Paper Dragon
Since America’s founding in 1776, the very fabric of our society has often seemed on the verge of unraveling, with Barbarians at the gate ready to eat our economic lunch, and/or prove that our messy democratic system of government is inferior to theirs.
Having crushed Germany and Japan during WWII, we saw the Soviet Union rise as our main challenger, get to space first, build an Iron Curtain, and target us with thousands of nuclear bombs. Fast forward, the USSR collapsed in 1991.
Next up, Japan stepped forward to show us how the pros do it by manufacturing cars and televisions more efficiently and economically. Well, 20-years of deflation and an aging population has dimmed that Rising Sun.
Recently Vladimir Putin tried to prove the West to be morally weak and NATO a paper tiger, by starting a war in Ukraine that will set Russia back for generations, regardless of the war’s final outcome.
Today, with China as America’s main competitor, folks once again are saying “this time it’s different.” Perhaps it’s time to keep in mind four factors why the Chinese Communist Party is headed for the same trash bin of history as the USSR:
– Xi Jinping, China’s President-for-life, recently called Vladimir Putin his “best friend in the world.” This friendship is costing China soaring energy and commodity prices, along with snarled supply chains that were already disrupted by pandemic lockdowns.
– Even as America offers the entrepreneurial and technological pathway for a South African immigrant to become the richest man in the world, China cracks down on its own technology sector, driving down the market cap of its 10 largest technology companies by $2 trillion in one year. Elon Musk is in the news every day; nobody hears from Jack Ma!
– While China’s property sector represents ~29% of its soaring GPD, Evergrande’s demise pricked that bubble, proving once again the folly of central planning giant ghost towns.
– Dictators may be able to control people, but not viruses. China’s zero-Covid policy, forcing nearly 400 million people to stay home for weeks, may go down in history as a massive failed health and economic policy.
Authoritarian systems invariably look strong and in full control, until they are not. Once America starts onshoring its industry, and as soon as the effects of China’s One-Child policy truly kick in, we will see the real failures of central planning i.e. that it has never worked in the past, and will not work in the future, no matter who the dictator happens to be or the perceived strength of their grip.
— Sina.
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