Wednesday, April 20, 2011

China's Ghost Cities and Malls -- Communist Version of Back to the Future.

Verne Strickland Blogmaster

China's Ghost Cities and Malls, is it? What a haunting and ominous title. This Australian documentary film, released via MRC TV (Media Research Center), is every bit as spooky, depressing and shocking as it sounds. In Communist China, huge and modern cities are being built for . . . no one.

As a television documentary producer, I had the extraordinary opportunity in 1979 to visit the Peoples Republic of China (PRC). It was three years after Mao's death, and the country was reeling from revolution, mismanaged resources, and mistreatment of its impoverished, often starting, masses.

China -- a master of facade -- today has a shiny exterior. But its people are still enslaved by a totalitarian government. This story and documentary awed me. Perhaps it will have the same effect on you.

Stephen Gutowski's picture
*Click on underlined name to find Gutowski videos. "China" documentary is on page 2.
Friday, April 15, 2011 - 10:56am 
In case you were confused by all those reports of China's massive growth over the last several years this little documentary from Australian tv will give you an idea of what is going on. Here's a hint. It isn't some huge success worthy of praise and emulation. Sorry Thomas Friedman! (h/t Lee Doren)

In this little documentary we see yet another example of why centralized government control over economies doesn't work. As if we needed yet another example in the first place. The central government demands a certain amount of growth in GDP from the local governments and so they go out and waste money building lots of useless new cities that nobody lives in.

Hey, on paper that looks like awesome and consistent growth. So it must be working, right? Um, no.
This is kind of like the broken window fallacy on steroids. You see in the broken window fallacy replacing destroyed assets is stimulative. Unfortunately for liberal economic theory which is essentially based on the fallacy the only way this could be viewed as true is if you focus only on the seen benefits of replacing assets and not the unseen costs. This is all summed up in this nice little video.

However, at least in the broken window fallacy there is actually a demand for replacing destroyed assets. What the Chinese government is doing here is far worse. They're taking money from the market, filtering it through the government, and completely wasting it on building projects that end in ghost cities.

Think about that for a second. The government of one of the most populace countries in the entire world has managed to create an unmanageable boondoggle involving too much housing when most of their citizens live in squalor. How sad is that?

Perhaps the saddest part of this piece, though, is some of the people impoverished by these absurd programs think they need more government intervention to save them. They can't seem to understand that greater government intervention wont save them from the problems current government intervention has created. It's unnerving really.

Then again are we all that much better here in the US? How many government broken-window-fallacy-on-steroids programs exist in our own country? Frankly, China looks more and more like the society we will end up becoming if we aren't vigilant enough.