Quick quiz, name the country:
- whose farms produce 20% of the world’s calories
- who is the leading semiconductor manufacturer and exporter (and this country’s top export industry)
- whose manufacturing base is the world’s largest
- who is the largest recipient of FDI and the second largest exporter
- whose entertainment and culture are pirated, siphoned, copied and continuously consumed globally (go to kat.ph/movies, how many of the top 100 are made in China?)
- whose labor participation rate is at a 30 year low yet still produces the same amount of economic activity as ever before
Why are some misanthropic analysts throwing the baby out with the bath water when it is clear that the US has not collapsed or will collapse in the near future?
For example, not to single this reader out, but the comment from Mangix in yesterday’s blog post touches on a number of myth’s that are currently popular in some corners of the blogsphere:
so if china doesn’t present a particularly strong growth opportunity, what does?
According to Jim Rogers, capital has slowly been moving from the west to the east and since you can’t have capitalism without capital…
It boggles the mind that anything in the west would have any growth opportunity since most western governments are loaded with billions and trillions dollars of debt.
There are at least three problems with this:
1) Jim Rogers may have been correct with his investment strategies in commodities and agriculture, but his calls and timing regarding East Asia, especially China, have been wholly incorrect. If someone is continually incorrect with their predictions, why continue listening to them and taking their advice in that domain?
No one listens to the Millerites or Harold Camping anymore, so why pay heed to Rogers & Co.? Because it feels good? Perhaps you are an apocaholic.
2) China has strict capital controls that prevent capital from flowing East to West. If these were relaxed, domestic savers would now have alternatives to park their funds. Currently Chinese savers have few choices: place the funds in state-owned banks whose repressed interest rates sit below CPI and/or purchase investment properties and hope to rent them out (though many of these properties remain dormant for years). Also, look at China’s FDI. As an investor why would you risk sending your capital to a country whose means of production is owned by the state?
3) Presidents, the Supreme Court, drones, OWS, Tea Partiers, carbs, conspiracies, chupacabras and autotune are all easy scapegoats. But it is also your responsibility as a potential entrepreneur to think of new growth opportunities in whichever country you live in (regardless of “East” or “West”). Sure 56% of start-ups fail in their first 5 years, sure you might dislike the political environment in whatever domicile you live in, but there are probably still opportunities if you are creative. Stop blaming the state, stop blaming political parties and “gridlock,” you alone can invent the future and become so rich that tax rates just make you blush.
Mark DeWeaver, who I interviewed here, has found opportunities in the most unlikeliest of places: Iraq. Here is the official webpage of the Iraq Stock Exchange. Here is a wiki entry about it. Here is a story about it on Bloomberg (which is still blocked here in China).
One last note
Just because there have been riots in Greece and Spain in the past year, it does not follow that there will be a future, global societal collapse such as those continuously prophesied by doomsday radio-hosts and the hyperbolic (sic) blogosphere… who make a living off of preaching gloom.
Nor does it follow from such a collapse, that some wise libertarian-minded order will rise from the ashes. This is a weird teenage eschatological fantasy. Not once in history have “the masses” - hoi polloi – become instantly enlightened with agorism and libertarian thought following a “collapse.” In fact, the last time a grand civilization collapsed we had 1000 years of Dark Ages. Brutish and miserable. Why would anyone want that to happen again?
And there is little evidence to suggest that gold/silver owners would be kings. It is all a non sequitur. More than likely, they would be the first ones <insert morbid death>. Plus, if you dislike your USD so much, feel free to donate them to TLS.
See also: cryptography realists by XKCD.
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