Tuesday, August 25, 2015

Politicians Wreck Economies, Chinese and US

After the three-day market rout it's time for an I Told You So article on the follies of the politician-driven Chinese economy. Writes Rich Lowry:
China might have bright, shiny airports and gauzy GDP numbers, but that is window dressing on a badly distorted economic system that is being managed about as well as you’d expect by a group of corrupt, self-interested statists, which is to say not well at all.
Hmm. Politicians distorting the economic system, with the result that "A country famous for its 'ghost cities,' massive unoccupied developments, obviously has a huge malinvestment problem." Where have I heard that before? Which country has a huge problem with politicians throwing government subsidies at malinvestments in, e.g., "affordable housing" and "green energy?"

Rich Lowry says that at least the Chinese government knows it has a problem.
The Chinese government has talked up reforms as it seeks to put the economy on a sounder long-term footing. The list of necessary changes is incredibly long. For a truly modern economy, China needs a commercial banking system, less powerful state-owned enterprises, free capital flows, greater labor mobility, and a proper retirement system, not to mention the rule of law, property rights, and an independent judiciary, among other things.
What Lowry is saying is that the politicians everywhere need to get out of picking winners and losers and directing the economy with their corrupt (and probably economically incompetent) nominees.

What about the United States? Where is the groundswell of political opinion from the heartland demanding that the government get out of its endless interventions in the economy? For instance, libertarian activist Stephen Moore can't get a mortgage, because Dodd-Frank, even though he's putting 25 percent down, and people that put 25 percent down don't walk away from their mortgages.
Virtually all the defaulted loans had low down payments, with many having less than 5 percent down, thanks to government "affordable housing" mandates.
Moore is being denied because he has a low credit score -- for two late credit card payments and $300 in unpaid parking tickets. Meanwhile the government is still on its "affordable housing" kick.
While I'm making a 25 percent down payment, the government insurance underwriters -- the Federal Housing Administration, Fannie Mae and Freddie Mac -- are backing with taxpayer dollars hundreds of thousands of loans made with as little as 3 percent down. These are the loans that will likely default. And taxpayers are on the hook for hundreds of billions of dollars.
What could go wrong? If you add in the tens of thousands of crony-green wind turbines that unroll beneath you as you fly across the fruited plain, you remind yourself that there is plenty of ruin in the United States.

We should be careful in sneering at China. We have plenty of screwed up economic nightmares waiting to happen right here at home.

The reason that China has a screwed-up economy is that its corrupt Communist Party un-elected oligarchy doesn't have a clue about how to run the economy. The reason that the US has a screwed-up economy is that the voters keep electing politicians to office that don't have a clue about how to run the economy.

Hello people! If you want to know what to do about the economy, don't listen to a word the politicians say. They will say anything to get your vote.

The people to trust with the economy are the businessmen. They are idiots, of course, but unless they have politicians in their pocket they are forced to adjust their businesses to the reality of the market every day. And that is what makes them grow the economy.

No comments:

Post a Comment