Late night thoughts

When strategists do not know what to say they bring up China. China here. China there. China is the cause of our problems. They are the solution of our predicament. Buying our bonds. Forcing copper to rise.

Quite frankly I believe this is all nonsense. China GDP per capita is almost $9000. Our GDP per capita is 5 times bigger. How do they become as rich as we are? How can they grow their economy to become a wealthy country?

I do not believe they can and will not. Why? Let’s look at history. Just tell me which country has been prosperous in the history of mankind which was controlled and dominated by a small power group. China's slowdown is not a temporary one. Their economy cannot grow faster with the kind of institutions and political system they have. Do not bet on China to bail us out, to save the world.

The USSR? Egypt? The Middle East? North Korea? Most African countries? Latin America? The failure of these countries is that they are controlled by a powerful minority. This minority creates the rules of the game designed specifically to protect their wealth and their power. They do not care about growth, creative destruction, or wellbeing of the populace.

Why is our economy growing so slowly? It is quite possible because our society is creating strong vested interests. They would rather sink with the ship than save it. Just think of what is going on right now in Washington.

Try to read Why Nations Fail. It is full of historical and detailed examples.

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