National Socialism with Chinese Characteristics

Meet He Di, the insider trying to save the Chinese Communist Party from itself

BY JOHN GARNAUT

Two years ago, one of China's most successful investment bankers broke away from his meetings in Berlin to explore a special exhibit that had caught his eye: "Hitler and the Germans: Nation and Crime." In the basement of the German History Museum, He Di watched crowds uneasily coming to terms with how their ancestors had embraced the Nazi promise of "advancement, prosperity and the reinstatement of former national grandeur," as the curators wrote in their introduction to the exhibit. He, vice-chairman of investment banking at the Swiss firm UBS, found the exhibition so enthralling, and so disturbing for the parallels he saw with back home, that he spent three days absorbing everything on Nazi history that he could find.

"I saw exactly how Hitler combined populism and nationalism to support Nazism," He told me in an interview in Beijing. "That's why the neighboring countries worry about China's situation. All these things we also worry about." On returning to China he sharpened the mission statement at the think tank he founded in 2007 and redoubled its ideological crusade.

He's Boyuan Foundation exists almost entirely under the radar, but is probably the most ambitious, radical, and consequential think tank in China. After helping bring the Chinese economy into the arena of global capital through his work at UBS, He now aspires to enable Chinese people to live in a world of what he and his ideological allies call "universal values": liberty, democracy, and free markets. While the foundation advises government institutions, including leaders at the banking and financial regulators, its core mission is to "achieve a societal consensus" around the universal values that it believes underpin a modern economic, political and social system.

"This is the transition from a traditional to a modern society," He says.

The New York Times and Socialism

Socialism is not an alternative to capitalism; it is an alternative to any system under which men can live as human beings

by James E. Miller

In lieu of the election of Socialist President Francois Hollande and a Socialist Party collision as the majority in France’s Parliament, the New York Times recently asked “what does it mean to be a Socialist these days, anyway?”   According to The Grey Lady, socialism today is “certainly nothing radical” and simply meant the “the emancipation of the working class and its transformation into the middle class” during its heyday.  Essentially the article categorizes the contemporary socialist as one who is a rigorous defender of the welfare state.  The piece quotes French journalist Bernard-Henri Levy as saying “European socialists are essentially like American Democrats.”  It even accuses center-right political parties in the West of being quite comfortable with socialism’s accomplishments.

So is the New York Times correct?  Is socialism just a boogeyman evoked by the “fringes” to scare the public into questioning the morality and efficiency of the welfare state?

Going by the New York Times definition, socialism is just another word for social democracy.  But of course the word socialism never really referred to just welfare entitlements.  Properly defined, socialism is a society where the complete means of production and distribution of goods are solely in the hands of the state.  It is also a system defined by the absence of private property.  According to famed socialist and author Robert Heilbroner:

Name the author: "How The Capitalists Are Trying To Scare The People"

Hint. It was not said yesterday in Europe, or today somewhere in the US. It was said on May 19, 1917...

Name the author:

No socialist has ever proposed that the “tens of millions”, i.e., the small and middle peasants, should be deprived of their property (“made to abdicate their property rights”). Nothing of the kind! Socialists everywhere have always denied such nonsense. Socialists are out to make only the landowners and capitalists “abdicate”. To deal a decisive blow at those who are defying the people the way the colliery owners are doing when they disrupt and ruin production, it is sufficient to make a few hundred, at the most one or two thousand, millionaires, bank and industrial and commercial bosses, “abdicate” their property rights. This would be quite enough to break the resistance of capital.

Further hint: here is the full speech:

US shifts to Brazilian standards

Painful and "Unexpected"

By Martin Hutchinson 

President Barack Obama's victory clarifies the political and economic landscape. Unfettered in his second term, he will now be able to pursue the economic policies he truly favors. To see their result, we can look at a country with an overlarge government, low domestic savings, endless "stimulus" spending financed by its development bank, relatively high inflation, huge inequality and accompanying tax evasion, state meddling in major industries, which trade off their political connections, a high level of corruption and an education system that does a poor job of preparing its citizens for the high-tech world. 

That country is Brazil. Sadly, Brazilian economic policies will if pursued for two decades or so produce in the United States a Brazilian standard of living. 

Obama's opponents during the election campaign accused him of wanting the United States to be more like the Western countries of the European Union. Certainly the EU's all-powerful bureaucracy and its commitment to various "elite" projects such as fighting global warming and universal healthcare appeal to him. But in reality, the United States is a very different environment from Western Europe, with a different demographic profile and many attitudes that have derived from its New World provenance. 

The Law of Demand

One of the most important ideas in the social sciences

by ART CARDEN

The law of demand is a simple principle with profound consequences and incredible explanatory power. The law is so simple, it can be expressed as haiku:

All else held constantquantity demanded fallswhen the price rises.

When tomato prices rise, people eat fewer tomatoes. When tomato prices fall, people eat more tomatoes. What is true of the tomato market is true of other markets as well. The law of demand applies to markets for goods like tomatoes and to markets for services like auto repair and landscaping.

The law of demand applies to more than just the goods and services we buy, however. We can think about having a “demand” for all sorts of things, like a demand for speed and comfort while driving. When fast driving becomes riskier, people do less of it. When fast driving becomes safer, people do more of it.

Consider something else that has been controversial recently: the demand for convenient communication. With the diffusion of cell phones (and smart phones especially), communicating via email, text messages, Facebook, Twitter, and other applications has never been easier. The siren song of email, the Internet, and text messages can be strong, even for people who are driving at the time. Let’s consider first how the law of demand helps us explain why people text while driving and second the implicit theory underlying laws against texting while driving.

Fiscal Cliff: Sense and Nonsense

No Solution before a major crisis

by Mario Rizzo

The above table is from the November 8th issue of the Wall Street Journal. The figures for the fiscal cliff consequences are usefully stated for next year and not for the next nine years as those who want to suggest that the numbers are truly impressive (or want to scare children) typically use.

Consider the following facts or likely scenarios:

1. If the Congress and the White House do not agree on something before the end of the calendar year, the  first-year consequences will be as the table indicates.  But how likely will they fail to come to even an illusory agreement for the entire year, let alone the next nine years. Not very likely, I should think.

2. Note how the consequences are stacked in “favor” of tax increases and not spending cuts. The “scheduled” spending cuts amount to only $136 billion out of a federal burget of about $7 trillion for next year. The tax increases are $532 billion. The Democrats are horrified that half of these come from domestic spending. The Republicans are horrified that the other half comes from defense spending.

3. It is true that many federal workers under this scenario would face pay cuts of about 8-9%, presumably to ensure that substantive programs can be cut less. These have the political effect of pinching well-organized people immediately who will then let us all know how much they are suffering.

Diversity, Ignorance, and Stupidity

Solutions searching for a problem

by WALTER E. WILLIAMS

George Orwell admonished, “Sometimes the first duty of intelligent men is the restatement of the obvious.” That’s what I want to do—talk about the obvious.

Law professors, courts, and social scientists have long held that gross statistical disparities between races are evidence of a pattern and practice of discrimination. Behind this vision is the notion that but for discrimination, we’d be distributed proportionately by race across socioeconomic characteristics such as income, education, occupations, and other outcomes.

There is no evidence from anywhere on earth or any time in human history which demonstrates that but for discrimination there would be proportional representation and absence of gross statistical disparities by race, sex, nationality, or any other human characteristic. Nonetheless, much of our thinking, laws, litigation, and public policy are based on proportionality being the norm. Let us acknowledge a few gross disparities and decide whether they represent what lawyers and judges call a “pattern and practice of discrimination,” while at the same time thinking about what corrective action might be taken.

Chronicling The Decline And Fall Of Entitlement Democracy

Mencken understood the American people better than they understood themselves

By Bill Frezza

It’s been a week of sober reflection, accompanied by a self-imposed news fast, during which I’ve struggled to understand the deeper meaning of our recent electoral catastrophe. Doing so undistracted by a thousand voices required strict electronic disengagement. I recommend this as one would take a purgative after eating a batch of bad oysters.

Many of us of the libertarian persuasion who had never previously voted Republican made an exception this time because the stakes were so high. In a purposeful departure from our usual  “pox on both their houses” approach, we waded into the partisan fray naively believing we could make a difference, ignoring the stink on those with whom we made common cause simply because the alternative was so much worse.

All for naught. After approaching it for decades, America has now hurtled past the dependency tipping point. We have scrapped the last vestiges of our constitutionally limited republic of strictly enumerated powers and replaced it with an unconstrained entitlement democracy neither better nor worse than any of the others whose failures have dotted the course of history—all over weighty issues such as who should pay for condoms.

Experience teaches effectually, but brutally

The Bernanke-Obama-Keynes Toxic Triangle Dead End

By Mark Spitznagel

The choice for the status quo made in last week’s presidential election was an uninformed one—at no fault of the voters—made in the fog of monetary distortion and Federal Reserve Chairman Ben Bernanke’s continuous campaign of disinformation.

President Barack Obama managed to overtake Republican challenger Mitt Romney on the exit poll question “Who is better for the economy?” and a strong majority of Obama voters felt that the economy is better off than four years ago. Indeed, anyone (particularly Bernanke) would concede that without the Fed’s zero interest rate policy we would be experiencing a far worse economy—the true Obama-Keynesian economy.

The danger here, as we have seen in every other bust for a century or more, is that we can only suspend the laws of economics for so long. And in general we are only good at considering immediate consequences, while being very, very bad at considering later consequences. As 19th century French economist Frédéric Bastiat observed, 

“The bad economist pursues a small present good, which will be followed by a great evil to come, while the true economist pursues a great good to come, at the risk of a small present evil.”

Bottom line-- the Fiscal Cliff doesn't matter

The US passed the point of no return a long time ago

by Simon Black

In his farewell address to Congress yesterday, Ron Paul blasted the dangers of what he called 'Economic Ignorance':

"Economic ignorance is commonplace. . . Believers in military Keynesianism and domestic Keynesianism continue to desperately promote their failed policies, as the economy languishes in a deep slumber."

He's dead right. Around the world, economic ignorance abounds. And perhaps nowhere is this more obvious today than in the senseless prattling over the US 'Fiscal Cliff'.

Here's the deal: You may remember the Debt Ceiling debacle of 2011. At the time, the US government was about to breach its debt ceiling, and there was an embarrassing standoff between Congress and President Obama.

As part of their eventual compromise, the debt ceiling increased by $400 billion in August 2011... then again by another $500 billion five weeks later... and finally by another $1.2 TRILLION twenty weeks after that.

Minority America

The basis of a more remarkable, unique and successful nation in the decades to come

by Joel Kotkin

Recent news from the Census Bureau that a “minority” majority might be a reality somewhat sooner than expected --- 2042 instead of 2050 --- may lead to many misapprehensions, if not in the media, certainly in the private spaces of Americans.

For some on the multicultural left, there exists the prospect of America firmly tilting towards a kind of third world politics, rejecting much of the country’s historical and constitutional legacy. Some left-leaning futurists, like Warren Wagar envision a nation of people fundamentally torn by “racial conflict.” By mid-century, Wagar sees an America suffering from a “gigantic internal struggle” that will eventually lead to its ultimate decline.

The xenophobic right, probably much larger but no less deluded, sees the similar potential for mischief, where American values are undermined by what 19th century Nativists called “ a rising tide of color.” It is part of a scenario that the likes of Pat Buchanan and Samuel Huntington envision as the rise “revanchist sentiments” along the nation’s Southern border.

Yet in reality America’s ability to absorb newcomers represents not so much a shift in racial dominance but a new paradigm, where race itself begins to matter less than culture, class and other factors. Rather than a source of national decline, the new Americas represent the critical force that can provide the new markets, the manpower, and, perhaps most important, the youthful energy to keep our city vital and growing.

The Anatomy of the State

What the State Is Not

by Murray N. Rothbard 

The State is almost universally considered an institution of social service. Some theorists venerate the State as the apotheosis of society; others regard it as an amiable, though often inefficient, organization for achieving social ends; but almost all regard it as a necessary means for achieving the goals of mankind, a means to be ranged against the "private sector" and often winning in this competition of resources. With the rise of democracy, the identification of the State with society has been redoubled, until it is common to hear sentiments expressed which violate virtually every tenet of reason and common sense such as, "we are the government." The useful collective term "we" has enabled an ideological camouflage to be thrown over the reality of political life. If "we are the government," then anything a government does to an individual is not only just and un-tyrannical but also "voluntary" on the part of the individual concerned. If the government has incurred a huge public debt which must be paid by taxing one group for the benefit of another, this reality of burden is obscured by saying that "we owe it to ourselves"; if the government conscripts a man, or throws him into jail for dissident opinion, then he is "doing it to himself" and, therefore, nothing untoward has occurred. Under this reasoning, any Jews murdered by the Nazi government were not murdered; instead, they must have "committed suicide," since they were the government (which was democratically chosen), and, therefore, anything the government did to them was voluntary on their part. One would not think it necessary to belabor this point, and yet the overwhelming bulk of the people hold this fallacy to a greater or lesser degree.

How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier, and Happier

The Triumph of the City

by Angel Martín Oro 

In 2007, for the first time in history, the share of urban world population surpassed its rural counterpart. According to estimations by the United Nations Population Fund, in 2030 urban population will represent about 60 percent of the total world population. This process is being driven largely by the remarkable economic performance of the developing world.

Many argue that this trend is not only environmentally unsustainable but also socially harmful. Cities are viewed as places of huge social inequalities, unhealthy modes of living, and unfriendly environmental practices. Although this view is mainly present among the critics of capitalism, it is widely entrenched in public opinion. Thus it strongly influences the regulations and policies regarding urban spaces.

One of the strongest opponents of this view is Harvard economist Edward L. Glaeser, whose Triumph of the City makes a persuasive defense of cities. As its subtitle suggests, he claims that cities are “our greatest invention” and presents the case that they make us not only richer, but also greener and healthier.

Ignorance by Consensus

The ripple before the storm

by David Korowicz

The current economic situation is in many ways better than what we have experienced in years. Against that background, we have stuck to the re-balancing scenario. Our central forecast remains indeed quite benign: a soft landing in the United States, a strong and sustained recovery in Europe, a solid trajectory in Japan and buoyant activity in China and India. In line with recent trends, sustained growth in OECD economies would be underpinned by strong job creation and falling unemployment.

                       OECD Economic Outlook 2007

GNP growth will average around 3.75% per annum between 2008-2015 — even if there is a down- turn and US instability.

                              Economic & Social Research Institute (Ireland) Medium-Term Review No. 11 2008

The above quotes might give one cause for derision. How could such acknowledged experts, well resourced, stuffed with economists and consulted by governments, get things so wrong? Especially when the risk at issue, the popping of a credit bubble, was about as vanilla as an economist could get. So precisely wrong too, certainly not 3.5% or 4%!

In reality quite a few people saw the risk of the bubble bursting, some not even professional economists, but they tended to operate on the fringes of established consensus, and by extension, a social periphery. Thus their views could be dismissed precisely because they represented a fringe view. In such a way consensus defends itself.

Mining Socialism Fails (Always)

Australia – Effects of the New Mining Tax

By Pater Tenebrarum

Back when Australia's socialist government introduced the 'Super Profits' Mining Tax', essentially a shakedown of the mining industry based on the erroneous assumption that the China-induced commodities boom was eternal and immutable, we penned an extensive critique.

Since then, it has turned out that many of the things we predicted would happen on account of this atrocious boondoggle have indeed become reality. First of all, by setting this negative example, Australia encouraged the rise of so-called 'resource nationalism' everywhere. Governments around the world have become to regard mining and other resource extraction operations as sitting ducks they can either steal (that is what has e.g. happened in places like Venezuela, Argentina and most recently Egypt, although the fate of Centamin is not yet decided) or shake down a la Australia.

After all, one cannot move a mining operation elsewhere and given the already sunk costs, it is a good bet that the operation will not be shut down as long as it is still marginally profitable.

Prepare for the Demise of California

Liberals Will Get All the Government (and Tax Hikes) They Want

by Mike "Mish" Shedlock

On Tuesday voters in California went the wrong way on three propositions.

1.     Voters approved Proposition 30 "temporarily" increasing the state sales tax and income tax on individuals making over $250,000.

2.   They voted against Proposition 31 that would allow the governor to cut the budget in fiscal emergencies.

3.   They voted against Proposition 32 that would prevent unions from making campaign donations via members' dues.

Moreover, and worse yet, Democrats picked up two more votes in the state legislature giving them a supermajority, capable of passing any tax hikes they want.

Those results are so awful I suggest you prepare for the demise of California.

Indeed California's Liberal Supermajority is about to run the state into the ground and taxpayers are going to get all the government they ever wanted.

A Man-Made Disaster

Post-Sandy 

by George Reisman

Hurricane Sandy caused the closing of a majority of the gasoline stations in the New York City area, did major damage to petroleum terminals, and reduced the ability of barges carrying fuel to reach their docks. All of this represented a substantial reduction in the supply of gasoline and other petroleum products in the New York metropolitan area. None of it was the cause of a shortage of gasoline or any other petroleum product, a shortage which New York's Mayor Bloomberg can think of no better means of alleviating than by imposing a system of gasoline rationing. (See the New York Times, November 9, 2012.)

In a free market, the effect of a good's becoming scarcer is not to cause a shortage of it, but a rise in its price. The rise in price serves to reduce the amount of the good buyers seek to buy to a point that is within the limit of the reduced supply available. However much the supply of oil and oil products was reduced by the hurricane, it was certainly not reduced to anywhere even remotely near the normal, everyday degree of scarcity in the supply of such things as gold or diamonds. And yet there is no shortage of gold or diamonds. Whoever is willing and able to pay the market price of these goods has no difficulty in obtaining them. But if our government officials, inspired perhaps by some such belief as that everyone should be able to obtain gold and diamond jewelry at an affordable price, decreed that the price of gold and diamonds should be cut in half, say, then, indeed, there would be shortages of gold and diamonds alongside the present shortages of gasoline in New York and New Jersey.

Petraeus and Benghazi

A Time for Truth

by Patrick J. Buchanan

The stunning resignation of CIA Director David Petraeus, days before he was to testify on the CIA role in the Benghazi massacre, raises many more questions than his resignation letter answers.

"I showed extremely poor judgment by engaging in an extramarital affair," wrote Petraeus. "Such behavior is unacceptable ... as the leader of an organization such as ours."

The problem: Petraeus' "unacceptable behavior," adultery with a married mother of two, Paula Broadwell, that exposed the famous general to blackmail, began soon after he became director in 2011.

Was his security detail at the CIA and were his closest associates oblivious to the fact that the director was a ripe target for blackmail, since any revelation of the affair could destroy his career?

People at the CIA had to know they had a security risk at the top of their agency. Did no one at the CIA do anything?

By early summer, however, Jill Kelley, 37, a close friend of the general from his days as head of CentCom at MacDill Air Force Base in Tampa, Fla., had received half a dozen anonymous, jealous, threatening emails.

"Back off." "Stay away from my guy!" they said.

Kelley went to an FBI friend who ferreted out Broadwell as the sender and Petraeus as the guy she wanted Kelley to stay away from.

Yet, learning that Broadwell was the source of the emails, that Petraeus was having an affair with her, and that the CIA director was thus a target for blackmail and a security risk should have taken three days for the FBI, not three months.

Investors Pay to Lend Germany Money

Average yield on the new Schatz line came in at minus 0.02%

By EMESE BARTHA And GEOFFREY T. SMITH

Nervous investors Wednesday paid Germany for the privilege of parking their funds at a bond sale for the first time since July as renewed concerns over Greek finances stoked an appetite for the euro zone's safest securities.

Investors are flocking back to German debt as Greece's problems intensify and the positive impact of the European Central Bank's bond-buy pledge starts to fade. The auction results underscore how the floundering talks among Greece's creditors are damaging confidence: Investors are so scared that troubles in Greece will infect other countries with shaky finances that they are paying more for two-year German bonds than they will get back when these bonds mature.

But while a sharp decline in Germany's borrowing costs will help the country's finances, plummeting bond yields could sow the seeds of future financial system instability, the Deutsche Bundesbank said Wednesday.

In its annual Financial Stability Report, the German central bank said that the sovereign debt crisis remained the largest immediate threat to the system, due to "the many channels of transmission and contagion in a closely interconnected economic and monetary area."

"With the Bank [ECB] yet to purchase any bonds and worries about Greece escalating again, investors seem to be losing what little faith they had regained," said Jennifer McKeown, senior European economist at Capital Economics.

You Ain't Seen Nothing Yet - Part One

The Fourth Turning

“Human history seems logical in afterthought but a mystery in forethought. Writers of history have a way of describing interwar societies as coursing from postwar to prewar as though people alive at the time knew when that transition occurred.” – Strauss & Howe - The Fourth Turning

by Jim Quinn

Watching pompous politicians, egotistical economists, arrogant investment geniuses, clueless media pundits, and self- proclaimed experts on the Great Depression predict an economic recovery and a return to normalcy would be amusing if it wasn’t so pathetic. Their lack of historical perspective does a huge disservice to the American people, as their failure to grasp the cyclical nature of history results in a broad misunderstanding of the Crisis the country is facing. The ruling class and opinion leaders are dominated by linear thinkers that believe the world progresses in a straight line. Despite all evidence of history clearly moving through cycles that repeat every eighty to one hundred years (a long human life), the present generations are always surprised by these turnings in history. I can guarantee you this country will not truly experience an economic recovery or progress for another fifteen to twenty years. If you think the last four years have been bad, you ain’t seen nothing yet.

Hope is not an option. There is too much debt, too little cash-flow, too many promises, too many lies, too little common sense, too much mass delusion, too much corruption, too little trust, too much hate, too many weapons in the hands of too many crazies, and too few visionary leaders to not create an epic worldwide implosion. Too bad. We’ve experienced horrific Crisis periods three times in the last 250 years and winter has arrived again exactly as forecasted by Strauss & Howe in 1997. The linear thinkers will continue to predict a recovery that never arrives. We have awful trials and tribulations, dreadful sacrifices of blood and treasure, and grim choices awaiting our country over the next fifteen years. Linear thinkers will scoff at such a statement as they irrationally view the world as a never ending forward progression towards a glorious future. History proves them wrong. We stand here in the year 2012 with no good options, only less worse options. Decades of foolishness, debt accumulation, and a materialistic feeding frenzy of delusion have left the world broke and out of options. And still our leaders accelerate the debt accumulation, while encouraging the masses to carry-on as if nothing has changed since 2008. Sadly, millions of lemmings want to believe they will not drown in the sea of un-payable commitments. Truth is a scarce resource on the planet today.

“Sometimes people don’t want to hear the truth because they don’t want their illusions destroyed.” – Friedrich Nietzsche