The Fascination With Authoritarian Systems

I always hate it when Tom Friedman writes a column, as he did today, with which I’m in substantial agreement, but insists on spicing it up with some complete idiocy.

I agree with his conclusion, that there’s no substitute for the traditional virtues—prudence, temperance, fortitude, wisdom, and so on:

We need to get back to collaborating the old-fashioned way. That is, people making decisions based on business judgment, experience, prudence, clarity of communications and thinking about how — not just how much.

But why did he have to muck it up with this tidbit?

You cannot tell tens of thousands of people that they can have the American dream — a home, for no money down and nothing to pay for two years — without that eventually catching up to you. The Puritan ethic of hard work and saving still matters. I just hate the idea that such an ethic is more alive today in China than in America.

What Mr. Friedman is not telling us is that “socialism with a Chinese face” is a brutal, heartless, merciless, unaccountable authoritarian system. There is no universal system of social insurance in China. If you present yourself at a hospital (mostly in the big cities), they’ll treat you but there is no general national health system in China. The family is the primary social services agency.

There is no secure form of personal savings in China—their banking, financial, and equities systems are hopelessly corrupt and opaque even to the Chinese let alone to feckless Westerners.

The One-Child Policy insures that the burden of caring for elders falls primarily on those poor, cherished, single children. Note that these are the children that even now are being killed and sickened by adulterated milk.

Of course the Chinese save. They don’t have any other choice.

The current financial crisis derives from screwed up incentives. It is what comes of a system overly dependent on consumer spending. If you save, it will be taxed away. Indebtedness is a strategy for avoiding taxation. The disincentives for profligacy are too slight. We won’t let anyone become truly destitute so why not spend it while you’ve got it? If you lose billions, the government will step in to prop you up.

Here the ants will always pay for the grasshoppers.

2 comments… add one
  • Of course the Chinese save. They don’t have any other choice.

    Similarly, Americans saved during WWII. They also didn’t have a choice!

  • Brett Link

    One problem with that, Dave – if it was a matter of taxation driving people to consumer spending without counter-incentives to balance that out, then why were savings rates considerably higher than they are today in the decades before the 1980s, through into the 1990s (they didn’t hit negative/zero until the 2000s)? And we’re talking considerably higher taxes, as in 70+% on the top brackets (who make up a disproportionate share of consumer spending) versus 28-39% after 1986.

    The bigger problem is arguably that incomes stagnated while a whole new arena of consumer spending opened up in electronics, combined with significantly more and easier credit. If you want to put a stop to that, then simply implement more stringent laws on getting a credit card, home equity loan, or what-not.

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