Does China do Capitalism Better than America?

It's a month old, but I heard this last night and was really intigrued by the responses, both for and against the motion:

http://www.npr.org/2012/03/19/148...an-america

http://intelligencesquaredus.org/...n-america/

Transcript
[intelligencesquaredus.org]

For The Motion
Orville Schell is the Arthur Ross director of the Center on U.S.-China Relations at the Asia Society in New York. He is a former professor and dean at the University of California, Berkeley's Graduate School of Journalism. The author of 14 books, nine of them about China, Schell worked for the Ford Foundation in Indonesia, covered the war in Indochina as a journalist and has traveled widely in China since the mid-1970s. He is a fellow at the Weatherhead East Asian Institute at Columbia University, a senior fellow at the Annenberg School of Communications at the University of Southern California and a member of the Council on Foreign Relations.

Peter Schiff is CEO and chief global strategist of Euro Pacific Capital. He is the author of several books, including the bestselling Crash Proof: How to Profit from the Coming Economic Collapse, and an upcoming book, The Real Crash: A Blueprint for a Bankrupt America. He also hosts The Peter Schiff Show, a daily radio talk show. He appears regularly on CNBC, Fox Business, CNN and Fox News. Schiff served as an economic adviser to Ron Paul in 2008.

Against The Motion
Ian Bremmer is the founder and president of Eurasia Group, a global political risk research and consulting firm. Bremmer created Wall Street's first global political risk index and has authored several books, including the national bestseller The End of the Free Market, The J Curve and the upcoming Every Nation for Itself. Bremmer contributes to multiple publications, including writing "The Call" blog on ForeignPolicy.com. He has a doctoral degree in political science from Stanford University, and teaches at Columbia University.

Minxin Pei is professor of government at Claremont McKenna College and the director of the Keck Center for International and Strategic Studies. Formerly a senior associate and director of the China Program at the Carnegie Endowment for International Peace, his research focuses on democratization in developing countries, economic reform and governance in China, and U.S.-China relations. Pei's research and op-eds have been published in numerous publications. He is also author of China's Trapped Transition: The Limits of Developmental Autocracy. Dr. Pei received his M.A. and doctoral degree in political science from Harvard University.

Arguments For the Motion:

• China has emerged from the global financial crisis seemingly unscathed. Europe’s hope that it will tap into its $3 trillion in reserves for a bailout only solidifies its newfound economic dominance.
• In contrast to the political gridlock in the U.S., China’s authoritarian government has the ability to mobilize its resources—impressive investment in infrastructure is one example— and to make difficult decisions quickly, without fear of political retribution.
• Since introducing capitalist economic reforms in 1978, China has lifted $300 billion people out of poverty.
• With the 2nd highest corporate tax rate in the world, 35%, the U.S. is not business-friendly. China’s rate is 25%.

Arguments Against the Motion

• A weak economic foundation, widespread corruption and growing inequality, will bring an end to China’s unprecedented growth.
• With its gross national income per capita at 7,570, China trails Ecuador, Kazakhstan, and Romania, and falls well behind the U.S. at 47,120.
• An authoritarian government means that there are no checks and balances—gridlock or no, America’s divided government was created for a reason.
• Companies rarely pay the full 35% in corporate taxes. In fact, once adjusted for deductions, the average corporate income tax is on par with other industrial nations.

I generally sided with those against the motion (shocking, I know) and I have a pretty decent amount of experience dealing with companies that must compete in both countries. A couple more arguments that I found pretty compelling on the "against" side were Dr.Pei's assertion that on the entrepreneurial side, there are many very large sectors that you aren't even allowed to get into as a Chinese citizen (like energy, anything to do with natural resources, finance, etc.), and Mr. Bremer's argument that China's capitalism isn't simply just "capitalism"; it's "state capitalism" and that means that the state is the principal actor in the economy.

Well worth the read (or listen). Thoughts?

If we are describing PURE free market capitalism, China is an abysmal failure.
There is no open competition for it's products that are not subsidized in some fashion - and often HEAVILY subsidized.
Their economic costs to the environment are also abysmal, and one day soon those costs are going to come due as it's citizens either die off in massive numbers from the toxins in their environment or genetic defects mount rapidly and overwhelm their capacity to treat them medically or care for the worst among them.

Now, if life is valueless, then I suppose it's a capitalists' dream economy.
Workers are just one more commodity to dispose of when they're used up.
Disposal costs are no more than the energy required to bury or burn the millions upon millions of bodies - just one more tiny raw materials factor in the equation of building wealth for the few and the destruction of the lives of the many.

America COULD compete on those terms if it wasn't for all the namby-pamby liberals who falsely believe human life is worth more than profit.
(Only unborn human life is worth anything to some folks. Once you are actually popped out of the womb you are a "resource" to be exploited.)
Of course, SOME of us who end up as "commodities" object to that sort of view of our lives, and therein lies the problem with America.

I tell ya, it's getting so an honest capitalist can't make a decent buck anymore.

China isn't really capitalism in the classic sense. It is mostly state controlled, though there is competition among the state run agencies (several state run energy companies).

Where China is benefiting economically is that as the actor and the regulator, they have decided to act decisively and regulate loosely. A centrally planned mistep will have a much larger impact on the country's economy than will the generally more distributed misteps in a well run capitalist system. China is demonstrative of a relatively well run central government that optimizes on economics and production rather than the environment and general welfare.

Quote from Xygonn : China isn't really capitalism in the classic sense. It is mostly state controlled, though there is competition among the state run agencies (several state run energy companies). Where China is benefiting economically is that as the actor and the regulator, they have decided to act decisively and regulate loosely. A centrally planned mistep will have a much larger impact on the country's economy than will the generally more distributed misteps in a well run capitalist system.

I agree with this.

Quote from Xygonn : China is demonstrative of a relatively well run central government that optimizes on economics and production rather than the environment and general welfare.

I don't think they're "demonstrative of a relatively well run central government" as a whole. There's tons of corruption and no transparency. However, there are some aspects of China's leadership compare favorably with ours. As Orville Schell puts it:

Quote : ...you look at China, who's running the government in China now? They're all engineers. In many ways, the very things that we used to impute to China as a great weakness, namely, a over reliance on ideology, are now the very things that are hampering our own country, while China, governed by engineers and technocrats, tends to look at reason. There are no climate deniers in China. I have never spoken to a Chinese who doubted evolution.

And this is important. There is an implication that an emphasis on economics and production at the expense of environmentalism and general welfare (aka human capital) is preferable. This I don't agree with. In the short term it might be a recipe for growing an economy quickly. But in the long term, there's bound to be tons of backlash associated with such an ideology. You'll have no more environment to protect; your human capital will be too sick to work. And then you'll have to rely on external sources for those things. How will China be doing 30 years from now?

A thought occurred to me the other day that may or may not be related, but I will offer it for consideration...

Tocqueville wrote that democratic people are fine with cheap imitations of well made goods. As I was putting on my fake designer sunglasses (from China) and considering the fact that China refuses to enforce IP protections for foreign companies... it occurred to me that it was all very democratic. It seems that any man in China with the desire and skill to craft a forgery of a Western luxury product is free to do so. The government does not stop him, he is free to make a living off this forgery.

We still protect an aristocracy of a sort, the aristocracy of merit, that has access to the legal system and copyright protection.

Which is more capitalistic? IP protection or the wild wild west? If capitalism is defined by the idea of the market settling all disputes, it would seem the Chinese approach is more capitalistic. Let the forgeries and the genuine articles compete and see who wins. That's not my preference, but I like my sunglasses.

Quote from Doctor_Wu : A thought occurred to me the other day that may or may not be related, but I will offer it for consideration... Tocqueville wrote that democratic people are fine with cheap imitations of well made goods. As I was putting on my fake designer sunglasses (from China) and considering the fact that China refuses to enforce IP protections for foreign companies... it occurred to me that it was all very democratic. It seems that any man in China with the desire and skill to craft a forgery of a Western luxury product is free to do so. The government does not stop him, he is free to make a living off this forgery. We still protect an aristocracy of a sort, the aristocracy of merit, that has access to the legal system and copyright protection. Which is more capitalistic? IP protection or the wild wild west? If capitalism is defined by the idea of the market settling all disputes, it would seem the Chinese approach is more capitalistic. Let the forgeries and the genuine articles compete and see who wins. That's not my preference, but I like my sunglasses.

...... but in a world where there is absolutely zero IP protection, the opportunity for profits from your hard work are very short. In the long run there's little to gain from inventing if it's just going to be stolen as soon as serial 0 hits the shelves. The China adaptation works because the IP holders retain IP rights in various countries (e.g. there is some manner of IP protection worldwide) AND the market for counterfeits is small. IOW the forgery opportunity has a small radius.

Quote from Dr. J : ...... but in a world where there is absolutely zero IP protection, the opportunity for profits from your hard work are very short. In the long run there's little to gain from inventing if it's just going to be stolen as soon as serial 0 hits the shelves. The China adaptation works because the IP holders retain IP rights in various countries (e.g. there is some manner of IP protection worldwide) AND the market for counterfeits is small. IOW the forgery opportunity has a small radius.

isn't that the whole point of CAPITALISM, you always inventing and progressing to stop the copycats

Instead we have people who invent something and can sit pretty for close to half a century while keeping other people from building better products out of their first design

Ever heard of this: imitation is the sincerest form of flattery

Quote from riptide_slick : Arguments For the Motion: China has emerged from the global financial crisis seemingly unscathed. Europe’s hope that it will tap into its $3 trillion in reserves for a bailout only solidifies its newfound economic dominance. In contrast to the political gridlock in the U.S., China’s authoritarian government has the ability to mobilize its resources—impressive investment in infrastructure is one example— and to make difficult decisions quickly, without fear of political retribution. Since introducing capitalist economic reforms in 1978, China has lifted $300 billion people out of poverty. With the 2nd highest corporate tax rate in the world, 35%, the U.S. is not business-friendly. China’s rate is 25%. Arguments Against the Motion A weak economic foundation, widespread corruption and growing inequality, will bring an end to China’s unprecedented growth. With its gross national income per capita at 7,570, China trails Ecuador, Kazakhstan, and Romania, and falls well behind the U.S. at 47,120. An authoritarian government means that there are no checks and balances—gridlock or no, America’s divided government was created for a reason. Companies rarely pay the full 35% in corporate taxes. In fact, once adjusted for deductions, the average corporate income tax is on par with other industrial nations.

China's in a strong position now for a number of factors. However, arguments for the motion basically assume that with the newfound power, there will be no socioeconomic change. That's bogus.

China built its wealth because it exploits a cheap labor market. The government essentially helps businesses take farmers and ag workers and turn them into slave labor manufacturing workers. Now, the worker benefits because farming wasn't any easier (or more financially rewarding), but now the workers see the disparity between the wealth they make in terms of expensive goods created and the wealth they have.

There are already labor laws and the like rolling around in China. The govt can squash them for some amount of time thanks to its military power. However, the tipping point isn't too far off. When the labor market starts demanding benefits and wages on par with other nations, a whole series of changes will slow their economy. Companies may seek to exploit another country, there may be a governmental overthrow, the govt may squash all uprising through extreme violence (in which case consumers may stop purchasing their goods and other laborers may flee), etc.

In short, China stepped on their people's backs in order to make it to the top but as soon as the people stop wanting to hold them up, they'll take a tumble.

Quote from Doctor_Wu : A thought occurred to me the other day that may or may not be related, but I will offer it for consideration... Tocqueville wrote that democratic people are fine with cheap imitations of well made goods. As I was putting on my fake designer sunglasses (from China) and considering the fact that China refuses to enforce IP protections for foreign companies... it occurred to me that it was all very democratic. It seems that any man in China with the desire and skill to craft a forgery of a Western luxury product is free to do so. The government does not stop him, he is free to make a living off this forgery. We still protect an aristocracy of a sort, the aristocracy of merit, that has access to the legal system and copyright protection. Which is more capitalistic? IP protection or the wild wild west? If capitalism is defined by the idea of the market settling all disputes, it would seem the Chinese approach is more capitalistic. Let the forgeries and the genuine articles compete and see who wins. That's not my preference, but I like my sunglasses.

Dr J hit it on the nose. The Wild West is more "capitalistic" since it's completely free. However, without protection comes no progress. Why invent something if it's just going to be stolen? Plus, you have no time to invent something since you spend time protecting what you already have. The point of law is to offer this protection so a society can flourish.

As Dr J says, forgeries work only because designer companies are still protected in most areas where there goods are sold. If every country were to remove those protections, there would be no more expensive goods for the forgers to copy and the entire market would implode.

Quote from Dr. J : ...... but in a world where there is absolutely zero IP protection, the opportunity for profits from your hard work are very short. In the long run there's little to gain from inventing if it's just going to be stolen as soon as serial 0 hits the shelves.

However, you seem to be ignoring the costs of invention/innovation currently due to IP protection. If one doesn't have to worry about IP protection, there could certainly be a rise in innovation due to random tinkering, meddling, etc with current products that would be patent protected.

Also, you ignore that it wouldn't be beneficial for thieves to steal at serial 0. There is no inherent guarantee that a product will become popular enough to be beneficial to steal. Do you think there were fOakley's made in China before Oakley became a household name and extremely popular?

Ironically, the basis for the disagreement are completely diverging points. I'll listen to it when I get home (blocked at work), but based on the link/outline, there isn't a single premise for the discussion, thus it doesn't seem like it really a discussion.

Quote from Anonymouse : If we are describing PURE free market capitalism, China is an abysmal failure. There is no open competition for it's products that are not subsidized in some fashion - and often HEAVILY subsidized. Their economic costs to the environment are also abysmal, and one day soon those costs are going to come due as it's citizens either die off in massive numbers from the toxins in their environment or genetic defects mount rapidly and overwhelm their capacity to treat them medically or care for the worst among them. Now, if life is valueless, then I suppose it's a capitalists' dream economy. Workers are just one more commodity to dispose of when they're used up. Disposal costs are no more than the energy required to bury or burn the millions upon millions of bodies - just one more tiny raw materials factor in the equation of building wealth for the few and the destruction of the lives of the many. America COULD compete on those terms if it wasn't for all the namby-pamby liberals who falsely believe human life is worth more than profit. (Only unborn human life is worth anything to some folks. Once you are actually popped out of the womb you are a "resource" to be exploited.) Of course, SOME of us who end up as "commodities" object to that sort of view of our lives, and therein lies the problem with America. I tell ya, it's getting so an honest capitalist can't make a decent buck anymore.

Dude, it's clear you've never been to China. It's also clear that you don't know much about China. For that matter you don't know much about the US. If you've never been to China, then it's easy to understand why you don't know much about it. Let's just say that the view you get of China from the US media is to say the least, biased. Just like the view you get of America from foreign media is biased. There are people in many countries that think Americans run around with guns so that they can steal from each other to buy crack for themselves and Mountain Dew for their kids that have had all their teeth rot out because of it.

I'll just say what many people around the world think. Americans are hypocrits. Why? Well in addition to the whole torture thing, we accuse other countries of unfairly subsidizing their industries while we do the same. Why do we have such large agricultural subsidizes. The government pays farms to sell goods at less than the cost of production. We then dump these goods all over the world and out compete local family farms who don't get such large subsidies. These farms go out of business and then US ag companies sweep in and pickup the remanants for next to nothing. Farming isn't the only industry the government subsidizes. I don't think many people realize how much we subsidize oil and aerospace.

As for the environment. The US is still the largest polluter on the planet. Considering that we have 1/5th their population, that's saying something. So if you think China is bad, then we are worse. In fact, China has come a long way in the last few years. For most of these years, they outspent us on clean energy. Go to any Chinese city or village and you'll see a sea of solar panels on all the roofs.

Back to OPs original point. Are the Chinese better capitalists than we are? If you are talking about pure capitalism then yes. They are purer capitalists. America practices socialist capitalism like in Europe. Contrary to what people think of a communist country, in China you have to pay if you want to play. As pointed out on CNN this weekend. China isn't a communist country. It's something the world has never seen before. It's a dictactorship without a dictactor where the people in power have term limits.

Neither of us do capitalism well. We both have varying versions of crony capitalism. IMO, cronyism causes most of the problems that people toward the left end of the spectrum tend to complain about and point fingers as why capitalism is bad.

Quote from travfar : Dude, it's clear you've never been to China. It's also clear that you don't know much about China. For that matter you don't know much about the US. If you've never been to China, then it's easy to understand why you don't know much about it. Let's just say that the view you get of China from the US media is to say the least, biased. Just like the view you get of America from foreign media is biased. There are people in many countries that think Americans run around with guns so that they can steal from each other to buy crack for themselves and Mountain Dew for their kids that have had all their teeth rot out because of it. I'll just say what many people around the world think. Americans are hypocrits. Why? Well in addition to the whole torture thing, we accuse other countries of unfairly subsidizing their industries while we do the same. Why do we have such large agricultural subsidizes. The government pays farms to sell goods at less than the cost of production. We then dump these goods all over the world and out compete local family farms who don't get such large subsidies. These farms go out of business and then US ag companies sweep in and pickup the remanants for next to nothing. Farming isn't the only industry the government subsidizes. I don't think many people realize how much we subsidize oil and aerospace. As for the environment. The US is still the largest polluter on the planet. Considering that we have 1/5th their population, that's saying something. So if you think China is bad, then we are worse. In fact, China has come a long way in the last few years. For most of these years, they outspent us on clean energy. Go to any Chinese city or village and you'll see a sea of solar panels on all the roofs. Back to OPs original point. Are the Chinese better capitalists than we are? If you are talking about pure capitalism then yes. They are purer capitalists. America practices socialist capitalism like in Europe. Contrary to what people think of a communist country, in China you have to pay if you want to play. As pointed out on CNN this weekend. China isn't a communist country. It's something the world has never seen before. It's a dictactorship without a dictactor where the people in power have term limits.

I believe;
A.) You missed MUCH of the sarcasm in my original post
B.) Contrary to what you BELIEVE, America DOES incorporate many of the costs of pollution cleanup and regulation in it's pricing of goods and services - far more so than the Chinese do in their international economic trade.
Yes, we still subsidize agriculture and energy to a large extent, but at least you can swim in the Mississippi River without risking triple-headed children.
Not exactly true for many of the major waterways in parts of China.

I defy you to find even one image of this sort in America.