Beware of Artificial Prosperity in China

I believe the 21st century will belong to China because most centuries have belonged to China.”

— Niall Ferguson

After this year’s highly successful FreedomFest, my wife and I flew to China for several speaking engagements and an opportunity to access the second-biggest economy in the world (unless you count the European Union (EU) as one country, which would make China third, behind the United States and Europe).

My wife and I first visited Hong Kong, which is still booming, with ongoing new construction. The talk of the town is a large apartment overlooking Hong Kong that is selling for $1 billion in HK dollars! Sounds like the top of a market to me.

If the flights to Hong Kong and Shanghai are any indicator, the Chinese economy is slowing. Both flights were far from full. We saw lots of empty buildings in Shanghai, an indication of over-building. We then visited Shanghai to attend and to speak at the Austrian economics seminar hosted by Li and Ken Schooland. Ken is the author of one of my favorite books, “The Adventures of Jonathan Gullible” (available on Amazon.com here).

Li is Chinese and confirmed that I am one of the most well-known economists in China, due to the translation of several of my works. Not that the Chinese government is paying attention to my policy recommendations! I talked about Austrian economics being the best school to address the challenges of the 21st century, with its emphasis on stable monetary policies and austerity (balanced budgets).

The Austrian economists have warned repeatedly that China’s economic growth is part genuine and part artificial. It is growing rapidly from a low level by adopting Western technology, making capital investments and seeking a new consumer society. But the Bank of China also is engaging in easy-money policies (the money supply has been growing at a 30% rate), which suggests overheating and an eventual bust.

Note: C-SPAN Book TV interviewed me about my bestseller, “The Making of Modern Economics,” to show at 1 p.m. Eastern time this Sunday on C-SPAN 2. For more information, go to www.booktv.org. To order a copy (priced at only $29.95, plus $5 for postage and handling), call Eagle Publishing at 1-800/211-7661 and mention code ECONP3.

You Blew It: The Crime of the Century

The Great Leap Forward confirms Mao Zedong as “one of history’s greatest monsters.”
— London’s Sunday Times

One of the most popular books in Hong Kong right now is historian Frank Dikötter’s “Mao’s Great Famine: The History of China’s Most Devastating Catastrophe, 1958-1962,” available here.

The book sets the record straight about the so-called “Great Leap Forward” campaign of Mao in 1958-1962. It should be called the “The Road to Serfdom”… just as the official name of China under communism should be called “The Anti-People’s Republic of China.”

Dikötter begins his devastating history as follows:

“Between 1958 and 1962, China descended into hell. Mao Zedong threw his country into a frenzy with the Great Leap Forward, an attempt to catch up to and overtake Britain in less than 15 years. The experiment ended in the greatest catastrophe the country had ever known, destroying tens of millions of lives.”

Dikötter’s book is a riveting, magnificently detailed chronicle of an era in Chinese history that is much speculated about but never before fully documented because access to Communist Party archives has long been restricted to all but the most trusted historians. A new archive law has opened up thousands of central and provincial documents that “fundamentally change the way one can study the Maoist era.”

Dikötter makes clear, as nobody has before, that far from being the program that would lift the country among the world’s superpowers and prove the power of Communism, as Mao imagined, the Great Leap Forward transformed the country in the other direction. It became the site not only of “one of the most deadly mass killings of human history,” at least 45 million people were worked, starved or beaten to death — but also was the site of “the greatest demolition of real estate in human history,” as up to one-third of all housing was turned into rubble. The experiment was a catastrophe for the natural world, as the land was savaged in a maniacal pursuit of steel and other industrial accomplishments.

In a powerful meshing of exhaustive research in Chinese archives and narrative drive, Dikötter, for the first time, links up what happened in the corridors of power — the vicious backstabbing and bullying tactics that took place among party leaders — with the everyday experiences of ordinary people, giving voice to the dead and disenfranchised. Dikötter’s magisterial account recasts the history of the People’s Republic of China.

Yours for peace, prosperity, and liberty, AEIOU,

Mark Skousen
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P.S. My book “Economics on Trial” is up for Freedom Book of the Month for July. To vote, go to http://freedombookclub.com/vote.html.

Upcoming Appearance

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