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.
Tim Swanson is a graduate of Texas A&M University. He has worked in East Asia for more than 5 years and currently lives in China. He is the author of Great Wall of Numbers: Business Opportunities & Challenges in China
{ 7 comments… read them below or add one }
Firstly, to suggest we stop blaming the state, political parties, etc. sounds like ignorance (as in, just look the other way). One cannot ignore that and think everything is perfect in this world and all you need is a creative hat to succeed. Isn’t it funny how, every year, with each new regulation, new restrictions, etc. people have to become MORE creative? In the business world, they spend money on lawyers looking for “creative” ways, or as I refer them as, “weasel ways,” to get through this regulation and restrictions. Not everyone is made of money nor do they have the time to sift through bills looking for an in. They simply shouldn’t be there and even the dumbest person shouldn’t need oodles of creativity to start a business.
To suggest you just need to be creative, well, that’s a big part but why you should restrict people because they aren’t creative? That violates freedom utterly but I don’t think the purpose of this article really cares about that.
Secondly, t o suggest America will collapse takes an opinion some people have and stereo-typically applies it to the rest of the Libertarian’s. Most Libertarian’s I talk to, which I suggest the author get in touch with, use words like “revolution.”
Is the author aware that America became a country via a revolution? Did Britain collapse? No. Did America? No. In fact, in America, it boomed. Inventions, innovations, discoveries, etc. America became the place to be – people flocked to it. It’s no coincidence that the further they move away from that model, the worse it becomes and the more “creativity” you need. Funny, back then, your creativity went towards your invention, such as the phone or “car,” but now it’s directed at even starting a business to even GET there.
But, this author uses a model of collapse and I guess that stems from the idea that having 16 trillion in debt is a bad thing, which it is, and Libertarian’s do argue that is a bad thing. How could you ever think it’s not? How could you ever think it is something to ignore or think of as nothing to be concerned about? And, after reading this article, it sounds like one should just not think about that and put it to the side. After all, if America is the place to invest TODAY and it hasn’t collapsed, then it will be the place to invest into FOREVER and nothing will make it collapse. The author generalized and thus, is subject to generalization in return.
Does the author suggest we continue spending? I don’t see any mention of his belief in cuts. Does the author thing a country can spend forever and not pay for it? Apparently not.
All I know is that countries who owe a lot of money towards other countries don’t normally sit on top for long. If you read this article, you may think things are perfect. If you live in reality and choose not to ignore anything, you probably won’t be voting Romney or Bush… I mean Romney or Obama. Sorry, Obama just looks like Bush since he signed into everything but ignore that – it doesn’t hurt you – just be creative.
Noel, thanks for your comments.
I replied to some of your concerns in a longer blog post here.
the ends do not justify the means. The wealth we have created in this country is temporary, like it or not. A wealth transfer out of the US is in process. The government will be squeezed later. The US is in decline on many levels: education, work ethic, personal responsibility. Government is out of control. No one should think the end of the US is “here”. The process like the decay of a long lived tree.
onclcr, thanks for your comments.
I replied to some of your concerns in a longer blog poster here.
Furthermore, regarding specific issues you raised:
- Education attainment and achievement: however measured, is roughly the same or better as it has been over the past decade
- Work ethic: not sure how you measure that, but productivity is actually higher per unit of input considering the drop in work force participation
- Personal responsibility: teen pregnancies are at a record low, violent crime is at a 40 year low
If there is a massive wealth transfer out of the US, where is it going to? Citations?
Better to begin preparing for the aftermath of the collapse of the Empire and the economy, than to let it happen and then try to figure out where to go from there.
I say this not because I want to see the world burn, but because the collapse is inevitable. All fiat currencies fail, all Empires fall. Empires with fiat currencies, such as the Empire of the United States, do them at the same time.
I concern myself with what will follow for the exact reason that there is no surety that what will follow will be any better than what is now. The collapse of the Wiemar Republic was not followed by roses and champagne, the fall of the Romanov Dynasty was not followed by a flourishing of the little people. There is a very real possibility of dictatorship in the United States coming out of the economic collapse, exactly as Caesar followed the Roman civil wars.
So what will YOU do to build a more free society? Have you given it any thought at all?
Hi Bob, thanks for your comments as well. I answered both of the questions you asked in a longer blog post here.
I just wanted to make one simple point: Jim Rogers has himself said that his timing sucks. So, not to disagree; just to make the point that people taking Rogers’ predictions as advice are doing so…against his advice.