So far you're right but the tide can always turn. China has massively overbuilt housing supply, which is the kind of mistake that a freer economy couldn't make. China's failed birth policies (1 child until 2015!) are another example.
My opinion is still that capitalism (Western style) will win. Not because markets are never wrong but because the scope for fucking up is so much less. Markets can't decide "families can have only one child" or "we need to build 90 million units of housing" (that now sits empty). An accumulation of fuck-ups in this vein is inevitable when you have a small group of people making these kinds of decisions. In the long run, it will be fatal.
It depends though, whom you are asking about failed or successful policies. For example I have seen a normal flat of a friend in China in a capitol of a province, who lives alone in this 4 room apartment. I asked how much rent they had to pay and then asked them what they think, how much they would have to pay for that in Berlin. When I told them they would probably have to pay some 2k EUR rent, they thought for a moment, then just said: "That's insane!". The rent they paid was maybe 1/8 to 1/6 of that. And that apartment was not somewhere far out. It is well within the city and has good public transport connection. People can afford to rent. People can move. Single people. Over here not so much. This is also a result of the state having built houses and apartments.
i don't know much about the rental market in china, but living there, always renting, i had the impression that rents do not cover the cost of the apartment. it is as if most people rent out their apartment because it would otherwise stay empty. when we finally bought an apartment, the mortgage payments were twice as high as what we would have paid for the same apartment in rent. we had a 15 year mortgage i think, so that means it takes 30 years in rent to just cover the cost of the apartment. is that profitable? i don't know. in germany rent has to be profitable.
Yes. Unfortunately, we don't live in capitalism anymore, we live in feudalism. The feudal lords just so happen to wear the skin of formerly capitalist corporations. That's how we get the opposite but identical kind of failure, where basically any desirable city gets almost no housing buildout (because any idiot with a billion dollars can make it arbitrarily expensive to do) and families can't afford to even have one child.
> Markets can't decide "families can have only one child"
Actually they can. It's part of the reason why a lot of capitalist nations are seeing major problems with population stagnation and possibly shrinkage.
The problem is markets don't care at all about society. If they can require that every member of a household has to work and extract all their money as efficiently as possible, then they leave little room for society to have families.
Capitalism is geared towards minimizing workers' free time. And, unfortunately, free time is how babies get made and kids get raised.
That is where western capitalism is failing. Shouting louder and young adults to pull on bootstraps harder isn't making them have kids in their studio apartments.
South Korea and Japan are 2 examples of this train-wreck that's coming for the US and other nations.
> If they can require that every member of a household has to work and extract all their money as efficiently as possible, then they leave little room for society to have families.
This ascribes an agency to capitalism that doesn’t exist.
The families themselves make the choices to have more or fewer children.
Capitalism says nothing about free time. Make the connection in your argument - people without enough money work as much as they can, maybe… but I still don’t see the lower wage people I know working 16 hour days. In fact it is the people who have a use for the extra money, usually to buy free time later, as one would expect in a capitalistic system.
> This ascribes an agency to capitalism that doesn’t exist.
Oh no, it really doesn't.
Captialism is everyone working to maximize profit. It's the lack of foresight on social problems and pressures in capitalism that leads to exactly this problem.
> The families themselves make the choices to have more or fewer children.
Right, because of the pressure of a capitalist society. People can be priced out of having children if necessities like food, housing, and clothing price them out of being able to take care of a child.
> Capitalism says nothing about free time.
Capitalism is about maximizing profit. A direct path towards that is paying employees the minimal amount and having them work the most hours to extract the maximum amount of value from them.
Before mass unionization, 60 or 80 hour workweeks were pretty common in the US. Even today, we see companies that use salaried employees as a way to make employees work longer hours.
If overtime wasn't so expensive, you could bet that McDonalds would have people working 12 hour shifts. Hospitals already do that to nurses.
> capitalism is everyone working to maximize profit
This is nonsense. Capitalism is about the private ownership of productive stuff, i.e. capital. That’s it. Profit is a corollary, and one that is bounded by preferences and tastes.
> completely ignores the coercive law of competition
Not a forcing function unless you’re levered. Competition can’t push your return on a productive asset below zero (by definition), just lower by increasing the value of said asset while reducing the cash flows from it.
`Not a forcing function unless you’re levered`; but every one is levered, you aren't born with all the housing, food, and water you'll need for the rest of your life. Everyone is born with a net negative of the necessities of life, the difference though is that a very small minority are bequeathed this by well heeled ancestors. But for the overwhelming majority there is a life long struggle to afford to live a suitable life.
> but every one is levered, you aren't born with all the housing, food, and water you'll need for the rest of your life
This is not leverage.
> Everyone is born with a net negative of the necessities of life, the difference though is that a very small minority are bequeathed this by well heeled ancestors
By your definition, no, they too are born in entropic deficit, it's just satisfied immediately by their parents. (This is how humans work.)
Out-competing yields rewards for effort, that doesn't make it necessary. All that's necessary is maintaining. Many small businesses coast by for 30 years with no aspiration to do more.
Japan has had stagnant GDP growth for decades. Growth is not "necessary" as socialist like to project, it's just better. Productivity/innovation increases through growth have drastically improved our quality of life. Meanwhile socialists treat the world as zero-sum, as though everyone started out with a pile of cash which gets divvied up. Redistribution can be good, but you first need to generate the wealth.
You are reading something that doesnt exist. Scott is 100% a capitalist and this piece has nothing to do with capitalism and does not does make any claim that capitalism requires non stop growth. It does talk about how people are greedy but that has nothing to do with capitalism. Capitalism works because it embraces greed and uses it to make society at large better off. That doesnt mean non stop growth is a requirement, it is a goal of people that needs to be balanced with other goals.
China is still moving millions of people from rural to urban areas every year. The overbuilt housing is a complete non issue that will naturally solve itself in under a decade. Meanwhile in the west there is a massive housing affordability crisis because the government lets special interests make new housing illegal. I am not a fan of the chinese government but their housing policy is one spot where they are obviously better than western policy.
1) Years ago for work, I went deep investigating these; some of the team actually flew to China to see it all first-hand and verify the data. This is not a bunk narrative.
2) I've never made this accusation on HN before and apologize if I'm wrong, but this is a new account with 3 comments, all on this post (one of the largest posts about Hong Kong I've seen in a while here), and it looks a lot like a paid actor for China. This makes me thankful for the green-name feature on HN, if the random string of numbers wasn't enough of a tell.
Housing prices have dropped 30% so far, and the market hasn’t hit bottom. It’s creating a huge drag on people’s savings and the economy as a whole. Not to mention inflating government debt as local governments can’t sell land anymore to developers to fund local spending.
Ghost cities of tofu dredge buildings are real. In some cases, the local government moved there offices into those places in a desperate bid to turn the tide.
Given China’s falling demographics and geopolitical events, the provinces built too much housing.
They prebuild 10 years of housing runway but still have another 10 years, aka 100m+ housing shortage for urbanization goals. They realize they got overzealous and was venturing in bubble and and intervened during boom vs after collapse. AKA preplanning and prematurely fixing something, which is the kind of intervention a freer economy can't do.
Family planning was also massive successful in preventing frankly 100s of millions of useless mouths from being born and concentrating resources to upskill 1-2 kids, hence their massive catchup within a few generations. Now they make more technical talent than OCED combined and will have the greatest high skill demographic dividend to milk for at least our life times, giving them 40+ years to sort out better family planning.
BTW US overspending 5-10% of GDP aka 2.5 Trillion per year on healthcare vs OECD baseline is basically more wasteful misallocation than anything PRC has ever done, including RE misallocation (3-5% waste). And at least they still have housing units left to use (being converted into affordable housing), instead of piles of paper work and personal debt. Accumulation of fuckups that are not resolvable in western style capitalism, it will be fatal medium term.
Yes, some cohorts are more useful than others for nation building, that's just reality, especially if excess mouths are net drains relative to national resource available. Too much excess and not just useless but actively detrimental to development. It's not saying time to purge, but excess demographics can dilute development resources too thin, double bad if above domestic carry capacity, i.e. getting import dependant trapped.
PRC averted 200-300m birth who would have spread family resources into developing country trap. The family planning exchange is non-existing 400m low skilled workers / subsistent farmers that is net drain on national power vs having 100m tertiary to uplift into developed country. All PRC rising in the last 20 years is because PRC family planning aborted a fuckload of 2nd/3rd/4th+ siblings so families can concentrate resources to get 1st kid into STEM. They speedrun the high skill human capita game, compressing 100s of years of human capita accumulation in 50. There's downsides, but they come after the up.
What's better for development, a 1.8B country of 6 Nigeria's and 2 Japans or 1.4B country of 2 Nigerias and 6 Japans. The latter. And you would recognize the former, while all lives are special blah blah blah is absolute developing shitshow. Every Nigeria PRC avoids is 200m of less governance overhead, i.e. make work jobs. AKA see which way India trended. Look at new gen of PRC protein consumption and average height vs alternative, stunted growth from malnutrition that literally makes significant % of population too stupid to integrate into modern economy. That's what happens, you can literally fuck up your human capita stock so much by diffusing limited resources that 100s of million become too biologically stupid to do modern jobs i.e. even in PRC, 100s of millions from old times too stunted and innumerate to do even basic factory work. PRC didn't abort enough.
A wide range of countries got rich, while China's policies were unique, in addition to being abhorrent. Why should anyone believe that the only other option for China was "being Nigeria"?
The PRC is getting older faster than they are getting rich. As a graying middle income country, they are worse off than Japan or Taiwan or Korea, places that that actually managed to become broadly developed and wealthy before needing to navigate population aging.
Sure, China received some temporary benefits from having an artificially low dependency ratio. That is over, the demographic payday loan is coming due.
India's low dependency rate positions them well for the next 50 years, as China flails in a demographic crisis caused by the CCP.
Going to enjoy holidays after one effort post. Only 1 of 2 extremely large country has gotten reasonably developed while starting from same level, hint: it's not India. Nigeria useful measure, because Nigerian income level is comparable to the few 100m left behind in PRC, that's the human develop cost of not concentrating resources and being stuck in informal economy. In terms of actual development, PRC not unique, just generic competent authoritarian directed export led growth. It was fact the only viable modern growth model, for small/large countries, PRC simply had to execute much better because they don't have luxury of only mastering a few sectors but all of them due to scale, and even now mastering almost everything, PRC still has too many people than high skilled opportunities. There is no other proven/repeated development model for no resource states, well except more authoritarian colonial exploitation, which you know is worse.
>old before rich
PRC can inflate RMB a few % and instantly be high income AKA rich as defined by world bank, ultimately the old before rich is retarded single dimension analysis. PRC is young/rich, old/poor society, which is much better setup than JP/TW/SKR for the simple reason PRC old (who also has 95%+ home ownership and high savings) are disproportionately poor and therefore cheap to caretake by the increasingly affluent young. It's more optimized vs advanced economies where welfware costs is uniformly unsustainably expensive to maintain. For reference bottom 2/5 of PRC, i.e. 500m constitutes 5% of GDP, every new skilled worker with multiple times more productivity to take care of multiple subsistent farmers and informal workers who are fucking poor and have little expectation to begin with. Also helps that PRC is... actually incredibly rich, in terms of manufacturing abundance, aka material richness. PRC old/poor, young/rich is one of the greatest caretake arbitrage opportunities, they wouldn't have been double fucked if they were old/rich, young/rich. BTW old before rich projection, PRC demographers already anticipated it, hence the family planning and zerg rushing for mass manufacturing and high end industries. One more thing to consider, every old/poor that drags down per capita average that dies (and they die first) will move per capita towards young/rich, i.e. for PRC to be statistically rich per capita in a few years, all they have to do is nothing but wait for old/poor to die.
>coming due
After you and I are dead. Their payday loan is the greatest high skill demographic dividend in human history, with actual system to capitalize on talent. They're going to have roughly OCED combined in just STEM in next 20 years, that workforce going to stick around until 2060s/70s+, aka they have basically 50 years to build dominance, and 30-40 years to figure out demographics. And btw this reality is based off PRC having effective 800m pop (again 500m are functionally Nigeria useless), they can afford to shed 500m useless mouths and still maintain advantage. BTW PRC 2100 demographics is ~2nd largest country, i.e. they will still have have massive human capita advantages, assuming they don't fix TFR, which of all countries with proven family planning systems, they're most likely to succeed.
>India's low dependency
Low demographic dependency doesn't matter if young/poor can't handle old/poor. NVM Indian TFR in most developed regions also crashing below TFR. Remember that stat PRC, despite being magnitude more successful at development than India still left with 500m surplus poor people, i.e. 40% of population. India is going to have 1000m-1200m out of 1700m, if they're lucky - that 30% stunting, 20% wasting is going to toast a lot of workforce. Most likely they're even more fucked because they couldn't capitalize on mass manufacturing now that labour saving tech is proliferating and AI is eating service. So you're looking at country where future profile is 7 Nigeria's and 1 Japan. Forget old ate dependency ratio, their young is going to be poor, underemployed, and restless. AKA the exact scenario PRC family planning was trying to avoid on a very condensed timeline. Again it's not like Indian didn't try to cap population via own sterilization / family planning policy. They simply failed and now they're heading into PRC demographer doomsday scenario, old/poor and young/poor. That's India's position. There will still be pockets of Indian rich but when demographic payday comes due PRC will be mostly rich taking care of poor vs India mostly poor/old/young vs few rich. Having mostly poor will also fuck a lot of other development goals, i.e. don't expect India to fix their air pollution anytime soon. Just like PRC old/poor, young/rich was locked decades ago, Indian old/poor, young/poor is more or less locked in due to their development velocity (lack of) and tfr trends.
Meanwhile most of advanced economies will struggle to fund social welfare nets where young/rich eat shit in inverted social contract to caretake old/rich(er) at their expense, i.e. new gen will be materially worse off than old gen. Ultimately PRC can on paper afford to caretake for old/poor, vs advanced economies on paper cannot afford to caretake for old/rich. India crashing TFR is old/poor + young/poor double shit sandwich. Everyone be flailing but guess who'll flail least. The flailing China is going suffer is old poor retiring in abundance they never dreamed of while everyone else likely regress vs past.
My opinion is still that capitalism (Western style) will win. Not because markets are never wrong but because the scope for fucking up is so much less. Markets can't decide "families can have only one child" or "we need to build 90 million units of housing" (that now sits empty). An accumulation of fuck-ups in this vein is inevitable when you have a small group of people making these kinds of decisions. In the long run, it will be fatal.