America vs China: Who does Economic Policy better?

Feuer Frei! · 05-23-11, 10:18 AM

The U.S. Treasury and the U.S. Federal Reserve have got a pretty good job responding to the financial crisis. It’s always easy to do Monday morning quarterbacking, but what they were concerned about was a situation that looked very much like the Great Depression. The drop in global GDP was actually as great as during the 1930s and the Treasury and the Fed did avert that by very, very aggressive actions.
But if you pull back a little bit and ask how they handled things over the last 10 years, I would say pretty badly, especially when compared with China.
If you look at the Chinese government, the Chinese did something very important: When growth was strong, they raised interest rates. They wanted to take the froth off the economy. They tightened consumer credit because they didn't want the consumers to max out and they accumulated a budget surplus because they knew these were the good times and that this was when you save money for the bad times.
Therefore, when the crisis hit they could do three things.
1. They could lower interest rates.
2. They could ease up on consumer credit.
3. They could spend a lot of money.
All of these things helped create the situation where, dramatically, the Chinese economy barely dropped during the crisis. It had a small hiccup and then was back to boom.
In contrast, during the last 10 years in the United States, when growth was good, we lowered interest rates to further goose growth - to squeeze out the last drop of growth you could get. The U.S. eased up on consumer credit, particularly housing credit in a variety of ways –Fannie and Freddie being the most important.
And then the U.S. destroyed the federal budget. In 2000, we had a budget surplus. Then the Bush Administration did three things:
1. It cut taxes.
2. It passed prescription drugs for the elderly.
3. It undertook two wars.
The effect of those three things was to create a massive structural budget deficit so that before the crisis even hit, the U.S. had a budget deficit. When the crisis hit, the deficit went to 10-percent of GDP.
Across all branches of Government and all parties, we were unable to be disciplined about saving money in the good times in order to be prepared for the bad times.
It’s the story of a democracy where we’ve almost lost the ability to inflict any kind of short-term pain for long-term gain.
That’s very troubling for the future.

SOURCE

August · 05-23-11, 11:03 AM

Apples and oranges. You can't compare a multiparty republic with a one party dictatorship.

MH · 05-23-11, 11:03 AM

Seems Chinese have adopted best of two words.
As far as economy they might have really big edge on the west currently.
Question is if it can last forever as china get richer and citizens will demand more.
Again by the time it happens it may be too late for others and china will be the new superpower.

I have no insight on economy but that's how it looks at glance.

Stealhead · 05-23-11, 02:28 PM

I think the Chinese are at a disadvantage in the long run they use the abacus.

August · 05-23-11, 02:32 PM

Quote:

Originally Posted by MH

Seems Chinese have adopted best of two words.

How you figure? They routinely jail political dissidents and massacre their own people. That's no world this American would want to live in.

MH · 05-23-11, 02:55 PM

Quote:

Originally Posted by August

How you figure? They routinely jail political dissidents and massacre their own people. That's no world this American would want to live in.

Was talking about economy only.
I would not like to live there as well but the chinese discipline maybe is their advantage in this case.

Betonov · 05-23-11, 03:18 PM

I'd vote for the American system. Free market has a way of adjusting itself, the problem with today are greedy CEO's that have too many friends in high places and a banking system that draws money out of thin air.
A planned economy can't react fast enough to changes. The Chineese are lucky they live in a vast country with an enormeus workforce and apart from some resources, they don't need to import a lot. A smaller nation that would rely on trade would go bankrupt since it takes politicians a whole generation to figure out times have changed, while an entropenour just looks at the business page in the daily newspaper.

You want an example: Yugoslavia, once it was a big country that was self sufficient. We produced what we needed, Slovenian goods were hot goods on the Yugoslavian market. Then 91' came, we began trading globally, but our goods were good for a country that had almost no import (shun the western capitalism and their goods made with slave labor), then foreign goods came, better quality, better prices and domestic companies refused to adapt, since they had no idea how to adapt. Only countries founded after 91' somehow managed.
Planned economies fail in the longrun in a fast changing world of today

MH · 05-23-11, 03:32 PM

Quote:

Originally Posted by Betonov

I'd vote for the American system. Free market has a way of adjusting itself, the problem with today are greedy CEO's that have too many friends in high places and a banking system that draws money out of thin air.
A planned economy can't react fast enough to changes. The Chineese are lucky they live in a vast country with an enormeus workforce and apart from some resources, they don't need to import a lot. A smaller nation that would rely on trade would go bankrupt since it takes politicians a whole generation to figure out times have changed, while an entropenour just looks at the business page in the daily newspaper.

You want an example: Yugoslavia, once it was a big country that was self sufficient. We produced what we needed, Slovenian goods were hot goods on the Yugoslavian market. Then 91' came, we began trading globally, but our goods were good for a country that had almost no import (shun the western capitalism and their goods made with slave labor), then foreign goods came, better quality, better prices and domestic companies refused to adapt, since they had no idea how to adapt. Only countries founded after 91' somehow managed.
Planned economies fail in the longrun in a fast changing world of today

Chinese economy is profit driven as well but no greedy CEOs
People get rewarded but reasonably for achievements and get kicked in ass for failure.

You talking about western products back in 91.
Its 2011 and most of the stuff has this "designed in switzerland made in china thing" on it.

Oberon · 05-23-11, 03:55 PM

China is tricky. On the outside it looks like a massive success story and as strong as an ox. On the inside though it's creaking and full of band-aids over holes in the dam. Hu knows this, he knows that he has to adjust the export primary market into a more balanced market, bring the Yuan up in strength gently and feed the revenue generated into improvement projects for the inner-country. If this is not done and the gap between the interior and exterior runs out of control, then it's second revolution time.

Skybird · 05-23-11, 07:59 PM

Quote:

Originally Posted by August

How you figure? They routinely jail political dissidents and massacre their own people. That's no world this American would want to live in.

Our welath today and our living ways goes at the cost of millions of people in parts of thje world usuallynot being shown on our TV screens. We do noit kill so much with our own hands - we let others carry out the killing on behalf of our killing. Your precious republic as well as our own republics in europe are as absived and cause as much if not more bloodshed and suffering, like open tyrannies. Your republic as well as ours are not demcoratically controlled, but lobby-run and lobby-dominated, they are oligarchies and plutocracies. what historical founding documents once wanted our countries to be, is one thing, and no longer of much relevance for desxcribing the status quo today. What our countries are today is something completely different.

Elections do not really change muich in the ruling of banks and corporations and their lobbies. we can get rid of them only by the same way open tyrannies get rid of by their people: by violence and revolutions.

We are as blood-dripping as the totalitarian regimes of the past have been. We are just ore clever in hiding our subpression and exploitation of others, and we do the killing via proxies.

Africa. South America. Oil-exporting Middle East. Proxy wars, support for dictatorships as well as parties in civil wars that guarantee(d) ressource interests for foreign business companies. Our Western democracies act as brutal and bloody than their claimed totalitarian counterparts and criminal rogue nations. The money that our wealth is founded on, is blood money.

And that is no history only, that is still the present.

Skybird · 05-23-11, 08:08 PM

On the topic, an economic system that results in destroying the existence basis of those running it, and only for short and limited ammounts of time spikes in glorious wealth but at the same time erodes the basis on which this wealth is based and distributes this wealth increasingly uneven, hardly can be described as a success story. It is of benefit for the few, and at the cost of the many, and it consumes the future. It does not last, for it takes more than what it gives back to the global system. He who holds a pistol at his head and pulls the trigger, and he who instead takes a a slow poison and laughs for the day until he dies at sunset - is the latter really that more clever than the first? We shine bright currently, yes, since historically just a short time - and we do so at the cost of having moved much much closer to the top of the cliff . Could be that from a future point of view, we may have shone twice as bright - but also only half as long. The writings are on the wall already, clear to be read by anybody wanting to read. But most people prefer to be told that ther party will carry on for another couple of years, at least as long as they still will live. That is the basic principle that holds our government systems in place: telling people "All will be well, rest assured, the next generation will fix it". Since several decades at least it goes like this. The sky got dim, thes torm cliuds are mounting, the waves whip the beach with increasing ferocity, the island becmes smaller the higher the water cliombs. And we - do party , and believe our masters' lies. Because that are the lies we want to follow.

Telling children there are no monsters under their bed helps them to sleep unafraid. But in our case, the place under our bed gets increasingly crowded.

August · 05-23-11, 08:29 PM

Quote:

Originally Posted by Skybird

And that is no history only, that is still the present.

Ever the pessimist eh Sky? Well remember that we're discussing America vs China here, not America/Europe vs China. We've managed to maintain our system for going on three centuries. China's present system on the other hand has been in existence for less than one. Only time will tell if their way is even stable let alone superior to ours.

Betonov · 05-24-11, 01:42 AM

Quote:

Originally Posted by August

Ever the pessimist eh Sky? Well remember that we're discussing America vs China here, not America/Europe vs China. We've managed to maintain our system for going on three centuries. China's present system on the other hand has been in existence for less than one. Only time will tell if their way is even stable let alone superior to ours.

It was stable for the last 3 centuries, because the money was standardized on a precius metal and banks could only loan what they actually had. Today's situation is BS and it wont last. Best case scenario, it will revert to what it once was, but what we and you have today is as stable as a sugar cube on a rainy day. There's only a small cup over it and that cup is aggresive growth, impossible in finite resource world. One day that cup will disapear. Plus the politicians on both sides of the Atlantic are nothing more than a bad joke. They're not going to do nothing about it.

Our system (US and Europe have the same system) may be superior, but it's sick with cancer

Skybird · 05-24-11, 06:21 AM

Quote:

Originally Posted by August

Ever the pessimist eh Sky? Well remember that we're discussing America vs China here, not America/Europe vs China. We've managed to maintain our system for going on three centuries. China's present system on the other hand has been in existence for less than one. Only time will tell if their way is even stable let alone superior to ours.

China has been the richest and most powerful trading power of this planet all human history knows of, they have been that for over two millenia. Compared to that, the communist party's experiment is nothing but a brief excursion so far.

The point is, for almost all known part of it's history ranging back over 3 and a half, some count even 5 millenia, the Chinese societies have been totalitarian ones.

I think that dwarfs America's 2 and a half century of existence, parts of that include the Indians massacre, slavery, and racism.

Not to count modern wars for strategic influence, ressources control, and control of financial traffic patterns.

And no, I am not pessimistic, usually. I am a realist, and I do not close the eyes before messages just because I wished I would not get them. That includes the bad ones, of course.

August · 05-24-11, 07:35 AM

Quote:

Originally Posted by Skybird

I think that dwarfs America's 2 and a half century of existence,

If China was still a monarchy or a republic then you might have a point but when Mao and his gang seized power in 1949 they totally changed their economic system.

Part of the test for success is longevity and the present Chinese system has not been in existence long enough to prove anything.

05-23-11, 10:18 AM	#1
Feuer Frei! Navy Seal Join Date: Sep 2009 Location: Valhalla Posts: 5,295 Downloads: 141 Uploads: 17	America vs China: Who does Economic Policy better? The U.S. Treasury and the U.S. Federal Reserve have got a pretty good job responding to the financial crisis. It’s always easy to do Monday morning quarterbacking, but what they were concerned about was a situation that looked very much like the Great Depression. The drop in global GDP was actually as great as during the 1930s and the Treasury and the Fed did avert that by very, very aggressive actions. But if you pull back a little bit and ask how they handled things over the last 10 years, I would say pretty badly, especially when compared with China. If you look at the Chinese government, the Chinese did something very important: When growth was strong, they raised interest rates. They wanted to take the froth off the economy. They tightened consumer credit because they didn't want the consumers to max out and they accumulated a budget surplus because they knew these were the good times and that this was when you save money for the bad times. Therefore, when the crisis hit they could do three things. 1. They could lower interest rates. 2. They could ease up on consumer credit. 3. They could spend a lot of money. All of these things helped create the situation where, dramatically, the Chinese economy barely dropped during the crisis. It had a small hiccup and then was back to boom. In contrast, during the last 10 years in the United States, when growth was good, we lowered interest rates to further goose growth - to squeeze out the last drop of growth you could get. The U.S. eased up on consumer credit, particularly housing credit in a variety of ways –Fannie and Freddie being the most important. And then the U.S. destroyed the federal budget. In 2000, we had a budget surplus. Then the Bush Administration did three things: 1. It cut taxes. 2. It passed prescription drugs for the elderly. 3. It undertook two wars. The effect of those three things was to create a massive structural budget deficit so that before the crisis even hit, the U.S. had a budget deficit. When the crisis hit, the deficit went to 10-percent of GDP. Across all branches of Government and all parties, we were unable to be disciplined about saving money in the good times in order to be prepared for the bad times. It’s the story of a democracy where we’ve almost lost the ability to inflict any kind of short-term pain for long-term gain. That’s very troubling for the future. SOURCE __________________ "History is the lies that the victors agree on"- Napoleon LINK TO MY SH 3 MODS

05-23-11, 11:03 AM	#2
August Wayfaring Stranger Join Date: Apr 2005 Location: Massachusetts Posts: 23,197 Downloads: 0 Uploads: 0	Apples and oranges. You can't compare a multiparty republic with a one party dictatorship. __________________ Flanked by life and the funeral pyre. Putting on a show for you to see.

05-23-11, 08:08 PM	#11
Skybird Soaring Join Date: Sep 2001 Location: the mental asylum named Germany Posts: 42,603 Downloads: 10 Uploads: 0	On the topic, an economic system that results in destroying the existence basis of those running it, and only for short and limited ammounts of time spikes in glorious wealth but at the same time erodes the basis on which this wealth is based and distributes this wealth increasingly uneven, hardly can be described as a success story. It is of benefit for the few, and at the cost of the many, and it consumes the future. It does not last, for it takes more than what it gives back to the global system. He who holds a pistol at his head and pulls the trigger, and he who instead takes a a slow poison and laughs for the day until he dies at sunset - is the latter really that more clever than the first? We shine bright currently, yes, since historically just a short time - and we do so at the cost of having moved much much closer to the top of the cliff . Could be that from a future point of view, we may have shone twice as bright - but also only half as long. The writings are on the wall already, clear to be read by anybody wanting to read. But most people prefer to be told that ther party will carry on for another couple of years, at least as long as they still will live. That is the basic principle that holds our government systems in place: telling people "All will be well, rest assured, the next generation will fix it". Since several decades at least it goes like this. The sky got dim, thes torm cliuds are mounting, the waves whip the beach with increasing ferocity, the island becmes smaller the higher the water cliombs. And we - do party , and believe our masters' lies. Because that are the lies we want to follow. Telling children there are no monsters under their bed helps them to sleep unafraid. But in our case, the place under our bed gets increasingly crowded. __________________ If you feel nuts, consult an expert.

05-23-11, 11:03 AM	#3
MH Ocean Warrior Join Date: Jul 2008 Posts: 3,184 Downloads: 248 Uploads: 0	Seems Chinese have adopted best of two words. As far as economy they might have really big edge on the west currently. Question is if it can last forever as china get richer and citizens will demand more. Again by the time it happens it may be too late for others and china will be the new superpower. I have no insight on economy but that's how it looks at glance.

05-23-11, 02:28 PM	#4
Stealhead Navy Seal Join Date: Feb 2009 Location: Kentucky Posts: 5,421 Downloads: 85 Uploads: 0	I think the Chinese are at a disadvantage in the long run they use the abacus.

05-23-11, 03:18 PM	#7
Betonov Navy Seal Join Date: May 2009 Location: Slovenia Posts: 8,647 Downloads: 26 Uploads: 0	I'd vote for the American system. Free market has a way of adjusting itself, the problem with today are greedy CEO's that have too many friends in high places and a banking system that draws money out of thin air. A planned economy can't react fast enough to changes. The Chineese are lucky they live in a vast country with an enormeus workforce and apart from some resources, they don't need to import a lot. A smaller nation that would rely on trade would go bankrupt since it takes politicians a whole generation to figure out times have changed, while an entropenour just looks at the business page in the daily newspaper. You want an example: Yugoslavia, once it was a big country that was self sufficient. We produced what we needed, Slovenian goods were hot goods on the Yugoslavian market. Then 91' came, we began trading globally, but our goods were good for a country that had almost no import (shun the western capitalism and their goods made with slave labor), then foreign goods came, better quality, better prices and domestic companies refused to adapt, since they had no idea how to adapt. Only countries founded after 91' somehow managed. Planned economies fail in the longrun in a fast changing world of today

05-23-11, 03:55 PM	#9
Oberon Lucky Jack Join Date: Jul 2002 Posts: 25,976 Downloads: 61 Uploads: 20	China is tricky. On the outside it looks like a massive success story and as strong as an ox. On the inside though it's creaking and full of band-aids over holes in the dam. Hu knows this, he knows that he has to adjust the export primary market into a more balanced market, bring the Yuan up in strength gently and feed the revenue generated into improvement projects for the inner-country. If this is not done and the gap between the interior and exterior runs out of control, then it's second revolution time.