China avoided the world recession that started in
2009. The wise communist party, we are told, ramped up infrastructure
spending – unimpeded by the need for licenses, court reviews, or rights
of way. The government pumped in just enough infrastructure spending to
maintain China’s healthy growth rate.
Skeptics of democracy and free enterprise waxed
eloquent about China’s state capitalism, as directed by China’s
communist party. We want more of what China is having over here – was
the refrain.
Democracy and free markets indeed make mistakes. No
one promised free sailing of steady growth, low unemployment, and the
absence of business cycles. Bubbles and busts have been a part of the
capitalist system since the Dutch Tulip Bubble of 1637. We can debate
the role of government in the U. S. housing bubble and in Europe’s
banking and Euro crises, but no proponent of market capitalism has
promised a bubble-free, recession-free world.
The proponents of state capitalism and a one party
system do make such promises. The Soviet Union promised that “scientific
planning” would lead to steady growth, innovation, and the eventual
overtaking of the United States. China’s communist leaders laud their
“socialism with a Chinese face” in which sober and wise party and state
officials can be counted upon to make the correct decisions.
History tells another story. The most
disastrous blunders have been committed by the scientific planners of
one party states. Miscalculations and errors of the market system tend
to be self-correcting if they are left alone. Even when they are
mishandled, the damage is minor compared to the blunders of the state
capitalists.
go to forbes.com
