Recently in China Category

It is likely that Iran is developing and acquiring nuclear capabilities in order to produce nuclear weapons. Iran's current rulers have been vocal and consistent in their calls for Israel's destruction. Such statements have gone beyond what is considered acceptable in the arena of international relations. Iran actively and openly supports violent activities against Israeli civilians via proxies in Lebanon, Gaza, and elsewhere. Iran undermines Lebanon's sovereignty and national security by funding and supplying a local army not controlled by that country's government; it undermines a potential peace agreement between the Israelis and Palestinians by encouraging and facilitating the latter's choice of violent resistance and denial of Israel's right to exist within any borders. It is possible that Iran will soon enter a "zone of immunity", following which it will not be possible to thwart its efforts to acquire nuclear weapons. 

Israel should not attack Iran. Nor should it solicit American action to that end. Based on historical precedents, if Israel had a surgical way to thwart Iran's nuclear ambitions, it would have done so already. Hence, on the assumption that such an elegant solution is not available, the cost of an Israeli strike does not seem commensurate with the reward. Further, the potential cost, and likelihood, of living with a nuclear Iran does not seem high enough to justify a wager of this kind.

The rapid growth of the Asian "Tiger" economies gave rise to the idea of an Asian development model, one which consists, perhaps, of a cultural component that is uniquely Asian. Confucianism, an existential and political philosophy that originated in China and spread through east and southeast Asia, is often mentioned as one such possible component. More broadly, the interplay between culture and development has fascinated economists and sociologists for generations and is addressed in many of the classics of both disciplines1. As two relatively closed societies and as Asia's only two large-scale economies to attain the status of developed countries, Japan and South Korea offer an interesting case study for the examination of the importance of Confucianism.

Japan and Korea are among a "handful of successes among the world's more than one hundred developing countries" (Kuznets 1994:1) and as such offer a successful development model to emerging economies in Asia and beyond. While both countries completed the transition to a fully-developed economy in the 20th century, it is worthwhile to examine the historical foundations of this transition. By surveying the 19th century roots of Korean and Japanese development, we can draw conclusions that may benefit the 21st century modernization efforts of other countries, most notably China. 

"The importance which the certainty of law has for the smooth and efficient running of a free society can hardly be exaggerated. There is probably no single factor which has contributed more to the prosperity of the West than the relative certainty of law which has prevailed here."

The American media is in combative mood: A year and a half after Lehman's collapse, the pundits are finally waking up to the fact that China bears a significant share of the blame for the current financial crisis. And so, the Krugmans of this world are calling for the US government to 'punish' China through a variety of protectionist measures. 

'There is no means of avoiding a final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion or later as a final and total catastrophe of the currency system involved.'

The above quote from Ludwig von Mises's Human Action (1949) pretty much sums up where we are and where we're headed. There are two ways out of this mess: Allowing bad banks and bad companies to go bankrupt and take some pain in the short term; or bail them out through government "creation" of more money and cheap credit.  Looks like the world has opted for the second option. 

One of the most popular memes repeated by mainstream media since the collapse of Lehman Brothers last year is the idea that China will manage to avoid the consequences of the economic downturn by shifting from an export-based economy to one based on local consumption. 

'One-party autocracy certainly has its drawbacks. But when it is led by a reasonably enlightened group of people, as China is today, it can also have great advantages. That one party can just impose the politically difficult but critically important policies needed to move a society forward in the 21st century.'

The above was not written by the speaker of China's Communist Party; it was not published on China Daily or the Global Times. It was written by Thomas Friedman and appeared in yesterday's New York Times. Friedman is so in love with central-planning, that he is willing to give up his so-called liberal ideology and dismiss China's ruthless and violent control mechanism - which holds 20% of the world's population under considerable oppression - as a system with some "drawbacks", led by "enlightened people". 

While the rest of the world is suffering from the most severe financial crisis since the 1930s, it's business as usual for the people who got us into this mess. Two articles from today's Financial Times tell the whole story.

Below is an excerpt from a wonderful article by James Fallows from The Atlantic. Fallows traces the route of a USD in and out of China as it makes it's way through the country's enforced saving and currency manipulation mechanism. This is a must read for anyone wishing to understand how un-free China's market really is, especially when it comes to trading with other nations. The article was written more than a year ago, and Fallows did not fully grasp how unsustainable the process is. Since then, the imbalance created by China's actions, American's wrong response to it, and a variety of other minor factors brought the global economy to its knees:

The global financial crisis rekindled the debate about the advantages of central planning as opposed to free markets. Various "experts", including leading American economists, are using the crisis to promote their political agendas and call for increased regulation on, and government intervention in the market , both nationally, and globally through institutions such as the UN and the IMF. I am now working on a longer post regarding the dangers these ideas pose to individual freedom and global stability. In the mean time, it's important to note that such ideas are not new, and have been found wanting by the test of time. 

"People are prepared to obtain order and tranquility by giving up other values such as democracy and freedom. This dangerous temptation has not disappeared, even today." (Mikhail Gorbachev, 1993)

"The People have lost confidence in the Government. The Government has decided to dissolve the people and appoint another one." (Bertold Brecht)

We live in times of great darkness and confusion. A new study by the Economist Intelligence Unit provides a good summary of government and corporate attitudes towards the financial crisis, its causes, and the actions that will get us out of it (PDF here). The study is based on the opinions of '400 senior business people in companies around the world', as well as those of experts from the Economist Intelligence Unit and various business schools. Key findings include: