A business philosophy shared with me long ago suggests that one should never enter an enclosed back yard with a vicious pit bull unless you intend to kill it. If you are going to jump over the fence and face the neck ripper, go over it wielding a bat and swing it wildly, smashing the pit bull until it lays lifeless in its own pool of blood. Otherwise it will rip you to shreds.
If China had re-entered the world stage in 1979 claiming it was going to assert a strategy to overtake America and Europe, gut their real GDP engines, indebting their people to transfer historic levels of real GDP infrastructure to China, and most importantly (because the West’s elite drive political policy and military actions), entering a final pit bull smashing phase (this phase has not yet occurred) that leaves the West’s elite scrambling to protect their wealth from an epic class struggle of debt defaults, wealth redistribution, and financial collapse, the pit bull elite of EurAmerica would have financially ripped the neck of this immense country of wonderful people before they had a chance to implement such an ingenious strategy.
So if one believes like I do that China has proven the masterful central planner above all on Earth, it would be illogical for China to have entered into EurAmerica’s backyard too early. China’s GDP was much too weak to implement any semblance of a world hegemonic strategy that could directly confront the West. She would need to suckle on the teat of her Western nursemaid until strong enough to leave the nest and assert her own world power.
Now that China is strong enough, now that she has enough world hegemonic relationships in place, now that her nursemaid has entered menopause, China’s strategy will increasingly become apparent. Yet she still has no need to enter the backyard with EurAmerica’s pit bull even if she no longer fears its ferocity. China realizes there is no benefit to directly confront EurAmerica yet for the pit bull is old, in foul health and it has lost its teeth to cause any real damage to China’s continuing rise to world hegemony.
Certainly, if one believes that China lucked into such a meteoric rise as the leading economic force in the world, then attributing any intelligence of design to her strategy for doing so would seem conspriratory at best. Yet the results speak for themselves. FDI in China is unprecedented in any other point in the world’s history. It is the greatest gold rush, the most inflated bubble, has caused the deepest competitor indebtedness, and was the least bloody international coupe in history.
I do not disparage China for having the world class skill, patience and confidence to assist EurAmerican businessmen and politicians to shake down their citizens. China offered access of cheap drugs to a culture that had already chosen the addictive personality of consumerism. EurAmerica did not have to accept them but now that we did, we will have to suffer the withdrawal symptoms of our cultural weakness as we now attempt to rehabilitate ourselves.
In the midst of our economic turmoil, there are those that continue to espouse Keynesian principles to spur America out of our economic malaise. Our political leadership wishes to take QE to an even greater level of spending as a potential jobs solution. Keynesian principles suggest that in an absence of consumer demand, government can create artificial demand that will then spur additional consumer demand, increasing money velocity that can reverse the direction of collapsing money supply and right the course of capitalism.
For the principles to work, demand must be perceived as great enough and sustained enough for creditors to offer consumers new credit. In addition, the consumer’s potential income must be large enough to meet the obligations of the consumer’s past debt plus create additional debt capacity that can provide additional spending to spur the new business cycle. The amount required for Keynesian principles to take hold would be orders of magnitude greater than the politics of our day or the world creditors and credit agencies would allow given the historic consumer debt, housing overhang, and government deficits including national through local caused by an international extraction of equity to the East.
Additionally, this large amount of stimulus spending that is intended to spur on the local economy is diluted by the amounts that redirect to foreign economies. Our government cannot isolate stimulus and thus the amount of spending needed for America’s jumpstart would have to be multiplied for the effects of international leakage. America has long since gutted the tools of domestic Keynesian stimulus by allowing the tansferring of 40,000 factories to China alone.
We do not have the economic manufacturing base that supports money multiplying factor to implement Keynesian principles through governmental central planning in this country. The dollars we spend flow like a sieve into the world economy which also is in desperate need of stimulus. To attempt Keynesian principles in America today therefore would also be attempting to jumpstart the western world on our own.
I favor through my job voucher plan (www.jobvoucherplan.com), a distributive, domestic, Keynesian approach of sorts, one that attempts to direct as much of the catalyst into the domestic economy as possible while putting all able Americans back to work. Yet it combines Keynesian stimulus with a redistribution of current social welfare for that purpose and a redirection of the American economy to a modern mercantilism.
Clif Carothers
Job Voucher Plan 