After a long pause due to the fact that I was producing this software, I managed to find time to translate a bold and important passage from the book "Crash Proof " by Peter Schiff , economist and manager of investment funds, one of the few economists who had denounced the housing bubble and predicted the recent depression.
The most salient argument of the book are that: 1) in the next few years the dollar will fall and the yuan will rise, and 2) why this happens is that the U.S. debt to other nations, and in particular to China, is so great that the U.S. will never be able to pay it back, because they have lost the production facilities required to do so, and 3) the dollar will collapse soon after the euro also 4) when this happens, the purchasing power of Americans and Europeans will fall and the rise of the Chinese, the current roles are reversed: the Chinese start to consume and produce to us Westerners, 5) the only ones among us to preserve the purchasing power of the previous will be those who have invested in Asia and particularly China, Japan, Hong Kong and Singapore. Moral: if you need to invest money, or if you already have assets denominated in euro or not in dollars and yuan, it is important that you read this book.
The track on which I focus today contains an analysis of the Chinese economy and responds to two interesting questions: are the Chinese Communists? Is there a link between the economic boom and the fact that China is not a democracy?
The word to Peter Schiff.
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Once America flooded the world of goods at low cost and high quality. Today, by contrast, America is a high-cost producer with a reputation for poor quality. But what is significant is that when America was the one which produced a lower price, paid wages that were higher the world.
Today we mistakenly believe that the main factor that allows manufacturers to lower prices are low wages. The reality is that there are far more important factors: the low cost of capital and the absence of taxation and regulation State . When the Americans to save much money we had a healthy, real interest rates were naturally very low. That meant lower cost of capital, which in turn allowed the higher productivity of workers. [In other words, American workers were more productive than workers in other countries because they could use a larger amount of capital, litanies]. Avendo tasse molto basse e regolamentazioni minime, i produttori americani potevano pagare i salari più alti del mondo pur essendo coloro che producevano a minor prezzo nel mondo.
Oggi, invece, i produttori ad alta qualità e basso prezzo si trovano tutti in Asia. Alcuni Paesi come la Cina hanno salari più bassi di quelli negli USA, mentre altri, come il Giappone, hanno salari più alti. Ma la vera differenza è che il costo del capitale è più basso a causa dei tassi di risparmio più alti, delle minori tasse, e della minore quantità di regolamenti. Sembra sorprendente, ma nella “Cina comunista” gli imprenditori hanno maggiore libertà di quanta ne abbiano in America. It is much easier to open a company in China than in America.
Think of all the regulations that American contractors must comply with. How can we compete with countries that do not impose excessive harassment of those [who make up the cost of production, NDM]? Does anyone believe that the U.S. might become a great power with all laws, regulations, and taxes that exist today? We could have really settled the West in wagon trains if they had to deal with all the regulations are in force today, they had to withhold taxes, and they had to keep track of their spending to pay their income taxes?
The advantage is that China is a democracy not
Some will argue that the reliability of China's economic rise is limited because it is not a democracy. I argue the opposite, namely that China will have much success precisely because is not a democracy.
What is vital for economic success is not the right to vote, but is economic freedom, which means the protection of private property, the Government of the Right [in English "Rule of Law", sometimes translated arguably with "Rule of Law" NDM] and the minimization of taxes and regulations. One might reasonably argue that when there is economic freedom, free elections are of only secondary importance, and that when there is economic freedom not be able to vote has no value. Choose between two oppressors is like having no choice. Remember, the Soviet Union had elections and most voted (the alternative being a living in Siberia). The word democracy
today is used loosely, it is useful to recall that one of the main reasons for the economic success of America in its first period of existence was that our founding fathers understood the difference between democracy, which they recognized to be a populist form of government with implications for counter-capitalism [My Note: Democracy is a system in which people, through voting, decide how it should be used another's property, ie a system in which all do all invasive acts with impunity.] and the Republican government, which emphasized the concept of balance of powers, for example through the Electoral College and Senate alternating terms [staggered senatorial terms] designed to ward off the evil forces of democracy. James Madison, the father of the Constitution, writing in the Federalist Papers, said, "Democracies ... always found incompatible with personal security or property rights, and have in general had a life as short as their end was violent. "After the Constitution was ratified [and imposed by force to a population that did not ' never had freely signed, NDM], Benjamin Franklin asked, "What kind of government you have given us, Mr. Franklin?" and his response was: "A republic, if you can tenervela. Perhaps if we could keep it that way, I would not have needed to write this book.
For those of you who mistakenly believe that in the minds of the founders, the United States was a democracy, as long as you give a look to the Constitution: the word democracy not appear once. Indeed, Article 4, Section 3, says, "The United States shall guarantee to every State of the Union a republican form of government . If you have any questions, recite the "Pledge of Allegiance" and pay attention to words.
The new economic alignment
The truth is that U.S. economic freedom, just as a sound currency, is a distant memory, as well as low taxes, the lack of regulation, and high savings rates. The "comparative advantage" that we once had, which consisted in freedom e in un governo limitato, è svanito. Questi vantaggi ora prevalgono in Asia e, per questa ragione, l’Asia sta divenendo l’attore dominante dell’economia globale.
Proprio come gli Stati Uniti una volta presero il posto della Gran Bretagna come più grande economia mondiale, lo scettro economico sta per essere trasferito all’Est del mondo. Il Giappone e la Cina saranno i nuovi leader, e la Cina in particolare possiede il potenziale per emergere come l’economia dominante nel mondo.
Entrate in un negozio qualunque, o guardate dentro casa vostra. Praticamente tutto ciò che contengono è stato prodotto in Cina. E questo non è solo il risultato del basso costo del lavoro che c’è in Cina. Ci sono molte aree nel mondo in cui il costo del lavoro è molto minore che in Cina, ma che non esportano niente. La vera ragione del successo della Cina è la libertà economica.
La Cina è un paese comunista solo di nome. In un vero regime comunista le persone non sono produttive. Importavamo forse qualcosa dall'ex Unione Sovietica? Naturalmente no.
La Cina è destinata a prendere il posto del Giappone come il più grande Paese Creditore dell’America. Prendevamo forse in prestito dei soldi dall’Unione Sovietica? No. Anzi, eravamo noi a prestare loro soldi ogni anno. Non potevano permettersi neppure di acquistare il nostro grano, così che dovevamo far loro credito. China, however, grain exports it.
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