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Deika Morrison: Reasoning the Reasons

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Sunday, November 9, 2008

Why China gets it, and the US has not

No matter what, China has an ability to remain focused on what matters - and that's China, China's interest and the Chinese people.

The announcement of the $583B stimulus plan is just further evidence of this.

See here for Huffington post article.

See here for the 10 areas designated for spending

Economic growth and the welfare of the people will not be jeopardized, ladies and gentlemen.

So while the USA whose damaged economy lies on the verge of extended recession and even depression, and the powers that be even debate the merit of a stimulus package before an amount can be agreed upon, China comes out with an aggressive broad based plan to revitalize the economy, keep and generate employment, stimulate domestic demand, and provide assistance to those in need.

No matter what the critics may say, China is using this time of unprecedented uncertainty to bring certainty to its economy - to strengthen the fundamentals of its economy, so when the global economy gets back into gear, China is more than ready - China will be ahead.

And for every day that goes by in the US without a stimulus package, the US deepens its economic problems and falls further behind in preparation for global competition.

Sadly, ideology is the reason for this unfortunate US position - some strange objection to spending in order to provide relief to the people, and stabilize the economy. The government is not replacing the private sector; but the economy cannot come to a standstill while the private sector undergoes unprecedented change through a man-made shock largely generated by an element of the private sector itself. Something must happen to make the private sector the engine of growth again - and a stimulus plan can help with short term measures.

It is not either government or private sector. It is necessarily both.

And this is why China gets it, and the US has not.

Thankfully, the President-elect has called for a strategic stimulus package now, and will make it so immediately upon taking office if necessary. Let's hope that the American people and the economy do not have to wait until then because I'm not quite sure that they can.


damanimichael said...

Only problem is that China has actually announced all these 'stimuli' previously - how quick they spend the money will make the difference - previously it was earmarked to be spent by 2012, now they say by 2010... i guess we'll see if it makes a difference, but so far the markets don't think so (metals down, equities down).

Deika Morrison said...

that may be true...but people still have needs whether or not the markets "like" it - motivations are not the same

kapo said...

You may be idealizing the Chinese economic management somewhat. Their economic strategy has succeeded, but they are approaching the limits of the possibilities of an export led growth path. The present plan sounds ambitious, but is too late to prevent a severe crisis as their export machine is savaged, while it will take at least a decade of hard work to redirect growth towards local consumption. The current structure took a generation to build. Chine will not look so omnipotent in three years but they will remain big players.

Deika Morrison said...

Hmnn..."idealizing"? No. I think it's more that I don't underestimate the ability of China. Visiting last September - was a very educational trip.

kapo said...

China has a tremendous will to succeed and it is going to. But China is also the country where in its modern history nearly every generation goes through a social cataclysm. China, just like you and I, tends to repeat itself until it learns not to. There is no evidence that it has changed, despite the fact that a minority of its population has gained a foothold in the modern world. Jamaica is actually a far more politically stable country than China, perhaps unfortunately. We love to shoot and kill each other and the peasants enjoy a little jacquerie but the political order seems pretty fixed. All you have to check is the number of Jamaicans in China and the number of Chinese in Jamaica - that tells the tale.

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Reasoning The Reasons by Deika Morrison is licensed under a Creative Commons Attribution-No Derivative Works 3.0 United States License.