At Epoch Times columnist Milton Ezrati observes that the Chinese leadership doesn’t seem to know what to do about China’s economic problems.
It faces huge challenges—a property crisis, export shortfalls, demographic decline, a loss of confidence, and growing hostility in foreign capitals. More than ever, Beijing needs to act and point the way to future action.
But the leadership at its annual “Two Sessions” conference didn’t advertise any glorious plan. Well, not quite.
Speakers did reference new growth engines, what they called “new productive sources.” But there was little new here. As in past public statements, renewable energy, advanced technology, and electric vehicles led the list.
Oh good. So the Chinese are going to wreck the economy with green rubbish. Just like the US, where California is going for the gold of big time offshore wind, according to Edward Ring at American Greatness. Five companies have bought rights to build wind farms 20 miles out to sea in 4,000 ft of water. Yes, the wind farms will be floaters.
With 25 gigawatts of installed “nameplate capacity” called for by 2045, even at 10 megawatts per wind turbine, this would require 2,500 floating turbines.
Do you mind if I make a point here? Politicians do not have a clue how to grow the economy. Nor do experts. Nor do activists of various kinds, from union activists to corporate lobbyists to climate change advocates.
All people in politics want to do is channel the nation’s resources into their latest war. And that, whether it’s a world war or a climate war, funnels the nation’s wealth and ingenuity into destruction, hopefully of the other guy.
But at the end of it, the nation has funneled a ton of cash and blood into a war, and then it takes five to ten years to get the nation back on the path to prosperity, after it has digested the debt, the inflation, and the general destruction of the war.
And that assumes that the nation has won the war.
Yes, but, whatabout jump-starting growth? With… Oh I don’t know: targeted tax cuts, subsidizing “new productive sources,” “advanced technology?”
Hey I know! Whatabout AI! There’s a goldmine, if you like.
Do you see the point? When it comes to economic growth, nobody really knows what is coming next.
Of course, the government could lower taxes on startup companies and investors. Only the government is usually in the business of promising that the rich are going to pay their fair share.
I know! How about the president and all the cabinet officers get into a room and play Cut the Spending! The guy that comes up with the best idea for cutting government spending gets… Yes, what should he get? A gold medal? A Medal of Freedom? Ten Percent of the spending cut?
The point is that government does not know what is coming down the pike next to grow the economy. It cannot know. The whole structure of venture capital investing screams this out. Every VC investor finances a bunch of startups, all of which seem to have good ideas. But the fact is that only about one in twenty will be profitable and make a fortune. Because the world is full of good ideas, but not so full of good ideas that work.
Where were you when Amazon went public in the 1990s? Its price is up 1800 times the price when it went public in 1997. So a $10,000 investment back then would now be worth $18,000,000. I coulda been a multi-millionaire! But back then, I remember thinking: wow, Amazon is all debt and no profit.
Where were you when Apple put out the first iPod in 2001? I remember thinking: yeah, the kids really like it. But will it really take off? Well, today Apple is up 170 times its price in 2000, what with iPads and iPhones and MacBooks. So a $10,000 investment back then would now be worth $1,700,000. Not too shabby.
The point is that, even when a company first goes public, it isn’t a shoo in. Maybe it will do well; maybe it is a flash in the pan. Experts know nothing about it; governments know nothing about it. You place your bet and hope you hit the jackpot.
But if tens of thousands of entrepreneurs are getting startup money from thousands of VC investors. Well you never know.
Here’s an interesting graph. It’s real per-capita GDP for the US since 1800. It’s graphed using a log scale, which means that a constant growth rate is a straight line with a fixed gradient.
As you can see, in the last 40 years the real per-capita growth rate has been going down. In other words, the graph is an S-curve.
So that might mean that the economic growth of the last 200 years is coming to an end. Is that because of government stupidity and big government handing out monies for nothing? Or is it that the last 200 years have been an outlier in human history, where an extraordinary combination of events created a once for all time jolt in human prosperity?
So, maybe there is nothing governments can do to restore economic growth.
Or maybe, Elon Musk’s plan to Occupy Mars will completely change the course of human history.
You be the judge. But where do you put your $10,000? On Elon Musk or a politician?