MAY 12, 2014 -- As Lee Kuan Yew told Senator Shelby and me, in Singapore ten years ago, "China's leaders are not only good politicians, but students of government." China practices managed capitalism and managed human rights. They have to build a strong economy and at the same time keep the country together before they can grant more human rights.
So far China has had terrific success. But China's recovery model has put all countries in a dither trying to compete and trying to keep open markets and trade free. This came to my attention with Thomas Picketty's book: "Capital in the 21st Century".
After fifteen years of analyzing data in thirty countries, Picketty concludes that the rich get richer and their wealth doesn't trickle down. I always thought that "trickle-down economics" was a political expression. I don't know of an economic study that finds the rich get poorer or that wealth trickles -- either up or down.
about inequality, Picketty should have studied the effect that China's
managed capitalism has had on the economies of other countries. Other
than Warren Buffett and Bill Gates, the rich always hold on to their wealth,
getting richer and there is no trickle down or up. It's more become rich
as in China, the poorest country, which has already produced more billionaires
After World War II, Japan closed its market, subsidized its manufacture, and sold its export at cost; making up the profit in the closed market. For example, my 2006 Lexus that cost $34,000 - the same car in Tokyo sold for $44,000. Last year, Ford's Vice President was complaining about Japan's still closed market. Now, with China's controlled capitalism, Japan's model of closed markets and predatory practices has trouble working. The Prime Minister Abe is doing his best to compete.
in the European Union are also struggling to compete. But the Unites States
refuses to compete. The economists for Corporate America attribute the
lagged economy to the Great Recession - ignoring the continued offshoring
of our economy by Corporate America. Foreign countries using their Value
Added Tax assemble cars, watches, etc. Labor and Main Street have taken
a hit. But Wall Street, the Big Banks and Corporate America want to keep
the offshore profits flowing so they contribute to the President and Congress
to do nothing to compete in globalization; to not make it profitable for
manufacture in the Unites States; to oppose the VAT that has no loopholes
and is self-enforcing - to do nothing. The President and Congress do nothing.
There is no way to stop inequality. But to eliminate inequality as a political issue:
Senator Hollings of South Carolina served 38 years in the United States Senate, and for many years was Chairman of the Commerce, Space, Science & Transportation Committee. He is the author of Making Government Work (University of South Carolina Press, 2008).
© 2014, Ernest F. Hollings. All rights reserved. Contact us for republication permission.
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