Moon of Alabama Brecht quote
July 29, 2021

China Cracks Down On Tech - Its People Benefit

Back when Stephen S. Roach was Morgan Stanley's chief economist Moon of Alabama often quoted from his columns. Fifteen years ago Roach spoke out against globalization and emphasized the need of labor power. His takes stood in stark contrast to the conventional wisdom of that time. Roach retired from Morgan Stanley around 2011 and has since been a senior lecturer at the Yale School of Management.

While I had not read Roach for some time I today stumbled over a column of his which I find astonishingly wrong and badly argued.

Roach writes about China's recent clamp down on fin-tech, internet monopolies and private education companies:

China’s regulation of its spirited tech sector could be a tipping point for the economy

The subtitle is a good summary of the column:

There are legitimate reasons for China’s anti-tech campaign, but when the full force of regulation is used to strangle the business models and financing capacity of the economy’s most dynamic sector, it weakens confidence and the entrepreneurial spirit

China has recently cracked down and financial consumer services, hail services and private education companies. Alibaba's fintech spin off Ant was prohibited from going public. Didi, the Uber of China, went public in U.S. capital markets even though it been warned not to do so. Its apps were taken down and it will have to pay a severe fine. Other tech companies are also under pressure says Roach:

Moreover, there are signs of a clampdown on many other leading Chinese tech companies, including Tencent (internet conglomerate), Meituan (food delivery), Pinduoduo (e-commerce), Full Truck Alliance (truck-hailing apps Huochebang and Yunmanman), Kanzhun’s Boss Zhipin (recruitment), and online private tutoring companies like TAL Education Group and Gaotu Group. And all of this follows China’s high-profile crackdown on cryptocurrencies.

It is not as if there were a lack of reasons – in some cases, like cryptocurrencies, perfectly legitimate reasons – for China’s anti-tech campaign. Data security is the most oft-cited justification.

This is understandable in one sense, considering the high value the Chinese leadership places on its proprietary claims over big data, the high-octane fuel of its push into artificial intelligence. But it also smacks of hypocrisy in that much of the data has been gathered from the surreptitious gaze of the surveillance state.

The issue, however, is not justification. Actions can always be explained, or rationalised, after the fact. The point is that, for whatever reason, Chinese authorities are now using the full force of regulation to strangle the business models and financing capacity of the economy’s most dynamic sector.

Stephen Roach thinks, wrongly, that it is bad to restrict certain business models and financing through public offerings. But from China's point of view it makes perfect sense. Why should it care how much money foreign investors lose by that:

Beijing is pursuing other goals: reining in the power of its tech titans and boosting startups; protecting social equality; and making sure the cost of living in cities isn’t so high that families aren’t willing to have children. And Beijing is suspicious of companies that are skilled at raising capital overseas—beyond its watchful eye.
Sometimes, China might feel it’s being hijacked by hot foreign money. For example, Beijing wanted to scale down investment in for-profit education as early as 2018, but venture capital kept pouring in. Now the lucrative bet has been called to a halt.

Or consider geopolitical risks. Because of the [variable interest rate corporate] structure, in theory, DiDi, which is incorporated in the Cayman Islands, didn’t need Beijing’s approval to list in New York. But China’s cybersecurity office was concerned enough about DiDi’s data security—such as possible exposures to sensitive government locations—that it suggested the company postpone its IPO. DiDi ignored the warning, and we all know how it’s turning out.

The companies Roach listed are largely monopolies. They often buy up competitors and thereby, like Microsoft does in the U.S., prevent innovation. Moreover Alibaba's Ant tried to be a bank without being regulated as one. It promoted consumer credit and pulled people into debt. The delivery services and hauling services abused their workers. The tutoring companies took extremely high prices and distorted the otherwise equal chances between pupils, the basis of China's meritocracy.

All that is enough reason to strongly regulate them. But what was probably even worse is that the greedy owners of those companies planned to go public in western capital markets. They would thereby fall under foreign regulators and foreign laws. Other countries would probably gain access to the data they collect and use that against China. On top of that foreigners would gain the profits the companies make in China. At a time of a longer conflict between the U.S. and China it is better for Chinese companies to stay at home.  If these companies really need more capital to grow they can find enough in China and do not need to go abroad.

Socialism with Chinese characteristics simply does not prioritize speculative capitalism over other values.

Stephen Roach knows that but he dislikes it. He argues that the regulation crack down on those companies diminishes the confidence in China. That is correct with regards to the confidence of 'western' speculators. But Roach argues, without evidence, that the clamp down will also hit the confidence of Chinese consumers who will thereby spend less:

Nor is the assault on tech companies the only example of moves that restrain the private economy. Chinese consumers are also suffering.

Rapid population ageing and inadequate social safety nets for retirement income and health care have perpetuated households’ unwillingness to convert precautionary saving into discretionary spending on items like motor vehicles, furniture, appliances, leisure, entertainment, travel, and the other trappings of more mature consumer societies.
The reason is that China has yet to create a culture of confidence in which its vast population is ready for a transformative shift in saving and consumption patterns.
Confidence among businesses and consumers alike is a critical underpinning of any economy.

But why should a crackdown on abusive conglomerates diminish Chinese consumer confidence. Might it not do the opposite?

Roach does not think so:

Modern China lacks this foundation of trust that underpins animal spirits. But while this has long been an obstacle to Chinese consumerism, now distrust is creeping into the business sector, where the government’s assault on tech companies is antithetical to the creativity, energy and sheer hard work they require to grow and flourish in an intensely competitive environment.

I have frequently raised concerns about the excesses of fear-driven precautionary saving as a major impediment to consumer-led Chinese rebalancing. But the authorities’ recent moves against the tech sector could be a tipping point. Without entrepreneurial energy, the creative juices of China’s New Economy will be sapped, along with hopes for a long-promised surge of indigenous innovation.

Why should people not save for their old age and consume on 'trappings' instead? Why should they take up credit? Why should they accept abusive monopolies and financial speculation?

Roach's argument is disingenuous as he answers none of the above questions.

Others, like Berkshire Hathaway's vice chairman Charlie Munger, are much wiser:

Berkshire Hathaway vice chairman Charlie Munger praised the Chinese government for silencing Alibaba's Jack Ma in a recent interview, adding that he wishes US financial regulators were more like those in China. "Communists did the right thing," Munger, the 97-year-old longtime friend of Warren Buffett, said about the handling of Ma, who criticized officials in Beijing last year for stifling innovation.
Although he would not want "all of the Chinese system" in the US, Munger did say "I certainly would like to have the financial part of it in my own country."
Munger also told CNBC's Becky Quick that while "our own wonderful free enterprise economy is letting all these crazy people go to this gross excess," the Chinese "step in preemptively to stop speculation."

China has decided to live by producing stuff instead of by betting on financial speculation. It does not favor the finance, insurance and real estate (FIRE) sectors which dominate the U.S. economy. Unlike the U.S. China puts socialism before shareholders which in the end increases consumer confidence:

The Hang Seng Tech index, launched with fanfare last July and comprising internet darlings-turned-gargantuan blue chips such as Tencent and Alibaba, has cratered 40% since February to record lows.
Investors have so far responded with alarm that tipped on Tuesday towards panic. They dumped health stocks in anticipation the sector will be next in the firing line, even as the property and education sectors reel.

Housing, medical and education costs were the “three big mountains” suffocating Chinese families and crowding out their consumption, said Yuan Yuwei, a fund manager at Olympus Hedge Fund Investments, who had shorted developers and education firms.

“This is the most forceful reform I’ve seen over many years, and the most populist one,” Yuan said. ”It benefits the masses at the cost of the richest and the elite groups.”

With the crackdown on the big tech companies smaller ones will have a chance to grow. Workers will get better wages. Consumers will no longer have to spend on much too expensive services.

Now what are the real reasons why you think that is bad, Mr. Roach?

Posted by b on July 29, 2021 at 17:08 UTC | Permalink

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An excellent analysis, Bernhard, and courageous too to take an economics heavyweight like Roach.

Posted by: Ernesto Che | Jul 29 2021 17:31 utc | 1

Correction: …… to take on an economics ……

Posted by: Ernesto Che | Jul 29 2021 17:33 utc | 2

How can one look at what happened in the US and think... let's do that?

Posted by: ld | Jul 29 2021 17:40 utc | 3

Roach reveals his Neoliberal essence, while China demonstrates it actually listens to advice from Dr. Hudson.

On July first, China declared it had achieved one of its major goals as this article announces in its preface:

"On July 1, China declared it had reached its first centenary development goal - building a moderately prosperous society, or xiaokang, in all respects and is marching confidently toward the second centenary goal of building China into a great modern socialist nation."

No "great modern socialist nation" would ever allow a private monopoly on anything. But the intent of the linked article is quite different:

"To decipher what that means in the context of where China is now and where it's heading, the Global Times is publishing a series of multimedia productions about achievements under the xiaokang goal in various aspects. This piece focuses on technological miracles that have changed people's lives."

But for those lives to be changed, the government needed to plan and structure itself properly. As Dr. Hudson noted in the excerpt I cited late last night, the government including its financial and regulatory aspects constitutes a system; and China's system is focused on promoting the wellbeing of its citizens, not a few oligarchs like Roach.

Posted by: karlof1 | Jul 29 2021 17:45 utc | 4

"Please let the children alone":
THESE ARE GOOD NEWS INDEED: During trips thru China in 1999-2oo8, I atseveral instances hIrit upon (quite by chance) several teachers at such private pre.prep. institutions. Thay all said their work was but a sham, and that they only were in it for the money.
Of course, their posting on the Wall Street Stock exchane was the final give-away.
ON ANOTHER NOTE: (to be continued)

Posted by: Tollef Ås/秋涛乐/טלפ וש | Jul 29 2021 17:47 utc | 5

Excellent post B!

'China has decided to live by producing stuff instead of by betting on financial speculation.'

I believe that it was Adam Smith who stated that a nation's wealth is what it produces.

By this measure China, which produces much more than it consumes, is steadily becoming wealthy, while the U.S. which produces much less than it consumes is steadily becoming poor. Soon, the U.S. will no longer be able to 'steal' it imports with by paying with debts that it has no means or intention of ever repaying. When that happens the competition between the Empire and the Multi-Polar world will be over.

Posted by: dh-mtl | Jul 29 2021 17:50 utc | 6

ON ANOTHER NOTE: (continued)
None of these schools ever taught the history of New China and og the Communist Party (The CCP)- So never were the children told the true story about how the US of North A instigatad an attempt to overthrow the People'S Republick of China thru' a "COLOR REVOLUTIOON IN THE EARLY SUMMER OG THE YEAR 1989 -- SOMETHING TAUGHT ON MAINLAND HIGH-SCHOOLS IN THEIR CLASSES ON "PARTY HISTORY"

Posted by: Tollef Ås/秋涛乐/טלפ וש | Jul 29 2021 17:57 utc | 7

Agreed, great post b.

Corporations, including big tech, should be subservient to society, and not vice versa. Power should rest with We the People, acting through government that serves the people, and not resting with elites acting through corporations.

So it's good to see one society asserting that proper order of things - unlike what we have here in The West where the 1%, the elites and corporations thoroughly control pretty much all our so-called "democratic" governments.

But I am worried about China allowing the so-called "vampire squid" Goldman Sachs and Blackrock into the country. Let's hope they keep an ever-vigilant eye on those viruses and their never-ending variants.

Posted by: Canadian Cents | Jul 29 2021 18:03 utc | 8

To credit the vampire squid reference:

In 2009, writing in Rolling Stone, journalist Matt Taibbi famously described Goldman Sachs as a “great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.

Posted by: Canadian Cents | Jul 29 2021 18:16 utc | 9

thanks b.... great focus on what the priorities are in different societies.... do we give all power to corporations, or does it remain with ordinary people?

i am not sure how the worlds focus on consumerism is a great focus.. i get it how economists and financial types obsess about this... it is what corporations want everyone to focus on - consumption.... what do we truly need to live peacefully and in harmony on the planet? food, shelter, clothing.... after that - i am not so sure...

Posted by: james | Jul 29 2021 18:21 utc | 10

The world has never really seen anything like modern China's approach to economics and finance.

It is a mix of communism and capitalism. Possibly the best mix so far implemented in world history.

The US also is a mix of communism and capitalism. Corporate losses are socialized while profits are privatized.

Possibly the worst type of mixed economy.

We will soon see even more divergence between Chinese and American economic outcomes.

Posted by: Mar man | Jul 29 2021 18:24 utc | 11

I have lived in six countries that could be classed as "dictatorships":
1: Egypt (four months thru two visits )
2; Israël Two years -one at a time
3: The Soviet Union (passing thru during six mothes, but married aínto and marred thereby)
4: China during the Gang of Four ´álthough this was when the peasants started to acqire human rights.
5: Irân under the Shah -- when gangs of police regularily beat up our reighbors (on our street, as Wes6t Europeans and USa-ans, we were spared and sacrosanct)
6; The USA (3+1 year in childhood and youth) -- ineconcievably and no-one to notice, due to the obfuscation of truth reighning us in all over there.

Posted by: Tollef Ås/秋涛乐/טלפ וש | Jul 29 2021 18:42 utc | 12

Great info and perspective. It's easy to see the failure of an Empire of profiteering conquest. We see blocks of countries prepare to abandon the ship of a US led Western sphere of influence. Capitalism has created a credit/debt wasteland and called it Prosperity. Good riddance.

But, a true socialist state, or utopia, hasn't manifested and probably won't until AI takes over free from the human frailties of temptation and greed. Can the Chinese system of social credit/debt and governance by an Orwellian Party fill the needs of messy human beings desperate to express the inalienable rights to say 'toss off'? We shall see.

Posted by: gottlieb | Jul 29 2021 18:46 utc | 13

No one is always right or always wrong.

Roach is smart and worth listening to, but he is far from omniscient or objective.

The reality is very simple: China has seen what the tech monopolies in the US do.

They buy politicians and laws, they flout the government, they destroy huge swathes of the economy.

No part of this is acceptable to the CCP.

Right or wrong, they insist on holding the reins over the direction China takes. And the reality is - they have done a fantastic job.

I recently saw this: Adam Tooze: World Bank report on China in 1983
This is particularly interesting because 1983 was before "Socialism with Chinese characteristics" - i.e. limited capitalism - really got going. But even the World Bank, back then, already detected measurable distance between how China had fared since the 1950s vs. India. Thus their phenomenal success since 1983 isn't a fluke but is rather an extension of an already ongoing multi-decade reign of success.

Tooze's article misses the huge role that "GMO" rice played in this process - see Father of Rice wiki article, but even so Yuen's work would never have made the huge impact it actually did, without the CCP pushing it everywhere quickly.

Posted by: c1ue | Jul 29 2021 18:50 utc | 14

Thanks b for this article.

I have reported the same in my comment on your last article. Regulators will always be on the backfoot in a race with the private sector. It's great to see china is not afraid to use the big hammer and essentially reset the sector.

Many of the great minds in China had very meagre beginnings. The privatization of education will only mean these talents will be denied of their chance to shine.

If the speculators treat China as a casino to win big then they must be prepared to lose big when they back the wrong horse. Muppets like Roach are just sour on realizing this casino has different house rules.

That said, the proof of the pudding is in the eating. We shall find out in due course if the Chinese government can be trusted to wield these big hammers in the name of 'Chinese characteristics' for the benefit of its people as a whole.

Posted by: A.L. | Jul 29 2021 18:51 utc | 15

I do not know any details, but in principle, a crackdown on "platform" business can decrease the tendency to create monopolies like Amazon, Uber, Google etc. They tend to demolish competition with periods of predatory pricing followed by price increases and buying out competitors, squeezing suppliers etc., in other words, the convenience of "shopping in one place" ends up squeezing the consumers and producers alike. In the same time, enormous concentration may lead to political power, regulatory capture etc.

It is a "communist approach", perhaps, but it should be fully possible and advisable in the capitalist heartland, USA, EU etc. I mean, in you happen to be a consumer and/or producer of actual services and goods.

Posted by: Piotr Berman | Jul 29 2021 18:55 utc | 16

China nowadays has greater personal freedom than anywhere in the sest -- not to speak of the US of North A:
-- Where else can you see popular strikes and protests that are not suppresed by ou see police batons?
-- Where else can you see folks quRRELING FREELY WITH THE POLICE?
-- Where else can ou see people walking into courtrooms and shouting at the judges?
-- Where else do you see local county-level people's congresses woting to disallow national gun-restriction laws?
I have seen all of this taking place during my travels throughout Mainland China.

Posted by: Tollef Ås/秋涛乐/טלפ וש | Jul 29 2021 18:58 utc | 17

Roach is not a serious source. Never was, never will be. Sorry if this blog's creator lost so many time of his life reading his articles.

The category of "animal spirits" is an essential block of Keynesian theory and was coined by Keynes himself. It is recurring to both Keynesians, Post-Keynesians (including MMTers, who are a branch of Post-Keynesianism).

The reason why Keynes had to come up with the concept of "animal spirits" is very simple: bourgeois economy always presuppose capitalism is a system in equilibrium. Supply is always equal to demand and, when one is higher than the other, capitalism always tends to restore the equilibrium. Keynesianism is a bourgeois economic theory.

They Keynesians don't have a concept of profit (because profit would break the premise of equilibrium as the natural state of capitalism). To Keynes and his descendants, "profit" is merely an accident of successful investment. Successful investment here means technological progress. Technological progress is exogenous to capitalism according to Keynesianism: it's a byproduct of exceptional human beings. What capitalism promotes (by accident) is that these so-called exceptional human beings find, for the first time in History, the ideal conditions to prosper/flourish. This condition is what Keynes called "animal spirits" (of the entrepreneur).

From the concept of animal spirits, Keynesianism postulates many other "imperfections" of capitalism in the real world, such as the role of the State, a theory of unemployment and wage inequality ("skill gap" theory) and also a vague concept of crisis (as an unnecessary disequilibrium caused by bad politicians/decision makers, or natural cataclysms).

From the equilibrium precept Keynesianism also derives the "too much savings is bad" theory (supply always must equal demand, therefore money stopped in ones bank account is subtracted supply, i.e. it is a minus from the point of view of capitalism). Keynesians (many neoliberals also convinced Japan and South Korea to stop with the culture of savings during the 1990s; China must have learned with the case of these two countries, too.

The rationalization that excess savings hampers production ("animal spirits") is, of course, pure nonsense. States can use those savings (which are in fiat currency, in bank accounts which it ultimately controls) to actually prop up long-term industrializing projects that would be unacceptable to unleashed capitalism (because they're unprofitable in the short and medium terms). Japan and South Korea did exactly that during their "miracle" decades. There's no secret: if you don't have colonies, you have to exploit your own people to trigger your first effort of long-term industrialization, as heavy industry (the base of every industrial system) takes decades to build and decades more to give returns to society. The USSR had to do that with its peasant class as it didn't have a developed monetary system as Japan did; China did it initially with American capital during the Deng Xiaoping era. Nowadays, the CPC has more cards to play.

Finally, there's no such a thing as "animal spirits". Capitalism operates through simple trial and error: it throws a plethora of capitalists to compete against each other to the death, and the winners take it all. All of them had the "animal spirits". Most didn't succeed. Marx well described capitalism as a bombastic system: it generates many natural resources but throws away many natural resources. It is a wasteful system. It only gives the illusion of prosperity and efficiency because of survivor bias (only the winners appear "in the open", for all to see) and also because propaganda and communications (and education) sectors are dominated by the middle classes (the most prosperous part of the working classes; the "working class aristocracy").

Posted by: vk | Jul 29 2021 19:36 utc | 18

B, great post and good questions. Thanks.

Stephen Roach just validates that he is a lackey of the Dollar Empire. China is being proactive in developing a healthy economy and shared prosperity.

Stephen Roach is still a Wall Street (Neoliberal) man and would like China’s financialization to increase without any hindrance. He is biased and would love to see China DOLLARIZED and captured by the Dollar Empire. The Empire would like all public Chinese companies to be listed on Wall Street, their founders becoming multi-billionaires, and companies’ valuations in trillions. The Dollar Empire can then easily create boom-bust cycles and end up owning China’s assets without liabilities. This way the Financial Empire can easily control China’s kleptocrats, corporations and consumers. However, China’s administration is smart and knows Empire ulterior motives!

Stephen Roach’s past associations need to immediately raise RED flag 🚩 He has been involved with the Brookings Institution, the research staff of the Federal Reserve Board (Is he William Thompson-Russia for China?), Morgan Stanley, writes for Project Syndicate which has received grants from the Open Society Foundations.

Geopolitical power structures require effective management instruments. One of the most effective management instruments has always been BLACKMAIL (financial control, sanction threats...), and the ultimate form of blackmail, especially in Western countries, is based on involvement in pedocriminality. While from a societal point of view, people of integrity are desirable as elites, from a power-political point of view, on the contrary, corruptible and blackmailable persons are in DEMAND. This results in a fundamental contradiction with far-reaching consequences.

CHINA’s CLAMP DOWN - Short-tern pain for long-term gain.
Most financial crisis happen because of LEVERAGE which drives bad loans and bets. China’s administration is working towards proactively curtailing consumption and speculative credits. They want to create sovereign money towards productive credit and constraint bubbles. Every bubble requires two essential inputs to fuel its rise:
1. A compelling story
2. Ample credit

How many bubbles are you living in? Housing, stocks, inflation...?

Also, China’s goal is to increase gdp per capita (WAGES) to drive its “dual-circulation” strategy. It wants salary to rise rather than its people relying on consumption credit, like the U$A. A good way to raise incomes. It also wants healthy competition in its market economy and is preventing monopolies from developing concentrated market power.

Alibaba was using a loophole of cyber company and operating as a bank by issuing consumption credit, without following any banking regulation. Finance is a regulated sector all over the world and that regulation is a key function of the central banks. Who ensures the reserve requirements for banks? Financial regulators at the central bank. “Alibaba had lend around $10 billion towards reserves of $200 million.” This is a LEVERAGE RATIO of approx 50. What was Lehman’s leverage ratio before going bankrupt? 70+. A big red flag. Where were Fed’s regulators? What is the leverage ratio in the US financial markets now, particularly the shadow banking arena? No more bailouts?

It is not an “anti-tech campaign” as Westerners want to frame, but ENFORCEMENT of regulations in the fintech arena. Even the U$A administration reigned in money laundering activities at PayPal. They want money laundering to happen through the U$A banks. Why? Own the assets that can be blackmailed?

In the present times, DATA is a currency or like oil. A nation need to ensure its data security, particularly in the hostile environment. In some cases there might be over-regulation too. However, the pendulum of regulation shifts between under and over regulations. Let’s respect China’s sovereignty and let them decide what is best for them. The Empire’s lackeys want to make a big deal of everything to frame China negatively. What is the EU doing in the data arena? Please follow the EU General Data Protection Regulation (GDPR).

Didi brought troubles for themselves. China’s administration really helped them survive competition with Uber by passing a law and later they acquired Uber’s business. Didi showed a middle finger to that administration by going public the week of China’s centenary. They showed Goldman Sach’s type arrogance.

Is the American Financial system safer after the Global Financial Crisis? Please watch this debate to hear various perspectives. Who won & why? Most subjects of the Financial Empire are lost. When will the Financial Titanic BREAK?

Posted by: Max | Jul 29 2021 19:45 utc | 19

Excellent piece, you’ve hit the nail on the head. It’s hilarious how Western ‘China watchers’ can, without fail, be relied upon to predict doom and destruction for China every time the CCP [sic] implements a policy that favors the rights of citizens over the rights of rich investors to make a quick buck.

These clowns, featuring idiots like Gordon Chang who is so ashamed of his partial Chinese ancestry that he projects his self-hatred onto the country of China, have been forecasting the imminent collapse of the PRC since 1997. Even China’s superlative highspeed rail system was written off by these brainiacs as a massive white elephant that nobody in China will use because they are too poor to afford tickets! 🤔😂

According to Western economics 101 orthodoxy China’s remarkable ascent from poor agrarian backwater to industrial and high tech powerhouse shouldn’t even have been possible because, uh, central planning and reasons. 😂

Not only can the Chinese government smack down billionaires and companies that get out of line, it can successfully plan and implement widespread infrastructure and development goals…something which the neoliberal West has forgotten how to do.

While China was building 10,000 km of high speed rail tracks a year Western countries didn’t even manage half that. The HS2 line between London and Edinburgh, which is not even 1000 km, is scheduled to take a decade. And if it isn’t the profit über alles ideology that kills infrastructure and development upgrades in the West, it’s the election cycle and special interest pressure groups that kill most large scale projects in the pre-planning stage.

The Anglophone countries are especially good at putting the needs of their citizens last. And the stuff that does get built in these countries is often shoddy and second rate. But as long as a few shareholders got rich in the process it’s all good.

The West’s delusional belief that it is the best and has a divine right to rule the world forever plus its inability to self-reflect and to learn from other countries will be its downfall.

Posted by: Antibody | Jul 29 2021 19:47 utc | 20

vk @ 16

"Marx well described capitalism as a bombastic system: it generates many natural resources but throws away many natural resources."

If that's verbatim then Marx is really ignorant.

ONLY NATURE "generates" natural resources! Humans EXTRACT natural resources, they don't generate them! If this sounds like beating a dead horse then perhaps, but the failing, IMO, is that we cannot make this key distinction, and this failure helps us perpetuate the illogic of perpetual growth on a finite planet- if we can generate everything then there's no limit!

Posted by: Seer | Jul 29 2021 20:13 utc | 21

@ Posted by: Seer | Jul 29 2021 20:13 utc | 19

Oops, sorry. I had "material resources" in mind, not natural.

Even "material resources" is not precise. It should be "wealth" or, in this specific context, "living labor" or "value".

Posted by: vk | Jul 29 2021 20:15 utc | 22

@Max | Jul 29 2021 19:45 utc | 17

It wants salary to rise rather than its people relying on consumption credit, like the U$A. A good way to raise incomes.

Well said, thank you. I always think affordability is one's ability to earn and save, not one's ability to access loans. It is to build a society that provides opportunities for people who are willing to learn and work instead of one to put people into debts, which implicitly enslave people.

Posted by: LuRenJia | Jul 29 2021 20:27 utc | 23

Max @ 17
Stephen Roach just validates that he is a lackey of the Dollar Empire. China is being proactive in developing a healthy economy and shared prosperity.

Stephen Roach is still a Wall Street (Neoliberal)..

<=== China has implemented the restraints needed to prevent capitalism from converting to monopoly powered feudalism. Often I have said, competition is the basal element of capitalism.. monopoly power in private hands, or privatizing government resources (assets, service providing, or out sourcing government supply and or provisioning government agencies needs [software, planning and hardware via private contractors) converts capitalism into Oligarch controlled and owned feudalism.. such folley is akin to the situation the land grants created when the land owner of these large feudal estates were the unchallenged lords of these estates. These lords implemented the manner and the means for the pauper to live on the estate. But that implementation involved production quotas and punishment and banishment for failures. Thus, feudal system creates new wealth and adds to the power of the feudal estate owner and reduces humanity to pauper status.

USA needs to eliminate the patent and copyright monopoly powers <=its laws created from hot thin air. USA needs to retract all privatized parts of government and refuse to allow any part of its government to be privatized for any reason. If it does not, it will soon discover, I fear, just how powerful honestly and fairly supervised competition can be. Americans developed the the Competitive model of capitalism, until 1948. after that the USA destroyed it. Societies's adopting the capitalist model of economics, must enforce open, free, non monopoly powered, regulated competition to keep it economy productive and to discover, and to take advantage of the genius that lay within its masses.

great work B..

Posted by: snake | Jul 29 2021 20:29 utc | 24


"food, shelter, clothing.... after that" According to the Buddha, the only other thing is medicine.

Posted by: David F | Jul 29 2021 20:31 utc | 25

It is disappointing but perhaps not surprising (given Roach's background) to read what Roach wrote.

And b is right and Roach is wrong on the behavior of Chinese consumers. My reading of Chinese Internet comments (I read Chinese) confirms that the overwhelming of Chinese netizens support those clamp downs against Ant, Didi, etc.

Chinese government thus has both the "logic" and "support" on their side. They will keep going. It is further proof that they are "of the people, by the people, for the people"...

Sorry for those sore losers and anti-China crowd.

Posted by: d dan | Jul 29 2021 20:33 utc | 26

China since the time of Deng has made a stark distinction between making money (good) and seeking political power (forbidden with penalty of death).

Recent tech giants seemed to forget that. Mistake. Nothing has changed.

One can argue whether this is good or bad, indeed whether the Party is good or bad for China. One cannot argue that the Party ever has or ever will allow rivals to power. It won't. Not even a little bit.

Posted by: Mark Thomason | Jul 29 2021 20:41 utc | 27

Seven years ago on 29th July 2014 Maylaysian Airlines MH-17 with 283 passengers and 15 crew was shot down with the loss of all lives (including more that 200 EU citizens).

It has long been my belief that MH-17's flight path was deliberately changed by Ukrainian authorities to fly over the Donbass and that it was intentionally shot down by a Ukrainian fighter jet. It is not credible to believe that the Ukraine regime would have done so without the instruction/support of Obama's US government.

The Downing of Malaysian Airlines MH17: The Quest for Truth and Justice. Review of the Evidence

On making a similar post a few years ago one esteemed commentator responded by stating that he believed that it was a Buk launched by the Ukrainian side (the implication was that it was not intended to shot down MH-17). This is just not credible. The LNR/DNR had no aircraft and Russian aircraft were not operating in the area; there was no reason for Ukraine military to suspect hostile aircraft. The suggestion that it was an attempt to shoot down an aircraft that was believed to be carrying Putin is also baloney (as if Russia would allow their President to fly over a conflict zone). No, this is a crime that points more acutely at the US than any other outrage (i.e. it cannot be excused as unintentional or good intentions gone wrong, and it cannot, logically, be pinned on another actor).

(Off-topic, I know, apart from the date, but it is important that this day is marked in a thread where it will be read.)

Posted by: ADKC | Jul 29 2021 21:05 utc | 28

China can lecture us on how to regulate tech when I see Chinese Billionaires touch space with their rockets. Bezos is even talking about going to the Moon. Communism crushes innovation by taking away the prophet motive.

Space Race: Billionaires vs CHICOMS
Winning! Trump
Winning! our Billionaires

Posted by: Christian J. Chuba | Jul 29 2021 21:15 utc | 29

@ David F | Jul 29 2021 20:31 utc | 23... thanks david.. medicine is like food for the soul.... maybe not the modern versions!

Posted by: james | Jul 29 2021 21:35 utc | 30

Christian J. Chuba @27

Tech in the US was always government developed. Innovation, as you see it, is really just exploitation of a technical development. It is laughable to talk about "billionaires" touching space; this was achieved over 59 years ago by the son of a carpenter and a dairy farmer.

Oh, by the way, it is "PROFIT" and billionaires that are behind the "plandemic", not China. See my post @26 if you want some idea of what the US is capable of these days (hint: it is not space travel).

Posted by: ADKC | Jul 29 2021 21:37 utc | 31

@ Christian J. Chuba | Jul 29 2021 21:15 utc | 27

The 'prophet' motive? I assume you mean profit but maybe you are being clever in a way I haven't discerned.

Speaking of prophecies, I jeered when Musk first claimed he was going to put a person on Mars by 2024 and even harder when he claimed there would be a city there by 2050. Having a lot of money does not imbue a person with extra knowledge or wisdom. Billionaires being launched on sub-orbital flights is not a contribution to space exploration.

Meanwhile the Chinese Mars lander is sending back selfies.

Posted by: MarkU | Jul 29 2021 21:59 utc | 32

@Mar man #9
Ideology has very little to do with it.
The United States, prior to its accession as a super power, employed the same mercantilist policies as China has had for many years - as Dr. Michael Hudson has noted on many occasions.
Said government promoted specific industries - steel, for example as well as oil and a number of others through direct and indirect subsidies. The US Federal government even "destroyed" an entire industry: cotton production almost quadrupled from 1830 to 1850, for example. Cotton was the single largest export product of the United States for decades.

Posted by: c1ue | Jul 29 2021 22:07 utc | 33

@ Christian J. Chuba | Jul 29 2021 21:15 utc | 27

Oh dear. That was sarcasm, wasn't it?

Posted by: corvo | Jul 29 2021 22:09 utc | 34

Mar man @9--

The world has never really seen anything like modern China's approach to economics and finance.

It is a mix of communism and capitalism. Possibly the best mix so far implemented in world history.

Most will never know since the study of Political-Economy no longer exists in most Neoliberal nations since its truths overpower the BigLies of Neoliberalism. There was once an American School of Political-Economy; Hudson and several others have written about its existence and its practitioners. Its last two major members were Thorstein Veblen and Simon Patten, the latter known for his Economy of Abundance, the former most famously for his critiques: The Leisure Class and its Conspicuous Consumption. Without the wholesale suppression of Political-Economy as an academic pursuit, Neoliberalism would never have attained a foothold within the USA or anywhere else on the planet. If you know nothing about Marx, how can anything be critiqued using the Marxist School of Thought? Same with all the other Classical Economists, particularly Adam Smith, whose words are twisted and turned inside-out. Furthermore, the study of Political-Economy follows directly from the study of Moral Philosophy, about which Adam Smith wrote first, The Theory of Moral Sentiments, seventeen years prior to An Inquiry into the Nature and Causes of the Wealth of Nations. Here's one of Hudson's many comments on the situation:

"Chicago School practitioners of free-market mathematics crow that 'there is no such thing as a free lunch,' distracting attention from economic reality by dropping the history of economic thought and economic history itself from the curriculum. The very idea that there is such a thing as a free lunch is deemed heretical. This idea now governs academic departments and monopolizes the most prestigious economic journals, without publication in which it is difficult for junior faculty ever to rise to tenured positions in their universities. The aim is to censor the perception that today’s economy is all about getting a free lunch by obtaining legal privileges, as exemplified by the recent U.S. health care HMOs, the bailouts over banks deemed 'too big to fail' and other beneficiaries of government largesse." [My Emphasis]
Then there's this explanation that's more specific:

"We look at how the economy, goods and services and labor, exists within the context of wealth and assets and debt. And this is how people looked at the economy before there was anti-classical reaction in the 1890’s. We look at how land ownership, banks and credit shape the framework within which the economy operates – at interest.

"So we’re classical economists. Hyman Minsky was the main modern monetary theorist. Heterodox meant that he got his ideas largely from Marx. You can say classical political economy reached its logical conclusion with Marx. Capital was the last great work of classical economics, and showed where its logic was leading. Marx showed that capitalism itself was revolutionary. Capitalism was a continually self-transforming system. And so we’re looking at how the economy changes, not how it might settle at equilibrium without political change. It evolves, in what Marx called the laws of motion. So we’re putting the political back into what used to be political economy – before the 'political' was stripped out a century ago and it moved toward today’s more tunnel-visioned 'economics.'" [My Emphasis]

You must know your enemy is a longstanding maxim. Unless you learn Political-Economy's history, you won't have the proper weapons to use to defeat Neoliberalism. Hudson's been singing that tune since the 1970s, but he all too often sings solo. More now seem to be listening thanks to the vast damage Neoliberalism's done, especially in the developing world. It's often said by both sides that there's no ideological war at the base of Cold War 2.0 between the Neoliberal Outlaw US Empire and China, but we know much better. I'd call it Rentier Finance Capitalism versus Collectivist Social-Capitalism--the former seeking to capture and turn the primary basis of Capital into a Free Lunch versus the latter which seeks to eliminate the Free Lunch so Capital--safeguarded in the hands of the state--can serve the overall population.

Posted by: karlof1 | Jul 29 2021 22:20 utc | 35

Posted by: Christian J. Chuba | Jul 29 2021 21:15 utc | 27

Are you nuts? The US is in a constant war against anything that smells of someone else being innovative. They are doing everything to stop competition. Sanctions, embargoes,threats, rules based bullshit, constant villification, accusation, gun boat diplomacy, etc, etc. You call that innovation?

Posted by: arby | Jul 29 2021 22:23 utc | 36

Like all other Marxist Governments, this one has never gotten to the "dictatorship of the proletariat" stage.
A ruling elite has always maintained control.
It would be interesting to see what an emergent and dialectic Marxist government (or whatever) arises.
Capitalism is in collapse, and China is an ecological nightmare (I have relatives there).
We shall see ---

Posted by: Duncan Idaho | Jul 29 2021 22:27 utc | 37

VK wrote

The rationalization that excess savings hampers production ("animal spirits") is, of course, pure nonsense. States can use those savings (which are in fiat currency, in bank accounts which it ultimately controls) to actually prop up long-term industrializing projects
The savings Keynes was complaining about was the kind where the depositors went to the bank and demanded their money in the form of cash and then took that cash buried it in mason jars in the backyard or hid it under the mattress to "save" it.
Keynes' view of savings in which people kept the money in a bank account was pretty much the same as yours.

What happened in the US in the 1930's is that huge numbers of depositors went to the banks and withdrew their savings which forced the banks to call in their loans (their assets) to satisfy this huge demand for cash. The inability of banks to satisfy all the demands for cash only increased the depositors desire to get their money out while they could. The end result was the money supply collapsed. For every dollar that the depositors managed to withdraw four dollars in deposits was destroyed (loans create deposits and the destruction of loans destroy deposits). The money supply collapsed to close to half of what it had been and of the half which was remaining a lot was being hoarded (i.e. saved).
Thus it should be understandable why Keynes had a few nasty things to say about how saving was counterproductive.

Posted by: jinn | Jul 29 2021 22:37 utc | 38

China’s blasphemies are economic, cultural, and political.

[1] ECONOMIC: As explained in the post above, China favors socialism over shareholders. China favors its real economy over its financial economy. China opposes neo-feudalism -- i.e. opposes a rentier economy. Chinese society does not grant supremacy to vampire-parasites (bankers, creditors, and financiers). In China, bankers work for the people, rather than the opposite. In China, a company's industrial value is more important than its financial market value. In China even the biggest monopolies are held accountable, and are spanked when they try to enslave the nation. In China, even the richest industrial tycoons can be sent to jail for their crimes. All of this is intolerable to the west.

[2] CULTURAL: China is egalitarian, but not pathologically “woke.” China does not grovel to Israel, racial minorities, LGBTQ militants, or furious feminists. China is a meritocracy, and believes in what the West used to call “family values” (which the West now despises). Again, all this is anathema to the west.

[3] POLITICAL: China fails to worship the West as superior in every conceivable way.

Therefore China must be destroyed. However the West is helpless to stop China. The West is finished. The future is China.

Posted by: Alonzo Ramirez Perez | Jul 29 2021 22:56 utc | 39

>>>Posted by: Christian J. Chuba | Jul 29 2021 21:15 utc | 27<<<

This post was entirely sarcasm, too lightweight to call it satire.
I could feel my brain cells squirting out my ears as I was typing it.

In all seriousness, our billionaires owe a lot to govt funded research yet we bow down to them in grattitude.
Pharmaceuticals and computer science was all heavily funded in U.S. Universities with govt money. This might still be the case. Our billionaires just avoid paying taxes and eat lobsters in zero gravity cabins.

Posted by: Christian J. Chuba | Jul 29 2021 23:03 utc | 40

I think I took the bait. That must have bee sarcasm on Chuba's part.

Posted by: arby | Jul 29 2021 23:11 utc | 41

#karlof1 #33
I'm sorry,but Marxism isn't all correct either.
It makes no provision whatsoever for corruption.
It was created in an era where Capitalism was largely government oriented as opposed to vast private hoards.
Classic Marxism continues to rely on the utterly unquantifiable "util".
The "modern" Marxists like Nitzan and Bichler have been talking about monopoly and Capital as Power for decades - focusing more on the economic roots as opposed to the ideological ones.
The reality? While Marxist/Communist/Leninist nations have successfully transitioned from 3rd world to 2nd world - none of them either took root in a 1st world nation (unlike Marxist/Leninist dogma) or have been able to transition into a 1st world nation.
Russia is a pre-eminent military power but the standard of living is still far below 1st world nations.
Ditto China: they likely have the largest economy now, but they also have 4x more people than the US - meaning each person is 1/4 as wealthy.
Perhaps China will break this trend, but then again, it is more likely that 1st world prosperity is simply impossible without a large world underclass to take advantage of - and China is simply too large for that to work.

Posted by: c1ue | Jul 29 2021 23:19 utc | 42

Communism crushes innovation by taking away the prophet motive.

Posted by: Christian J. Chuba | Jul 29 2021 21:15 utc | 27

Corrected: Communism crushes innovation by taking away the Prophet (peace be upon him) motive. Some Muslim use abbreviation PBUH, some view that as impious, but skipping the praise altogether is not approved for sure.

Posted by: Piotr Berman | Jul 29 2021 23:46 utc | 43

In my life in the US I have known the telephone system to be a public utility.

In my life in the US I have known the marginal tax rate to be 90+%.

In my life in the US I have known the media to have a Fairness Doctrine between 1949 and 1987.

In my life in the US I have known the government to evolve away from public focused government and become financialized to believe that corporations are "people" and they can buy politicians and have.

In my life in the US I have known the government reporting of labor and business statistics go from representative of reality to being a myth of ongoing propaganda that does not reflect reality.

The business regulation that China is providing was done to a degree in the US for a while after WWII. The US birthed a number of environmental agencies with the best of public intentions but they became feeding troughs for the connected ideological pigs and inconvenient regulations were bought into non-existence.

Its not like the US doesn't have an inkling about how to build and operate water and sewage treatment plants, etc but the overall public culture is infected by the God of Mammon religious tenets that prioritize benefits for a few over benefits for the general public.

China is leading by example and the comparison with the West will become more stark as time passes. Humanity will evolve, perish or stumble along on the razor's edge for eternity....

Posted by: psychohistorian | Jul 29 2021 23:50 utc | 44

karlof @ 2 said;"China's system is focused on promoting the wellbeing of its citizens, not a few oligarchs like Roach.

THAT, should be the goal of ALL Governments. Regulations are a necessary part of human society. As MLK said; "Regulations never changed a man's heart, but they can restrain the heartless."

Posted by: vetinLA | Jul 29 2021 23:53 utc | 45

c1ue @12

Adam Tooze on the state of China in 1983.

Interesting stuff. Maybe it's time to re-evaluate the accomplishments of the Chairman.

The ancient technology of China (paper, printing,...) the West could replicate easily. The new technology of the West, not so easy. There's only so much you can do by yourself. But, now, like Prometheus, China has stolen the fire of the Gods of the West. What will it do with it? Share the secret with the people of the South and endure the eternal punishment? Or keep the secret and elevate itself as the new God of the East?

Posted by: Robert Macaire | Jul 30 2021 0:06 utc | 46

Mar man @ 9 opined;

"The world has never really seen anything like modern China's approach to economics and finance."

"It is a mix of communism and capitalism. Possibly the best mix so far implemented in world history."

"The US also is a mix of communism and capitalism. Corporate losses are socialized while profits are privatized."

"Possibly the worst type of mixed economy."

Excellent take, cause' it's true....

MIXED economies work, it doesn't have to be one or the other, as debated ad nausea, on MSM.

Posted by: vetinLA | Jul 30 2021 0:09 utc | 47

c1ue @40--

You're correct to an extent--the vast amounts of corruption existed within the last vestiges of Feudalism during Marx's era, and that's the sort of corruption he and other Classical Economists strove to destroy. That Class fought back and formulated Neoliberalism to keep eating its Free Lunch. To a degree, that Class created Communism as a foil to allow it to regain its lost political power. Hudson dates that Class's Reaction to 1890, but IMO it's earlier, 1870s, with Bismarck's rise. My research goal is to uncover the displacement of Classical Political-Economy and to detail how Neoliberalism was made to supplant it so it can finally be completely denounced and destroyed. The 20th Century's dots I've connected, but still need to uncover the 19th Century's. I can happily report I have more leads now than last January. I look at it as a Crime investigation--3,000+ years of ongoing crime enriching the Few at the expense and lives of the Masses.

Posted by: karlof1 | Jul 30 2021 0:11 utc | 48

c1ue @ 40

Russia is a pre-eminent military power but the standard of living is still far below 1st world nations.

The 1990s called and wants your views of Russian standard of living back. Russia has free (at point of use) education (including universities), medicine, guaranteed workers compensation, guaranteed annual leave, maternity leave, maternity capital for all children, almost no homelessness, excellent public transport. Now compare that to the US. Guess who has the higher standard of living? Not most people in the US.

Posted by: Cossack | Jul 30 2021 0:15 utc | 49

@ Posted by: karlof1 | Jul 30 2021 0:11 utc | 46; @ Posted by: c1ue | Jul 29 2021 23:19 utc | 40

Marx explained in Book III of Das Kapital why he didn't include corruption in his theory of capitalism.

Long story short, thieves don't produce wealth: they only take wealth already produced. So, if every one was a thief in capitalism, the only thing that would change would be the amount in the hands of this or that capitalist, and not the total value produced. If a capitalist stole from a another capitalist through, e.g. an unfair price, he would, on average, be stolen by another capitalist doing the same to him. Macroeconomically (i.e. taking society as a whole), it would all even out, like if you put the same number on both sides of an equation.

He never denied the fact that capitalism was a system that favored thieves, swindlers, greed etc. etc. He talked on those terms in the part about fictitious (financial) capital, which is capital that only exists in juridical form, that only exists in a stage so advanced of capitalism that it has the ideological and hegemonic capacity to invent capital out of bureaucracy and ideology (faith in the system). In fact, the categorization of fictitious capital (instead of simply financial capital) by Marx is the one that is scientifically correct, as it erases the artificial differentiation between legal and illegal thievery; in this sense, he foresaw the capitalist concept of "Too Big to Fail".

Posted by: vk | Jul 30 2021 0:29 utc | 50

China has made its views clear to Australia. However many Australian media and political 'elites.' have tin ears for subtle differences.

It is important in diplomacy to know the difference between a demarche and an aide memoire. A former Australian diplomat, Geoff Raby, explains:

"In commenting on diplomacy and foreign policy it is helpful to know the difference between a demarche and an aide memoire. The French makes it a little difficult for sure, but the former is a demand by one government on another to take or desist from certain actions, the latter is a note to assist one side or the other to recall matters discussed."

Posted by: Paul | Jul 30 2021 0:29 utc | 51

arby @ 34 said in part;" The US is in a constant war against anything that smells of someone else being innovative. They are doing everything to stop competition. Sanctions, embargoes,threats, rules based bullshit, constant villification, accusation, gun boat diplomacy, etc, etc."

Hit the nail on the head my friend.

Our ruling class lives in mortal fear, that some nations will implement a system that works for ALL the people, not just the morbidly wealthy.

Posted by: vetinLA | Jul 30 2021 0:44 utc | 52

Very interesting interview of Zhang Weiwei. I particularly agree with his take on Chinese youth of today and their awareness. He also makes the relevant difference between nationalism and patriotism in the context of Chinese consumers' behaviour.

I may be wrong but I think that most people like Roach base their opinions of China and Chinese on hearsay, media information and published reports / statistics (usually by wall street types) with little or no persona; on the ground experience or knowledge, either not having been to China at all or having been there on a shepherded conference etc.

Posted by: DB | Jul 30 2021 2:15 utc | 53

We have come to save you
and relieve your daily strife
We’ve come to free your people
and impose our way of life

We are right and moral
with only good intentions
but if by chance you don’t concede
we’ll stage an intervention

Our Democratic love bombs
Will convince you we are right
make no mistake we'll take our take
We hope you’ll see the light

Let's dispense with the pretense
we're not here for your salvation
expect no decency or sense
but domination of your nation

The vain and petty suzerain
obnoxious to the end
our self-anointed overlords
don't care who they offend

One and all will cheer the fall
when the dogs of war are dead
they may decide to take us all
with nuclear warheads.

Posted by: ld | Jul 30 2021 2:20 utc | 54

In time, China will possibly corrupt what is today seemingly a fine system. Perhaps that's a probability, given what we know of human nature and its relationship to power.
But today, right here and right now, China is not about to allow turbo-capitalism to corrupt their system for them. That has to be a good thing.
The world needs a new system. China is providing it.
And the West can only offer fear, the wreckage of Covid being the currently prime example. It's a scorched earth policy, and how far these fires are allowed to burn is the foremost question in the world today.
Treatment, not prevention, would stop that fear in its tracks.

Posted by: Hal Duell | Jul 30 2021 2:31 utc | 55

Not only Tech its cracking down on. This is the last paragraph from a Global times piece on the Brits prospective freedom to provoke exercise

"The US wants to "play a role" in the South China Sea, which shows its hegemony and has made the region a new front line of the contest between great powers. Here in the South China Sea, China will end the struggle between hegemony and anti-hegemony forces with the US. All other countries outside the region are advised to stay away from this confrontation to avoid "accidental injury."

Posted by: Peter AU1 | Jul 30 2021 2:41 utc | 56

@Robert Macaire #44
Indeed - what is intriguing about China's outperformance vs. India from the 1950s to 1983 - is that the "socialism with Chinese characteristics" seems much less a change due to the problems in the USSR, than potentially a strategic decision to take advantage of "capitalists selling the rope to hang themselves with".

Posted by: c1ue | Jul 30 2021 3:04 utc | 57

@vk #48
I don't think your use of the term wealth is accurate. Russian nobility were plenty wealthy/rich.
Perhaps you mean prosperity or economic growth.

Posted by: c1ue | Jul 30 2021 3:06 utc | 58

@54 Peter AU1

Couldn't be spelled out more plainly than that.

China will resolve the power relationship between itself and the US in the South China Sea - as was said here yesterday by a commenter (and it's on the tip of my tongue but I can't place the name - apologies and regrets, because it was a sublime observation). And any smaller fish may perish if they venture into these waters in any other manner than as innocent travelers.

I wonder how many people in this world, besides myself, cannot contain the longing to see the bumptious British adventure into these waters, completely misreading the realities of the world, and thus to perish. It couldn't happen to a more complacent ruling class.

And some of these ruling swine might even learn.

There is a new game in town, and you must be real to enter.

Posted by: Grieved | Jul 30 2021 3:09 utc | 59

@Cossack #47
Sorry, but if you think Russia today has the same standard of living as Western Europe or middle class and above Americans, you are completely deluded.
Nor is your "most people in the US" relevant. The reality is that people living outside of the big cities and the milloniki have significantly worse lives than those near the centers of power and industry - this despite Russia being one of the largest exporters of energy in the world.
Don't get me wrong - I do think the Russian government tries to do good for the Russian people, nonetheless, the reality is still that they have nowhere near the resources of 1st world nations to do so. The cost of said military power - all without the benefit of the US dollar reserve currency - doesn't help either.

Posted by: c1ue | Jul 30 2021 3:10 utc | 60

ADKC 26 "The LNR/DNR had no aircraft and Russian aircraft were not operating in the area; there was no reason for Ukraine military to suspect hostile aircraft."

Only three weeks or so before the shoot down, AP did a piece on the Ukrainian BUK missile systems on the front lines.

This is the only photo I can find now of the AP piece.
This was from June 2014. It originally had an AP caption attached and was being moved as the 'rebels' were pushed back from Sloviansk. The AP article disappeared off the net very quickly but other sites had used it for their so called news and was easy to find for a long time, complete with the AP caption about the Ukies moving their BUKs.

This is from April 2014. Ukies putting up pic of them.

Posted by: Peter AU1 | Jul 30 2021 3:43 utc | 61

"Socialism with Chinese characteristics" ended when the CCP allowed private ownership of the means of production.

There's another word, one that begins with "f", used to describe an authoritarian, collectivist, nationalistic one-party state that cracks down on political dissent and free speech.

Posted by: Observer | Jul 30 2021 4:36 utc | 62

c1ue @ 58

Sorry, I lived in the US in the 1980s in Southern California, Wilmington. San Pedro and Long Beach to be precise - shitholes. My daughters and granddaughters live approx. 220 km NNE of Yekaterinburg in a small town. My eldest daughter has a car, which she uses too much. There is a perfectly good public transportation system. She lives in a small, by Australian standards, apartment. Who would pay the heating costs in Winter for a bigger apartment. Have you ever been to Russia, or better still, lived there?

My MIL lives in a "log cabin" 20km out of town, by choice. No plumbing, no indoor toilet - a long drop in the yard. You can see how the long drop has moved by the flourishing fruit trees. Why? I don't know, I offered to buy her an apartment in town, she prefers her independence, and my girls love spending summers there.

It is you who is deluded, if you think that the millions of homeless have a better life than Russians. And if you think that there remains a middle class in the Disunited States of America, you are even more deluded.

Posted by: Cossack | Jul 30 2021 4:46 utc | 63

@ 61 cossack... thanks for the perspective..

Posted by: james | Jul 30 2021 5:10 utc | 64


I might be the only poor American in this forum, maybe the token working class guy. From my perspective I have seen the working poor become the working destitute/homeless over the last 12 years, while watching the middle class become the working poor.

I have what used to be considered a good middle class job and a second part time cash job. Housing prices and rent have inflated to such a degree that I am constantly stressed about being the next in line to have to live in my car, or on the streets, or in a tent in the woods, or if I am lucky on somebody's couch.

So, yes, if it is true that Russia and China are doing a better job housing their citizens, even if it is a modest dwelling, and provide debt free education with access based on merit instead of family wealth, I'd choose the government that provides that in a heartbeat.

Posted by: ArthurDent | Jul 30 2021 5:15 utc | 65

@60 observer

Agreed. All semantics and pearl-clutching, however. But who cares?

Where the butter meets the bread, what does it matter if f****** wins the day so long as international finance perishes when the sun hits its face?

Where the rubber meets the road, what does it matter so long as the U.S. does a Phoenix and governs itself in the true interest of its own people? Isolationism, med4all, resurgent Christianity.

All we need is the greenback to get hit in the mouth. Does China and Russia have the balls to truly lead the way? To take the mantle when the greenback has been the raison d'etre of China's ascendancy? I wish it wouldn't take so long.

Posted by: NemesisCalling | Jul 30 2021 5:16 utc | 66

Christian J Chuba @ 27:

Your comment was hilarious, especially coming from someone with a first name like Christian.

Religion may be the opium of the people but space travel is the opium of the new Western billionaire Holy Trinity: Bezos, Branson and Musk.

Posted by: Jen | Jul 30 2021 5:18 utc | 67

@63 Arthur

There are others here in poverty. My wife and I are single-income and I work unskilled labor in a union. I always say to myself I am remaining an uncarved block, the most useful thing in the Tao Te Ching. Blunted edges, nothing honed.


What I notice is growth of public unions, shrinking of trade unions, merging of federal monies with local monies ad infinitum and to a greater degree all the time. If you are finance or want to work for the soul-gouging, federally-infested public, then today's your day. For everyone else, it does seem like shrinking returns.

Posted by: NemesisCalling | Jul 30 2021 5:28 utc | 68

In the past 20-30 years the Social Democrats/Labour/"moderate" Left have completely betrayed and sold out the people they claimed to represent. That´s no coincidence. But it isn`t the result of some kind of "malign" attitude either. The Left has a contradictory position towards globalisation. They reject some aspects of globalisation as "capitalist" and embrace other aspects of globalisation as "progressive".

In the real world of politics they get always stalled by other interest groups when it comes to fighting "capitalism". Yet they next to always sucessfully form temporary coalitions with other interest groups when it comes to advancing the "progressive" agenda.

The net effect is reliable political support for globalisation/capitalism by the Left.

However, Roach has a point. China as a socialist country has implemented an economic systems that has produced remarkable economic growth but as a side effect it has also produced a class of billionaires. The Chinese so far haven`t resolved that internal contradiction beyond occasional ad-hoc break-downs.

Posted by: m | Jul 30 2021 6:23 utc | 69

"Why should people not save for their old age and consume on 'trappings' instead? Why should they take up credit? Why should they accept abusive monopolies and financial speculation?"

These are not choices. Let me start with a succinct description of the monetary system.

A centralized monetary system that is managed behind closed doors, (thus falls outside the democratic process) that is predicated on debt and is imposed under penalty of law, can only result in the concentration of wealth thus the concentration of power.

Our money and credit originate from a point zero and radiate towards the periphery. The prevailing interest rate at every stage of this journey guarantees a progressive loss of purchasing power.

Because of interest, profit migrates from the periphery towards the centre.

The asymmetry in purchasing power between the entities that are closer to the point of origin of money & credit and the entities that make use of same at the periphery, guarantees that the majority can never accumulate wealth.

Interest guarantees that the sums owed are greater than what was originally borrowed. Eventually therefore, collateral will be transferred towards the centre of the system. Hence the concentration of wealth.

This is an arithmetical identity. The only variable is time. It is inexorable.

Individuals and companies can postpone their fate by engaging in lateral transactions like buying property, creating a business or merging with a business. But these are palliative measures.


As an entity, a government cannot contemplate to deliberately restrain itself. Electoral politics too is arithmetically skewed towards guaranteeing a progressive increase in outlays.

A centralized monetary system guarantees that the needs of the state will always supersede the needs of society. Hence the manipulation of interest rates lower and the devastation of the concept of savings.

It helps here to understand the difference between savings and investment. Todays geniuses will say that savings are investments. But that is not entirely correct.

Savings are not supposed to contemplate risk. But in an environment where purchasing power is compromised from the get go, savings will inevitably make their way into the financial markets where they do not belong.

Also worthy of note is the shift that occurred in the late 60s whereby government decreed mandatory contributions to pensions at source. This money was placed in the hands of finance of course. So, in effect, labour ended up subsidizing capital.

Today we are living the repercussions of these policies whereby pension and insurance schemes are underfunded in large part due to aberrant interest rate policies.

So, consumers do not really have a choice if not an ephemeral one but always a losing choice.

Posted by: guidoamm | Jul 30 2021 6:55 utc | 70

@ guidoamm | Jul 30 2021 6:55 utc | 68 with the discussion about monetary systems

Thanks for that. I want to take it a little bit further in one direction

Money for society provided by sovereign governments should do two things,IMO

1. Provide medium of exchange

2. Provide "temporary" store of value for personal savings not needed for immediate consumption

Longer term investment money comes with a definition of private risk and when money is used in for-profit situations then the risk will, by definition, go up because it is not backed by the government. It is in this area that government needs to regulate the risk taken by others and the risk the public is put under by the organization and its offerings.....exactly what China is doing, while still allowing ROI to be made by long term investors.

Posted by: psychohistorian | Jul 30 2021 7:43 utc | 71

Jen | Jul 30 2021 5:18 utc | 65

Western billionaire Holy Trinity: Bezos, Branson and Musk.

More like the three kings following a star, and carrying gifts.

Posted by: Stonebird | Jul 30 2021 7:54 utc | 72

Stonebird | Jul 30 2021 7:54 utc | 70
(Jen @ 65)

A bit more; Wikipedia rewritten;
Gold as a symbol of kingship on earth,(Bezos).
Frankincense (as the (h)opium of the masses) as a symbol of deity (Branson).
Myrrh, an embalming oil (a vaccine or oily talk). (Musk)

Posted by: Stonebird | Jul 30 2021 8:03 utc | 73

I spent most of the last fifteen years teaching in China, both in private tutoring organizations and in public schools and unviersities. As a lark, I chose a contract in a different city most every year and also during summers. Starting last summer, foreign teachers were asked to leave and have been teaching online.
The move to limit private tutoring programs has three components from my point of view:
1) The private companies are mostly glitzy hyped up super charged tutoring services. They mostly tutor English. They hire young foreigners who have completed a short TESOL course, not professional teachers. They are supercharged, intense, and pay their tutors two to three times what a public school teacher makes. The fees for students are very high. There are many of them and parents feel compelled to enroll their kids.
2) The number of foreign teachers in China? I've read it is or I should say it was 10,000, mostly US and British. Cut out tutor programs and maybe half of these foreigners wouldn't need to be there! Besides, they can teach online now.
3) Under 18 kids are really really stressed in China. College is actually easier. Every minute of after school, weekends and holidays is programmed for a lot, lot, lot of kids. Yes, the kids are some of the smartest in the world in many areas. Soooo, they feel they must compete with each other intensely to get ahead. Xi Jinping is asking them to chill a bit.

Posted by: HelenB | Jul 30 2021 8:30 utc | 74


For purposes of this discussion, we should agree on whether or not private property is a desirable feature of a modern society. I believe that the right to private property should be a foundational principle of modern society.

If we agree to the above, then our monetary system presents not a few problems.

Indeed, as you correctly note, money should be only a medium of exchange and should allow individuals to store the value of their excess production. Ergo, money should allow labour to retain the value of the fruits of their labour. That is the right to private property.

Our monetary system therefore does not contemplate private property.

Whether one should decide to "invest" their savings or not, should be an entirely private decision rather than a decision forced by fiscal pressure.

Then again, electoral politics can only result in progressively heavier fiscal burdens on society.

As a by the by. Since Sargar, empires, kingdoms, republics and sundry dictatorships always and everywhere decline due to fiscal mismanagement. Always. Other than natural disasters (a meteor wiping out entire regions of the globe) it is always a fiscal problem that brings about the demise of political entities. No exceptions.

Posted by: guidoamm | Jul 30 2021 8:47 utc | 75

The original article is ideological ramblings with the moral maturity of superstitious four-year old.

"Animal spirits" is an apt, candid summation of anarchy of production and its laissez-faire fetishists: recurrent throwbacks to pre-human times.

Let them cry and squeal, none is under obligation to show compassion for those that only look for themselves.

Music to my ears.

Posted by: Misotheist | Jul 30 2021 8:59 utc | 76

@ China

I cannot speak about what China is doing. I will note however that it seems to me that China has embarked on a project that is in all similar to the Marshall plan.

Effectively the USA unleashed a tsunami of pent up liquidity upon the then industrialised, but devastated, world thereby turning entire nations into debtors thereby cementing their role as bankers to the world.

China is very much doing the same thing today.

The introduction of the Euro was an interesting exercise in this regard. There is an interesting article written in 2000 by Evans Pritchard (today behind paywall or free subscription): Euro Federalist Financed By US Spy Chiefs - in this article Mr. Ambrose reports on just then declassified memo whereby in 1965 the CIA gave directions to then vice president Robert Marjolin to push for a common currency and, effectively, make it a fait accompli.

This revelation never elicited the appropriate amount of curiosity, let alone scrutiny, it richly deserves.

We are free people after all... apparently.

Posted by: guidoamm | Jul 30 2021 9:26 utc | 77

c1ue | Jul 29 2021 23:19 utc | 40

"The reality? While Marxist/Communist/Leninist nations have successfully transitioned from 3rd world to 2nd world - none of them either took root in a 1st world nation (unlike Marxist/Leninist dogma) or have been able to transition into a 1st world nation."

This is disingenuous.

First World, Second World (link to Wikipedia), and Third World are political designations, not economic ones. Marxist/Communist/Leninist nations were Second World by definition, since they were industrialized countries who were, as you put it, Marxist/Communist/Leninist.

So saying that they managed to move from Third World (non-aligned) to Second World (Communist) just means they adopted a Marxist/Communist/Leninist form of government.

Also, with the fall of the Soviet Union in 1991 Russia and all the countries in Eastern Europe moved from the Second World to the First World. So, you're wrong; a whole bunch of countries have managed that transition.

Of course, some, like Russia, are transitioning back because it turns out the other First World countries don't want them in their club and prefer to have Russia as part of a designated category of enemy states.

Posted by: Kukulkan | Jul 30 2021 9:44 utc | 78

@Cossack #61
I have frequent and direct experience with both Russia and the US. I have also traveled extensively all over the world.
So I am extremely familiar with the realities of life for regular people in all those countries.
The reality is that Russia is poor. It isn't 3rd world poor - but this is entirely because of 2 things:
1) Massive energy exports
2) Post 1990s privatization of home ownership

The massive energy exports underwrite the health care, retirement and infrastructure. Food is significantly more expensive in Russia both in absolute and (much more so) in relative cost. Utilities are much less in Russia both due to the still largely collectivist setup in big cities like the shared hot water as well as government energy subsidy.

But the biggest benefit is that nobody had a mortgage in 1991. Yes, people "moving up" or the youth who grew into adulthood then are more likely to have a punitive mortgage, but the percentage of people who fully own their homes is likely more than 2/3rds in Russia vs. the 1/3 in the US.

But this real estate situation is not going to last forever, unless the Russian population continues to decrease. In Russia, price to income ratio is 15+; the US price to income ratio for housing is around 6.7.

And for all the talk about inflation in the US - Russia's inflation has been far, far worse. The ruble has been devalued from 24-ish in 2007 to over 70 today.

So nice try, but you clearly don't understand the numbers or reality across the entire nations of the US as well as Russia.

Yes, there are homeless in the US - but that is entirely due to government lack of focus on all of its people (vs. just the rich and their direct servants). It is not a function of lack of money - if anything - the homeless problem is directly because of asset price inflation without the USSR collapse/no mortgage cushion. "Housing assistance" programs in the US are far more a function of paying $200K salaries to political cronies than it is about addressing the homeless problem - to which the ongoing health care debacle is also contributing.

Don't confuse a lack of execution with a lack of capability.

Posted by: c1ue | Jul 30 2021 10:24 utc | 79

@ArthurDent #63
The governments of Russia and China aren't doing more to house their people - what they are doing is trying to keep banksters from taking over and start an asset price inflation spiral.
Workers in China who have migrated from the countryside to work in the factories are housed in really tight conditions - comparable to college dorms. We're not talking about the thin slice of new college grads like you see in the US, we're talking about literally hundreds of millions.
The easiest gauge is: if you're on Social Security, what would your standard of living be? In the US, not great but it would be above average in Russia.

Posted by: c1ue | Jul 30 2021 10:29 utc | 80

@psychohistorian #69
You must be a fan of the US Federal Reserve, then.
They are doing a fantastic job of ensuring long term risk for saved money via ongoing inflation...

Posted by: c1ue | Jul 30 2021 10:32 utc | 81

@guidoamm #68, 73
I can't say that I agree with almost anything you write.

Let's start with the first set of assertions:

A centralized monetary system that is managed behind closed doors, (thus falls outside the democratic process) that is predicated on debt and is imposed under penalty of law, can only result in the concentration of wealth thus the concentration of power.

Yes and so? There is no system where the demos can vote on every single political and/or financial policy. That is idiotic and disfunctional.

Our money and credit originate from a point zero and radiate towards the periphery. The prevailing interest rate at every stage of this journey guarantees a progressive loss of purchasing power.

Utterly wrong. How much interest was charged when the US government sent stimulus checks to hundreds of millions of Americas? How much interest was charged when the US government added $600, now $300 to unemployment checks in every state that accepted them?

You focus entirely on the path money takes from Fed to bank to borrower, but that is far from the only path by which money goes from creation to circulation.

Because of interest, profit migrates from the periphery towards the centre.

As your understanding above is wrong, therefore this conclusion is equally wrong. Profit is not a function of interest rate - profit is a function of cost vs. revenue on a per unit basis. You can have 15% interest rates but lose purchasing power if inflation is 20%. Similarly, banks charge a significant amount of additional interest above what they pay for their capital, because of long term risk due to inflation.

The asymmetry in purchasing power between the entities that are closer to the point of origin of money & credit and the entities that make use of same at the periphery, guarantees that the majority can never accumulate wealth.

Wrong yet again. The United States has had the same Federal Reserve banking system since 1913. The United States saw enormous swings in private financial prosperity - up in the years before 1929, down in the Great Depression, up during WW2 and dramatically up in the 1950s through late 1960s. Enormous wealth was accumulated in the up periods.

Interest guarantees that the sums owed are greater than what was originally borrowed. Eventually therefore, collateral will be transferred towards the centre of the system. Hence the concentration of wealth.

This is both simplistic and wrong. You completely misunderstand the dynamic which Hudson speaks toward. Interest compensates for risk; default is the crystallization of said risk.

The concentration of wealth we are seeing today is not primarily because of interest - it is primarily because of monopoly. Monopoly has nothing to do with interest rates.

This is an arithmetical identity. The only variable is time. It is inexorable.

No, it isn't. Donald Trump has filed for commercial bankruptcy 3 or 4 times. Individuals can do the same. Only when societies limit both income potential and debt discharge potential, is what you say theoretically possible.

Individuals and companies can postpone their fate by engaging in lateral transactions like buying property, creating a business or merging with a business. But these are palliative measures.

Nonsensical. Business failures are endemic, and property prices increase only if government allows asset price inflation. The problem is that individuals doing so exacerbate the problem for overall society.

As an entity, a government cannot contemplate to deliberately restrain itself. Electoral politics too is arithmetically skewed towards guaranteeing a progressive increase in outlays.

A centralized monetary system guarantees that the needs of the state will always supersede the needs of society. Hence the manipulation of interest rates lower and the devastation of the concept of savings.

Idiotic. If this was true, the United States would not have 3 branches of government. Similarly, the Magna Carta would never have been signed.

It helps here to understand the difference between savings and investment. Todays geniuses will say that savings are investments. But that is not entirely correct.

Savings are not supposed to contemplate risk. But in an environment where purchasing power is compromised from the get go, savings will inevitably make their way into the financial markets where they do not belong.

Also worthy of note is the shift that occurred in the late 60s whereby government decreed mandatory contributions to pensions at source. This money was placed in the hands of finance of course. So, in effect, labour ended up subsidizing capital.

Today we are living the repercussions of these policies whereby pension and insurance schemes are underfunded in large part due to aberrant interest rate policies.

You clearly do not understand anything of what you're trying to lecture about. Among the enormous failures of understanding clearly demonstrated:

1) Government = capability to regulate. You make no mention of this whatsoever.
2) Interest rates in and of themselves clearly do not do what you think they do. We are living today in an unprecedentedly low interest rate environment. Under the simplistic and wrong understanding you have demonstrated above, we should all be living wonderful lives. In contrast, interest rates in the 1950s and 1960s were enormously higher as were income tax rates, etc.
The problems pension schemes and insurance companies are having are exactly because interest rates are too low, not too high - and even then, the problems are primarily short term because the obligations said financial entities took on were in a higher interest rate era. 30 years from now, when the boomers are all dead and assuming pension funds still exist (which they largely won't), the insurance and pension funds will be making enormous sums of money as their obligations were taken on in a low interest rate era even as they operate in a high interest rate environment.
Thus the problems occurring are not due to the interest rate level per se, but due to the change from high (for obligations taken on) to low (for present operating environment).
Nor do savings matter. The US has created $19 trillion of national debt since 2007. This was not taken from anyone's savings, except perhaps some from all those savers of US dollars outside the US itself. Try to understand what "sovereign power to coin money" means.

So, consumers do not really have a choice if not an ephemeral one but always a losing choice.

More idiocy. Consumers of what? When? and how? There is always a choice - even if that choice is nothing more than leaving the country.

I won't even bother going into your 2nd post - it is in the same vein of misunderstanding and confusion as the above.

Posted by: c1ue | Jul 30 2021 10:57 utc | 82

@Kukulkan #76
You're trying to use the Cold War era definition of 1st, 2nd and 3rd world.
I'm using the modern economic definition of 1st, 2nd and 3rd world.
Per wiki:

The concept of First World originated during the Cold War and comprised countries that were aligned with United States and the rest of NATO and opposed the Soviet Union and/or communism during the Cold War. Since the collapse of the Soviet Union in 1991, the definition has instead largely shifted to any country with little political risk and a well-functioning democracy, rule of law, capitalist economy, economic stability, and high standard of living. Various ways in which modern First World countries are often determined include GDP, GNP, literacy rates, life expectancy, and the Human Development Index.

Political risk and "well-functioning democracy" are complete bullshit terms, so what I stick to is standard of living.

And while we can absolutely quibble over what specifically is the variance in purchasing power between 73x480 rubles vs. 6.46x300 RMB vs. $4666 (Russia vs. China vs. US median monthly income) - there is zero doubt in my mind that each American is enormously richer than their Russian or Chinese counterpart. Any Western European would have an income comparable to the US as well.

Contrast the above with say, the non-rich parts of Africa where the median income is in the 2 digit (or less) monthly range.

South America is more interesting - Brazilians get around 5x250 monthly income but they don't have anywhere near the infrastructure or social support you see in Russia or China. There is no question in my mind, whatsoever, that standards of living in China are higher than Brazil.

Posted by: c1ue | Jul 30 2021 11:08 utc | 83

The thing to remember, when dealing with most western "experts" on China or Russia or everywhere else, is that they're not "researchers" or "analysts" in the scientific sense. They're religious zealots.
A researcher looks at data and builds its theory around its interpretation of them. It may work or not, data may be not sufficient or badly interpreted, and if it doesn't work the theory gets modified or scrapped entirely.
The zealot looks at data and demands it fit its preordained narrative. Always ends up ignoring or deliberately misinterpreting data that does not confirm its theory. Add to that the tendency to resort to magical thinking, groupthink and self-medicating lying (all in line with the denial stage of dealing with trauma) and there you have the perfect storm that plagues western academics.

Of course Roach can't interpret the Chinese move for what it is, because it is heresy for him, not only he can't understand the how and why, he refuses to even acknowledge the reasoning behind it. It CANNOT work, as it is contrary to Mammon's will, it is anathema and surely will be punished by the great god of free market. If you think about it, these "intellectuals" are incredibly similar to a semi-literate Wahhabi fundamentalist boy from a village up in the mountains.

Posted by: SumGuy | Jul 30 2021 11:38 utc | 84

It's somewhat ironic to see so many westerners now worshipping at the feet of the Chinese Communist Party. From our lounge chairs everything seems so rosy over there. Although in many ways the much adored western Vaccine Passport is just another avenue to Chinese Social Credit.
I do agree with them about curtailing the power of billionaires, they always end up in monopoly situations, buy governments and spread corruption. However China are not doing it for the good of the people, but purely to protect the power of the party.

Posted by: Gravel Rash | Jul 30 2021 11:45 utc | 85

Hold the name calling c1ue. We are here to debate. Nothing else.

"We are living today in an unprecedentedly low interest rate environment. Under the simplistic and wrong understanding you have demonstrated above, we should all be living wonderful lives."

It is not productive economic entities that request low interest rates.

There is a fundamental difference between savings and investments. Unlike the latter, the former does not contemplate risk.

A monetary system that is imposed under penalty of law, makes ALL economic entities responsible for the overspending (and the graft) taking place at government level. The law makes you and me responsible.

Government can only expand. (You must also factor here the creation of para-governmental entities like the UN, OPCW, IMF, WB and so on because these are all entities that are sustained by fiscal income - i.e tax revenue).

As fiscal income does not suffice to sustain the activities of government, debt is used to compensate the shortfall. As the debt burden increases, so must interest payments increase.

These are not linear dynamics however. These are compounding dynamics.

So the road that took us to where we are today, is littered with economic entities that have lost wealth along the way; often times, for no fault of their own. I am thinking here in particular of those individuals that were promised pensions that today are nowhere near what they were promised if they are there at all.

The reason we are today in a low interest environment has everything to do with overspending at sovereign level.

Where, at some point in history, a monetary system predicated on debt was deemed desirable, low interest rates are indicative of an economy that has been hollowed.

Posted by: guidoamm | Jul 30 2021 11:48 utc | 86

Posted by: guidoamm | Jul 30 2021 11:48 utc | 84

Low interest rates mean we can still pretend to pay back the interest that we still pretend to owe ourselves. If we couldn't still pretend to pay ourselves back, then we would have to pretend to default, and The Constitution says we can't do that. So, we would have to pretend to look into it, if that happened. We might have to pretend to punish some people. As it is, we can just keep interest rates where we want them. Flat interest rates helps keep the poor in their place too. No exponential accumulation for you, uhuh.

Posted by: Bemildred | Jul 30 2021 12:15 utc | 87

@Posted by: Gravel Rash | Jul 30 2021 11:45 utc | 83

There is an old confucian adage: gentlemen are evaluated by their deeds, not what's in their heart.

Posted by: cindy6 | Jul 30 2021 12:46 utc | 88

The sewer pit of, which cannot go a day without attacking China, suggested that it is the Chinese government covering up its own failures that manes it regulate the tuition market. Of course, zerohedge made no attempt to explain how cracking down on Alibaba and Didi were somehow different from the school tuition regulation.

Actually, though, the idea that reducing the cost of living in cities will cause Chinese people to have more children is as mistaken as the now exploded assumption that dumping the one child policy would cause a population mini boom. China is, like all other developed countries, facing the demographic consequences of its own success. People have children in large numbers in poor countries for two reasons:

1. Because of the lack of access to contraception and public resistance to contraception and

2. Because of the fact that those people need many children as the only hedge against a desperately uncertain future. Suppose a couple has seven children. Given the likelihood that health care services and sanitation are lacking, they might lose two of the seven. In the absence of pensions or free health care, the can at least hope that one of the remaining five might be kind enough to take care of them in their old age.

Of course, having children is not easy for working parents, and even harder when more tavern one child is to be produced and raised and educated. Women aren't breeding machines. They want a life too, and if they've already had a taste of education a career, and a social life, it becomes hard to persuade them to have even one child, let alone two or more.

So it is extremely unlikely that the CPC will succeed in reversing China's slow demographic decline any more than the capitalists of Europe can.

Posted by: Biswapriya Purkayast | Jul 30 2021 12:51 utc | 89

The average Russian is quite poor by Western standards:
- GDP per capital at purchasing power parity (PPP) is US$27,000 (US$11,600 at market exchange rates)
- The GINI coefficient (measure of income inequality) is relatively high at 37.7 (USA is 41.5 but their GDP per capita is US$65,000).
- Wealth inequality is of course way higher than income inequality (as it is in the US)

So we get stories like this in the Russian press:

"Almost half of Russians say a decent salary is out of their reach no matter how long they live to earn it, the government daily Rossiiskaya Gazeta cited research as saying Wednesday. On average, Russians named 66,000 rubles ($1,000) as a decent monthly salary, according to the government’s Financial University survey cited by the outlet. The figures ranged from 50,000 rubles in Siberia to 100,000 rubles in Moscow."

Even at PPP thats about US$2200 a month, US$26,400 per year - not a lot, although better with free healthcare, school, and many homes mortgage free. THATS A DECENT SALARY THAT HALF OF RUSSIANS CONSIDER TO BE OUT OF REACH. So the median salary is well below that amount. The median (not distorted by the rich) wage in the US is US$40,000.

As a comparison Canada's GDP per capital PPP is US$48,000 with a GINI ratio of 34, the average (yep, couldn't find median) salary is C$51,000 with free healthcare, and low university tuition (especially in Quebec). It has been calculated that the median Canadian is better off than the median US person, when taking into account "socialized" services, as the Canadian rich are a little less greedy in their rapacious ways (or are not allowed to be). Same would go for most of Europe and Scandinavia, the median American is relatively poor compared to most other Western nations, but still better off than Russians.

In China GINI is 46.5. That needs to be worked on by Mr Xi. GDP per capital US$10,300, at PPP US$24,000. It will be interesting as China GDP per capita passes Russia and accelerates away, the relationship between the two countries will become increasingly one of rich centre and poor tributary whether the Russians like it or not.

Posted by: Roger | Jul 30 2021 13:25 utc | 90

Honest respect for Xi Jinping.

This is awesome and well deserved.

Posted by: Smith | Jul 30 2021 13:56 utc | 91

Just my 2 cents worth:
I have only been to the USA for a 14 days trip which myself and my then madam planned. The nature was breathtaking, but the cities were awful, filled with a large amount of homeless people, black and white, men, women and children, beggars everywhere.
It is not a holiday I look back on with pleasure, too depressing, because everyone knows the USA has the wealth to solve these problems. But Mammon is god there, and socialism is a bad word. Funny I think as I come from a northern social democratic country, where the only homeless are Bulgarian beggars, begging is allowed by law here, unlike my native country Denmark where it is forbidden.
The larges gift in my life was the place I was born, Scandinavia has roughly 25 mills. Inhabitants, so you have to be lucky :)

Posted by: Den lille abe | Jul 30 2021 14:10 utc | 92

Be Careful What You Wish For

As I've noted before at moa, IMO Western elites are learning all the wrong lessons from China.

History has made me cynical. I think any attempt to restore reasonable regulation will be accompanied by an authoritarian back-lash. I sense this reactionary response already developing as 'the people' are baited (i.e. deliberately created conditions) by an increasingly loony Left: Jan 6 prosecutions, out-of-control immigration, inability to contain the pandemic, worsening economy, etc.

The 'solution' to contrived domestic and international crisis is not likely to not be reform at the top (as many hope for) but harsh measures for those lower on the totem pole.

We will be told that we can no longer afford the niceties promised by the Left and and that it is 'necessary' to extend the GWOT to a war on Russia-China "evils": interfering in elections, cut-throat trade practices, Chinese fetanyl, etc.


Posted by: Jackrabbit | Jul 30 2021 15:28 utc | 93

Craig Murray going to jail

UK Supreme Court refused to hear his appeal.


Posted by: Jackrabbit | Jul 30 2021 15:35 utc | 94

What China has accomplished is amazing and breathtaking, although some rural and remote areas are still very poor, but not as poor as the used to be

Posted by: Den lille abe | Jul 30 2021 15:35 utc | 95

@ Posted by: Gravel Rash | Jul 30 2021 11:45 utc | 83

Your argument may work for people living in First World countries, but not for people living in Third World countries. China already is an objectively better country to live than many darlings of the "emerging economies" such as Brazil by all consecrated bourgeois metrics (GDP, per capita GDP, hourly wages etc. etc.).


@ Posted by: guidoamm | Jul 30 2021 11:48 utc | 84

The reason for perpetual low interest rates (even negative interest rates, as in the case of countries like Japan) is very simple: the capitalist world never really recovered from 2008. All that pile of rotten debt from the private sector was simply transferred to the public sector (i.e. the Treasury and the Fed bought them at their full, precrisis prices). The process then started all over again, and now the mountain of private debt is even bigger than before 2008.

The USA is the richest country in the world - but it is also the most indebted country in the world. And the problem is not the public sector, but the private sector: if the USG rises its interest rate, its private sector will break. That's why Powell has been talking about "no end in sight" for what is essentially a zero interest rate.


@ Posted by: ArthurDent | Jul 30 2021 5:15 utc | 63

The USA still is by far the richest country in the world, even if you compare with other First World countries like Japan, Germany, UK etc. etc. There's a reason global companies still focus on the American consumer market for mass consumption.

From the outside, the impression is that the USA is not what it was during the 1990s, but still is the indisputable richest country in the world. It still has "fuel in its tank".

Now, for the more informed, it seems the USA is going through a process of "Third-worldization", which means skyrocketing inequality etc. etc. etc.

One of the moments I suddenly realized the USA was gaining some aspects of a Third World country was when I saw some news about poor mothers working three jobs in three different cities in order to raise their kids in Northern California. I read it and immediately thought: that's my country! (I live in a Third World country).

Another case was when I read that, in the UK, parents were protesting against the closing of the public schools during the pandemic because, otherwise, their kids would not have what to eat for breakfast and lunch. That struck home even more to me. This is a textbook Third World problem.

The main characteristic of a Third World country to me is the fact that the right to live is not guaranteed. In First World countries, even if you're absolutely poor, you're never going hungry. You may die of cold depending on the region, but food will never be a problem in your life. People with jobs in First World countries will never have to plan their budget for food, no matter how crappy the job is - yes, the food will not be very nutritious, but you'll still eat. That's not what happens in the Third World. In the Third World, you have to plan your budget to buy your food; it is not guaranteed - even if you're "middle class" - that the food you ate last month will be the same food you're going to eat next month. In the Third World, you quite poetically have to cut your flesh to make ends meet. There's no such a thing as gathering some coins from your pocket and your sofa and going to McDonalds in a random Tuesday in the Third World - this is a societal phenomenon that only exists in the First World.

Another very peculiar First World cultural habit I've noticed and that perplexes me is that many adults sorta keep their infancy trait of not eating some specific food because he/she "hates it", e.g. don't eat food with onions or garlic. Some kids in the Third World are like that (specially middle class kids), but, by adulthood

An even more bizarre habit is that, even lower middle class people in the First World apparently has some very specific food they like so much they eat it every day or at least every week in some restaurant or shop, and the fact that they realistically expect to eat it for the rest of their lives (e.g. person x loves to eat the cheesecake from the local café y and do so every day or at least every week). That is definitely not a thing in the Third World, where any kind of different/special food you eat will probably be your last time. In the Third World, the closest thing to guaranteed food you have is the base cereal from your country (generally, rice) and one or two vegetables; even meat (whatever kind it is) is far from guaranteed. That an average person consumes a specific food from a specific services provider and expects to do so consistently for the rest of their lives in the First World completely blows my mind.


@ Posted by: Kukulkan | Jul 30 2021 9:44 utc | 76

Russia is definitely Third World (and so is China).


@ Posted by: guidoamm | Jul 30 2021 9:26 utc | 75

What China is doing is completely different from a Marshall Plan. The Marshall Plan was just a big bag of money that poured over Western Europe so that they could rebuild what they already had built before the War - of course, this time, with American manufactures.

By 1960, Western Europe already was completely dependent on the American economy.


@ Posted by: HelenB | Jul 30 2021 8:30 utc | 72

I think the case of tutoring is a specific accident of history in China (the Chinese culture traditionally puts a lot of importance of the education of their children) that could have degenerated into a structural problem (private education dominating everything and sucking all the air in the room) and the CPC is solving right now, while it is still relatively incipient. Going public was evidently a big signal flashing to the whole Party it was growing too dangerous.


@ Posted by: guidoamm | Jul 30 2021 8:47 utc | 73

There's nothing "modern" about private property. In fact, private property is the oldest form of division of human societies into classes, and can be detected since the oldest stages of civilization.

You could claim private property is foundational to every civilization based on the self-evident fact that, so far, every civilization has been based on private property. But you can't mathematically prove that will always be the case; after all, human civilization is still very young (some 100,000 years old max), we still live in very primitive times.

Marx explained the question in a very simple and elegant way: humans have a limited imagination. Humans are animals, they're living beings with a given ecological role, like any other species. Therefore, humans only put to themselves problems which are humanly possible. For example: a marathon runner will never put to himself the challenge of finishing a marathon in five seconds, but will put to him the challenge to finish it under two hours. The same thing applies socially (historically): if there are humans contesting private property, then private property is not socially eternal.


@ Posted by: c1ue | Jul 30 2021 3:06 utc | 56

The Russian nobility was rich because they exploited the peasantry, not because they produced it.

Exploitation is not thievery in Marxist theory. Thievery can only happen in the sphere of circulation. The logic is that not thief will kill the goose that lays the golden eggs (i.e. the productive sphere) - that would defeat the purpose of thievery to begin with.

The reason why capitalists get richer while the working class gets poorer is not thievery, but because of exploitation. The difference here is the ontology of the process itself: the worker works for the capitalist and receives an equivalent wage from said capitalist, for the hours worked. This is a simple exchange process: the worker gives the capitalist hours of work, the capitalist gives the worker a given quantity of money (it has to be money, this is extremely important) to the worker.

What put worker and capitalist in worlds apart is after the process: the worker will expend his wage on his societal reproduction (i.e. to sustain himself and his family), while the capitalist will expend his profits on amplification of production. One lives in a regime of simple reproduction (the worker), while the other lives in a regime of amplified reproduction (the capitalist). The reason the capitalist can and the worker can't is also very simple: human labor has the utility of producing more than what it gives when consumed. The worker gave and received his "fair share", but the capitalist received more than what he paid for, precisely for the fact that the use value of human labor is giving its consumer more than what he paid for. This is called "surplus value" in Marxist theory. Profit is merely surplus value relatively (to total capital expended).

The concept of human labor giving more than what it receives is not witchcraft on Marx's part. It is very logical and very simple, actually: Mother Nature (materially objective world, natural world for short) is cruel. As such, it will not give the homo sapiens a good life. If humans delegated to the natural world to regulate themselves, we would still be at some hundred thousands total living up to 38 years on average. Humans need to work the natural world so that the natural world becomes more amenable to them. Human labor then interacts with Nature in way that the result must be a humanly useful thing (could be anything, either for mental or physical welfare, or both). Therefore, the natural tendency of the homo sapiens is that it will work in the direction of the welfare of the species, even though certain individuals may be mentally ill and self-destructive.

So, when Marx states human labor gives you more than what it is worth, he's not violating the laws of Physics. He's talking specifically about the social (historical) world. From the point of view of human society, a super nova exploding millions of light years away is a non-factor, it is completely useless. The same is true for an isolated mountain in some uninhabited corner of the world. Human labor picks something socially useless and transforms it into something socially useful - that's what he meant by creating more value that what it's worth.

And yes, Marx's theory unifies humanities with biological sciences; it is the only theory to do so. That's why Engels once said that Marx did to Humanities what Darwin did to Biology (Darwin unified Biology with Physics).

Posted by: vk | Jul 30 2021 15:39 utc | 96

Posted by: Jackrabbit | Jul 30 2021 15:28 utc | 91

Given that we are "governed" by what is essentially a collection of criminal gangs, i.e. billionaires and their minions and extended families and corporations and government hacks, etc ...

It seems reasonable to expect gang wars as they are forced to squabble over the residue of what we once had here.

You are right that decadent elites usually decide to reform someone else.

Posted by: Bemildred | Jul 30 2021 15:40 utc | 97

Well, well, well... the truth always comes out late, it seems:

US sets new disclosure rules for Chinese IPOs coming to American stock markets

The Securities and Exchange Commission said on Friday that Chinese firms would have to disclose the listing of shares through a structure called Variable Interest Entities, or VIEs, a shell company that is outside China.


It also comes a day after a group of Republican lawmakers sent a letter urging Gensler to act to prevent further losses like those suffered by shareholders of Didi Global, whose shares went into a tailspin after Beijing started an investigation into the company soon after it went public in the US.


“The SEC needs to force the exchanges to delist every Chinese company and end all Wall Street-supported Chinese IPOs,” said ASA chief executive Chris Iacovella. “The CCP’s access to the US capital markets must end.”

It was all about saving face, after all, and protecting its capitalist class at all costs. No wonder these expert bourgeois economists were livid at China's crackdown on big finance - it must have pissed or even bankrupted many of their clients and friends.

The USA is really the Union of the Capitalist States.

Posted by: vk | Jul 30 2021 15:58 utc | 98

A good take:

Why is China smashing its tech industry?
Maybe because what countries think of as a "tech industry" isn't always the same

Posted by: Paul | Jul 30 2021 16:05 utc | 99

What characteristics define a successful company?

Good leadership, focus on the customers, better value proposition,... Successful companies focus on delivering great VALUE to customers and not being driven by the competitive angle. Apple, Amazon, Alibaba, Audi,... BMW, ... Ecco,... Lamy,,..Tesla, Toyota,...Samsung, Singapore Airlines,... Zegna, Zara,... live by energizing customers and focusing on the TOP line. Many Imperialists in the West are missing this essence and its essentials. Imperialists don’t care about their customers - CITIZENS.

China is focused on its people, to provide great value and income. Its challenge is to increase its gdp per capita, enhance shared prosperity, move up the global value chain,... This requires it to focus on INCOME-driven consumption and not credit-driven consumption, like the U$A, and manage its inflation as well as market regulations. Its technocrats are managing this challenge well so far. How many of you have successfully doubled your income in millions through revenue growth in the last few years? If you have, then you understand China’s Herculean challenge.

U$A’s administrations have lost focus of their citizens and ENSLAVED them. Now they focus on the bottom line to avoid bankruptcy. It is time for America to REINVENT itself, focus on its people and regain its success. If it does the right thing then god will bless America. Until America sees light, it is out of luck. “In God We Trust”

What characteristics defined a successful country?

Posted by: Max | Jul 30 2021 16:08 utc | 100

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