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Tuesday, June 17, 2008

Inexplicable Quote of the Day

As longtime readers know, in addition to taking out the trash and refilling the soap dispensers, one of my duties at Crash Landing is to ridicule other economist bloggers when I think they've said something patently absurd. Usually I pick on Tyler Cowen (I will stop when people think I am more important than him), but today's winner is David Zetland, who said on his blog:

I am basically a free-market libertarian, but I am no fan of "unbridled" capitalism. (I've been to China).

Now I can forgive David for placing the final period outside of the parenthetical sentence, but the idea that an officially communist country is now the paragon of unbridled capitalism?

By all means, folks, tell me in the comments how in some respects Chinese businesspeople are freer than Americans. Fine. Don't tell me that China illustrates the results of pure capitalism.

Pointing to Somalia as a Rothbardian world is unfair, but at least it makes sense; David's claim is nonsense.

6 comments:

  1. I believe I have an example. Chinese businessmen in an article I read were using cardboard in their sticky buns and boiling or frying them in pork fat. In the US this business would be shut down. Freer Chinese.

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  2. Hi Bob,

    Thanks for the attention, negative as it may seem.

    First off, the "." can go inside the parentheses.

    Second, when I associate China and unbridled capitalism, I am saying that money is more important than laws. I am not sure how you want to define "pure capitalism". If you are including a rigorous adherence to laws that are based on human liberty (i.e., a libertarian/anarchistic POV), then China would not fit that model. If you (like me) think of pure capitalism as "anything goes in the quest for profits, as long as you can get away with it," then we will agree that China fits.

    Will you relabel this post as "Explained Quote of the Day," now?

    :)

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  3. Anonymous11:42 AM

    His point is fair, particularly with respect to "unbridled capitalism". China's leaders choose to regulate personal and political liberties, but not the free market.

    In the U.S., we prevent (most) businesses from from cutting wages to $1 an hour. China has no such limits.

    The free market has brought them prosperity, but also massive abuse of individual rights. Hence, "unbridled capitalism".

    ReplyDelete
  4. David, meet everyone. Everyone, David.

    Sorry David but I still think you are being crazy. Every WSJ story describing China's stock market gyrations explains that there are two divisions, one for the Chinese investors and one for outside, foreign investors.

    One time Rothbard asked Mises what the dividing line was between a heavily regulated market economy, and an actually socialist arrangement. Mises said a stock market; where people were allowed to at least nominally own the "means of production," it was capitalism. So on that score, I know China is the furthest thing from "unbridled capitalism."

    We can't even trust the GDP numbers that are coming out of there, because their economy is so heavily regulated. (Not that we can trust the GDP numbers at FRED that much, either.)

    Pepe, can you jump in here? You've studied China more than I have. I don't know exactly how the Chi Coms distort their market, but I am quite sure they do.

    (David, just so you know, this is a sore spot for me, so that's why I'm going nuts over an apparently minor point. Since I am a big fan of unbridled capitalism, I rush to clarify when I think someone is unfairly pointing at government failure and labeling it as a market failure.)

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  5. Bob,

    Here's one thing you might put in your arsenal:

    In China, you can't buy land. You only lease from the government for about 70 years. This might suggest a bit of a property rights problems.

    Further, if you ever have the opportunity to try and do some business in China, you will quickly learn you can't get anything done until you have a former general as part of your team.

    China is kind of capitalism with chopsticks, instead of a fork.

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  6. If you are including a rigorous adherence to laws that are based on human liberty (i.e., a libertarian/anarchistic POV), then China would not fit that model.

    Well, what I mean by "human liberty" includes widespread respect for property rights. And that's what unbridled capitalism is.

    Now we can argue about the initial distribution of property titles; I'm not insisting on that aspect for "unbridled capitalism" to hold true. But I'm saying a necessary condition for pure capitalism is that, whatever the property arrangements are, the government can't swoop in and demand a kickback etc. in order for you to use "your" property.

    If you (like me) think of pure capitalism as "anything goes in the quest for profits, as long as you can get away with it," then we will agree that China fits.

    Yeah, but then so does every other country, right? It's just that "what you can get away with" is different from country to country.

    ReplyDelete