the financial crisis resulting from decades of US monetary indulgence and fiscal irresponsibility is not merely a passing shower needed to deflate the latest debt bubble in the housing sector of the US economy.

The credit turmoil turned out to be a catastrophic, global, financial



perfect storm of unprecedented dimension that will cause serious structural damage to all market economies around the world. It may even spell the end of the cowboy finance capitalism of the past two decades in which risks are socialized and gains privatized, with debt manipulated to act as phantom capital and high returns on pension funds of workers paid for with permanent loss of employment and regressively low wages for those still working.
...

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Rest at the link. It is very long.

market economy like the one fugitive was talkin about is like communism. only sounds good on paper. its like some mathematician trying to show me with a bunch of completely "rational and logical" formulas how jumping off this bridge wont kill me but will prove that i am not chicken because there are like 50 blondes cheering me on at the riverbank, well guess what since the last guy that listened to you jumped and died i'll have to think twice about following suit. thank you uncle sam for testing the water.

Pure "isms" sound good in paper but in reality, it defies scientific and empirical approach to economics. An ideology, whether its the so called Capitalism or Communism, is a quasi-religion, because it basically amounts to one, believing entirely what some guy wrote a long time ago in a book, and this guy has to be a super genius or demi-god or something that he's infallible, and second, all the adherents take the word of the Chosen and create a system of beliefs based on their interpretation of the dogma. That's what you call theology.

It defies a scientific and pragmatic approach to economics and social governance, where knowledge, tactics and strategies are formed from the empirical results of experience and measurable data. The problem I see with politicians in the US right now is that they have taken ideological perceptions to the problem, all solutions are colored with ideological glasses, so people are all around calling it "failure of Capitalism" or accusing others of being a Communist or Socialist. This instead of resolving issues pragmatically.

We know from the result of the Great China Experiment is that liberalization of markets worked to a very successful degree, but we also know it is capable creating massive social divides among the people, like the Rich-Poor class separation that got worst during the Jiang Zhemin era. We also know that government intervention in markets maybe a necessary evil to promote social stability and prevent chaos, like what happened in 1997. Hong Kong was the ideal Capitalistic society Milton Friedman always pointed out in his writing and documentary, but in 1997, China had to pour money into Hong Kong to prevent the collapsing markets in affecting the mainland, creating a financial dam so to speak. We also know that government spending in areas like public education and infrastructure does work, and both are cited as fundamental factors in China's boom. There are also parallel cases around the world when both Germany and the US embarked in building the Autobahn and the Interstate highway system during the fifties.