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A "Broken China" Update.

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It has been quite a while since I made a Broken China post. Some of the reasons have been personal. I will lay out what is going on with me in a separate post.

I could be doing daily posts on all the crap going on in the PRC but it would be terribly repetitive and y'all would rapidly lose interest. Most of what I am seeing is not objective and quantifiable. Suffice it to say that none of the things I am seeing would be present in a country with a healthy, functioning society with a functioning economy and a bright future.

You should take ALL of the following as anecdotal evidence. Enough individual points, when taken together, can paint quite the picture. That said, on with the show.

Item One:
The great problem with industrialization is that a county only gets to do it once. What took Britain seven generations, the US five, France four and Germany & Japan three, the PRC has done in less than two. It built a massive capacity for industrial production, housing for the workers coming to the cities, and road & rail systems to move people and goods. That drive for industrialization is OVER. They can NEVER get it back.

In the west, the purpose of a business is to make a profit for the shareholders. In China it is to provide employment for people and promote societal stability. If it happens to make a profit, all well and good.

The primary driver of economic growth for the PRC over the past two decades has been real estate and industrial construction. Construction accounted for about 30% of national GDP. In the process, the PRC overbuilt its housing capacity by about 100-200%.

The 2008 sub-prime housing crisis in the US occurred because we overbuilt our housing by about 5%. To get a measure of the societal dislocation, multiply the US subprime pain by 40-60 and apply it to a smaller, less resilient economy. Roughly 80% of construction workers in China are unemployed.

Real Estate has been the one area of the PRC economy the CCP has allowed citizens to invest in. They did it with a vengeance. Now over half of the people are seeing their sole retirement savings vanishing as the houses, apartments, etc, that many are still paying the mortgages on, are worth less than 10% of what they paid if they can be sold at all. This is NOT sitting well with the Chinese people.

Item Two:
The PRC produces approximately 55% of the world's steel. Until recently, about half that production was used in building and construction. No more. Now the PRC is trying to dump this steel anywhere it can. As a result they are facing rising protectionism.

The PRC is no longer the low cost producer in any manufacturing segment in any industry. All that it has going for it is a massive manufacturing capacity. As a result, unemployment is rising rapidly throughout the economy but led by construction.

Item Three:
What the PRC should have done, but couldn't for internal political reasons, during industrialization was to create an internal demand driven consumption market. It didn't. As a result there is no way to absorb much of this over capacity in production. That leaves exports and/or shuttering businesses. The former is creating increasing tariff protectionism among China's foreign consumers. The latter leads to internal societal discontent and revolt. This is the sum of all fears for the CCP.

WWG1WGA

Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)

Thank you.

:: Most of what I am seeing is not objective and quantifiable. ::

Yet, as we string the red yarn, a picture starts to appear.
#DotdeDot

PRC is no longer the low cost producer——: Yup. A bit of a side note but in that vein. I buy a lot of nuts and bolts. By the hundreds and thousands and upwards of 200 types and sizes. In recent times my normal suppliers let me specify domestic or other and I normally specify domestic even tho they might cost a bit more. I just got in and order of 250 bolts where quality wasn’t critical so I just noted “any available.” The were made in Vietnam and are as good as any. In recent times they might have come from china but it seems like those days are gone.

Thanks for that

Interesting Broken China post, as usual.

There were also dislocations when Britain (rather, Scotland) invented capitalism. The dismal child labor practices provided much material for Charles Dickens. All land was essentially owned by the King, but peasants were allowed to occupy it and make a fairly nice living. When they were needed to populate factories, it became illegal (punishable by death) to hunt on the King’s land or grow crops there, so that the peasants were forced into the factories.

This gave rise to the wonderful saying: “Might as well be hanged for a sheep as a goat.”

But at the end of the day, private property had great benefits. It was a concept that was new to the world, and the new American republic immortalized it in the Constitution.

“Pursuit of happiness” was a euphemism for “Pursuit of private property.”

With England’s 50-year head start into capitalism, they created a global empire.

Everywhere the right to own property went hand-in-hand with private ownership of guns. According to historian Carroll Quigley, the reason Russia stayed backward vis a vis Western Europe was that the wealth was not available for the peasants to own weapons when it came their turn to industrialize, and the Czarist government kept its monopoly on the guns and the power.

In America, on the other hand, any citizen who could afford a Colt 45 revolver and a Springfield rifle was as well-armed as the U.S. Army.

Freedom and capitalism go together. China’s experiment in capitalism without freedom may have been doomed from the start.

NOT a "Broken China" Update.

If you want on or off the ping list send me a FReepMail.

In my Broken China update earlier today I promised a personal update. Well here goes.

The long and short of it is that I have been in varying levels of pain for the past ten+ years. For the past six months it has been considerable.

As some of you know, I have two, as the doctor called it, incompetent discs in my lower back. This is mostly taken care of by pain meds. Fortunately, after I turned 65 and got pushed off on Medicare, I no longer got hassled over the pain meds. My congresscritter had something to do with that. He's the only pharmacist in Congress.

Beginning last summer my left shoulder started hurting. In January it got bad enough to go see the Orthopedist. Medicine is NOT my long suit. The Doc put the x-ray up on the screen and even I could see the problem. My arm and shoulder were basically bone-on-bone when I lifted my arm. I didn't think it funny but the Doc found it humerus.

The pain meds for my back don't do much for the shoulder pain for medical, REASONS.

I decided to try the cortisone shot first. I shouldn't have. You have to wait at least three months after the last cortisone shot before you can have surgery. That time is up and I have shoulder replacement surgery scheduled for next Monday. The exact procedure will depend on what the Doc finds when he goes in. All three options have essentially the same prognosis (good), and risks (very minor), and recovery period. My left arm will basically be useless for anything more than typing for two months. Then I have to see the Physical Terrorist for four months.

To top that off, I developed a major infection in my lower jaw. Antibiotics took care of the infection but I had three teeth in my lower right jaw pulled last Thursday. That pain is pretty much gone. In July I'll probably have root canal on four more teeth and see if I lose some of them. In any event they'll start working on a permanent implant. That is the least of my concerns.

Other than that, I'm doing great. I apologize if I have been overly grumpy of late. There's no need to take it out on y'all.

SpyNavy

Garde la Foi, mes amis! Nous nous sommes les sauveurs de la République! Maintenant et Toujours!
(Keep the Faith, my friends! We are the saviors of the Republic! Now and Forever!)
LonePalm, le Républicain du verre cassé (The Broken Glass Republican)