China’s Economy is Now Freer and More Competitive than the United States

Another thing that might trigger a sell-off in the stock market: a sudden setback in China...

Today is a big day in China...it marks the 60th anniversary of the communist victory. "The Chinese people have stood up," said Mao, announcing the victory in 1949.

Then, over the next two decades, whenever the Chinese stood up...Mao shot them down himself. Mao's long march to power was a huge setback for human political progress - if there is any. The man was a thorough scoundrel and a complete incompetent at everything, except getting power and holding onto it. Every program was a disaster. When he set out to 'liberate' the masses, they ended up as slaves. When he set out to feed them, they starved. When he proposed to empower them with his "democratic dictatorship," they ended up with bullets in the back of the head.

But 60 years later, the commies are still in power. China is still red.

And yet, thanks to the curious way the world turns, China's economy is now freer and more competitive in many ways than the United States. Go figure.

As economies age, more and more people become 'rentiers.' That is, they get some special privilege...some inside angle...some conniving advantage. The latest numbers, for example, tell us that almost half of all households pay no federal taxes. They collect benefits - jobless benefits, food stamps, education, day care, Medicare, Social Security - without contributing to the system that provides them. Add to this number the millions of households that pay taxes but receive a large part of their money from the government itself - employees, contractors, lobbyists, etc. - and you have enough to win any election in the country.

But the welfare chiselers and food stamp cheats are small time crooks. The big crooks go for billions. John Crudele in The New York Post:

"...Sept. 18, 2008 [US Secretary of the Treasury...Henry] Paulson placed his first call of the day at 6:55 a.m., to Lloyd Blankfein, who succeeded Paulson as CEO of Goldman. It's unclear whether the two connected because Blankfein called Paulson minutes later.

"And then Blankfein placed another call to Paulson at 7:05 a.m. for what looks like a 10-minute conversation.

"After that Paulson called Christopher Cox, Securities & Exchange Commission Chairman twice; British Chancellor Alistair Darling and New York Federal Reserve head (and now Treasury Secretary) Tim Geithner two times.

"Then Paulson took another call from Goldman's Blankfein.

"It wasn't even 9 a.m. yet - 30 minutes before the stock market was to open - and Paulson and Blankfein had already exchanged three phone calls."

It pays to have friends in high places. That was the day the market learned of Paulson's bailout proposals. Could Goldman have gotten word before others? Hey, we're not accusing anyone...

Bill Bonner
for The Daily Reckoning Australia

P.S. to get The Daily Reckoning direct to your inbox sign up to our free e-mail newsletter or if you prefer to use RSS, subscribe to the Daily Reckoning RSS feed.

Related Articles:

• Rising in Defense of Goldman Sachs
• Global Economy Gloom
• Government Pretends to Punish the Bankers
• Only Hope for Obama is that the Economy Revives
• Government Sachs