Central Planning Has Won
In case anybody missed it, central planning as a method of controlling societies of people (countries) has won. The fact that citizens in the developed countries are completely unaware of it is a prime example of the meta-narratives that have subsumed our mass media. It would be heresy to report that central planning has won in the western media. The advertisers would understandably be a little nervous (except maybe Walmart… more on that later).
To appreciate the magnitude of this turnout, you need only look at one thing, and that is year-over-year gross domestic product (GDP) growth. China’s
(click the max button) growth has averaged about 8% for the last 20 years. Older citizens will remember what a party is was in the 50s and 60s when the American
growth averaged around 4%. The ‘swinging sixties’ were fueled by a post WW2 economic boom. But for China to grow at 8% for two decades is probably a historical first. And remember that is compounded growth.
We will show you the charts on this below, but once you accept this fact (that is, that central planning has won), see if you can glean snippets of information that tend to back that up. You will see them everywhere:
- Almost everything you buy is made in China.
- House prices are skyrocketing in all the desirable North American cities as the newly-rich Chinese ‘hedge their bets by real estate.’
- China’s trade surplus with the United States reached $347 billion in 2016.
- "If Wal-Mart were an individual economy, it would rank as China's eighth-biggest trading partner, ahead of Russia, Australia and Canada." - Xu Jun, Wal-Mart China's director of external affairs.
If you would like to understand the reasons why and how a planned economy can win, here is a fascinating TED talk that explains it.
How Did This Happen?
Central planning didn't have to win.
There are some democracies that function fairly well, but the two biggest economies in the world hold particular interest.
A really big part of the problem is that in the United States, the ruling money class have infected the political system at every level, and their influence has had a very negative effect.
The key area where their influence caused far-reaching degradation in society has been with globalization.
The Presidents Were Ineffectual
After the second World War, two-thirds of the world's industrial production happened in the United States. In fact, until the dawn of this millennium, the United States was indeed the only real superpower. Since then, the US has gone into what can only be described as a downward spiral.
The seeds of its descent were sown in the period of its peak, and the disastrous result exposes the flaws in the US system.
The beginning of the end for US world dominance can be traced back to 1968 and the election of Richard Nixon. Nixon began the unravelling of the ‘social contract’ between the so-called working class and the moneyed class. The end of the democratic party’s “Great Society” was starting. More than that, Nixon signalled the end of effective democracy in the US.
Nixon spent the second half of his first term and the entirety of his second term struggling with the Watergate scandal. Carter was largely in crisis mode with the strong recession of the mid-seventies, the first oil shock and ‘stagflation’. Starting in 1979, he faced the Iranian hostage crisis. Then, with the election of Reagan in 1980, the dismantling of the social fabric of the US picked up steam. Massive tax cuts for individuals and corporations were passed as the ‘trickle down’ meta-narrative was foisted on the gullible public.
Remember that little nugget? ‘Give a lot of money to corporations and the rich as tax breaks and because they are so smart they will do more smart things with all that money and the entire economy will benefit.’ This was a huge failure as the chart below indicates (see National Debt Percentage Growth).
The destruction of collective bargaining proceeded apace (who remembers Reagan strike breaking the air traffic controllers?). The Republican party became the party of the ruling money class and the Democrats were in disarray.
Clinton, although an effective politician and administrator, spent most of his two terms fighting scandals. He also needs to be called out for presiding over the end of the Glass-Steagull Act, which prevented banks from engaging in the type of high-risk practices that contributed to the 2008 recession. It should be noted that at the end of the Clinton administration, the US had a budget surplus of 300 billion dollars.
The seeds of the USA’s fall from power had been sown, but the real trouble began with George W. Bush. Within a year of taking office he had started one war; by the end of his second, he had started another. This together with the further tax breaks that he gave the wealthy led to massive deficits. Finally, the meltdown of the financial system in 2008 provided the perfect scenario for the bankruptcy of the US.
The Congress Was Ineffectual
Both China and Russia have a higher turnover in their top posts than the USA. The incumbents in the American political system have huge advantages for securing reelection:
There are no term limits. (Even China has term limits.)
They spend most of their time raising money for their next election.
Gerrymandering (the process of redrawing the boundaries of the political districts to disadvantage the opposing party) is a major pastime of the political parties in power and is currently protected by the supreme court.
The chart below shows the percentage of incumbents that are re-elected in the House of Representatives.
This re-election percentage is indicative of a political system that stifles fresh ideas and proper critical discourse.
How Bad is This?
The bad news is that the situation is far worse than even indicated by the graphical information shown below. Globalization is truly the defining element of this picture. The moneyed class used it to both lower the price of goods and also free them from the pesky demands of the labor force. The lower classes accepted the slow erosion of their position in society because the cost of goods were being kept down. Inflation became non-existent.
There are two pieces of this puzzle that go a long way in explaining how the US lost its position as world superpower.
The concept of “economic warfare” seems to be lost on the American psyche. It seems that the noise of the mass media just won’t let the American public deal with this idea -- “America is the most powerful country in the world,” etcetera. Here is an
that fully details the first major battle in the ‘Economic Wars.’ It is the story of the destruction of the US electronics industry.
We at Fringe In believe that the example set by the destruction of the US electronics industry provided a template for how to systematically destroy specific industries in the US. The fact that the completely ineffectual American government let this happen opened the doors to economic warfare.
The World Trade Organization (WTO)
The WTO is a multinational body that attempts to manage world trade. There is one huge problem with the WTO. The WTO’s theory is that trade is good and we just need to make sure there is a level playing field so one country does not game the system.
The most perfect example of gaming the system is, of course, China’s position in the WTO.
As it now stands, the ‘developed world’ (USA, Europe, etc.) have to open their borders to trade with China. Free trade is good, right? No tariffs on Chinese goods coming in means lots of cheap consumer goods. But what if China got to say, “Oh, by the way, we are not going to open our
economy to free trade”?
“That can’t be!” you might say. “The US would never stand by and let that happen.” Except that it did and it still does. According to the WTO, China is classed as a “developing country.” As such,
“The WTO Agreements contain special provisions which give developing countries special rights and which give developed countries the possibility to treat developing countries more favourably than other WTO Members … When developed countries grant trade concessions to developing countries, they should not expect the developing countries to make matching offers in return.”
In other words, China managed to get free trade with the rest of world while protecting its products and industries with import tariffs. Using the ‘playbook’ developed by Japan in the 50s (see point 1), it protected its industries and then used whatever means necessary including dumping their products onto the developed world's markets to systematically destroy all competition.
There can only be one result from this, and it is total world domination by China.
Gross National Product
Let's start with the size of the economies. GNP is the total output of a country’s economy. The USA is by far the biggest economy, right?
This used to be true, but it is rapidly changing. You will notice that in the year 2000, China's GNP was at 3.3 trillion and the US was at 11.5 trillion. China is set to surpass the US right around 2020. We have also included India, which has about the same population as China and is a democracy.
The growth of the Chinese economy is an unprecedented event in recent history. But the size of the economies only tells part of the story.
Concurrent with the growth of the Chinese economy has been the growth of the national debt in the United States. This is not a good thing. Just as the US is losing its world dominance, because it has such high debt, it is also losing its ability to invest in its own revival.
National Debt Percentage Growth
This chart brings us back to the question: "How did we get here?" The prevailing meta-narrative in the US is that Reagan was some sort of saint that delivered us from the jaws of big government. The chart below illustrates the reality.
Reagan gave massive tax cuts to corporations and the wealthy. The move was supposed to stimulate the economy and generate tax revenue. We see above what actually happened. Reagan simply buried the government in debt.
Basic Industrial Production
The production of basic commodities like steel and aluminum are critical to the success of a country's economy. If a country is not as efficient with these basic commodities, or has to buy them from another country, they are at a distinct disadvantage.
Let’s look at the figures for steel and aluminum.
From these graphs you can see that the basic commodities needed for production are now controlled by the Chinese.
Electrical Generating Capacity
In basic electrical production, China is now producing about 50% more power than the United States.
In the area of basic commodities, China has achieved total dominance.
High Speed Rail
One other area where China is excelling is high speed rail. This is important because it affects the basic productivity of the workforce, much like the interstate highway system led to productivity gains in the US throughout the 50s and 60s.
There is one aspect of comparison where the US holds a clear lead, and that is conventional military spending. There are those that argue that we are no longer fighting traditional wars, but it is questionable if the sheer amount of money being spent here actually contributes to the betterment of American society. Also questionable is the benefit of military spending funded by debt.
The take home here is that ‘democratic rule’ and ‘free-enterprise capitalism’ are not panaceas. While we have been feed these “meta-narratives”, the world has evolved, and now capitalism as we have come to know it is failing to properly provide for the vast majority of people.
Having come to grips with the failures of our present-day economic system, the question emerges: what will our post-capitalist world look like?