Central Planning vs the market

[RGBVideo]

China and to a lesser extent India have been using their national industrial policies to kick our asses.

2009 World Bank GDP figures (nominal, millions $)

United States - 14,119,000
China - 4,985,461
India - 1,377,265

World Bank 2009 per capita GDP figures (nominal, $)

United States - 45,989
China - 3,744
India - 1,192

How exactly are China and India kicking America's ass?

I think it's an excellent point. China was practicing centralized control over economy a la Soviet Union in the early 60s-late 70s. It turned into one of the poorest countries in the world. In 1979, under Deng Xiaoping's leadership, it started gradual reforms into a free market-based economic system with less and less government control. After that, it's economy has been booming. Thanks for proving that centralized control of the economy leads to stagnation and economic freedom to economic growth, Oerdin!

If you're arguing that protective tariffs or similar protectionism are behind industrialized growth in China (what Pat Buchanan has been saying since ca 2005), that's a different argument. Tariffs vs. Free trade on the international scene / controlled economy vs. free-market economy. They are separate policy dilemmas. China is catching up rest of the world because it has been a planned economy with such a low base GDP for such a long time.

Realpolitik is a zero-sum game

Economic trade is not a zero-sum game. If another party in a two-party trade deal would lose, it would not engage itself in that single economic exchange in a free market. Or do you mean that US should suffer from a GDP loss if it could ensure that China would suffer from an even a greater GDP loss ("yeah, let's lose but the other guy loses EVEN MORE")? Unless you can build an international coalition of trade sanctions, the only consequence is that China replaces US as a trade partnership with other countries with which it enjoys free trade agreements and US is the only country that loses.

I just dont know yet if I'd call it central planning when the state intervenes in the economy to counter a market distortion created by another intervention.

Ohh, dear. Do you mean that the state should intervene to counteract perceived price bubbles (which have been created by free people in the market)? Want to offer an example where you could see this as a smart move?

[DaShi]

*cough*2008 financial crisis*cough*

[giblets]

I think it's an excellent point. China was practicing centralized control over economy a la Soviet Union in the early 60s-late 70s. It turned into one of the poorest countries in the world.

What do you mean, "turned into"? Do you think China wasn't poor before Communists took over?

[RGBVideo]

http://www.wolframalpha.com/input/?i=real+gdp+rate+china

We'd need some graphs where real GDP growth is compared vis-a-vis China vs. the world to prove my point, but I can't be arsed to find them. IIRC China started going down vs world average in the late 50s and continued going down until early 80s (I've seen a few graphs back when I was reading schoolbooks illustrating how planned economies affect GDP). Maybe I'm wrong. Try google if you're interested.

You're right if you mean that Chinese real GDP per capita has almost always lagged world average real GDP per capita, but I was talking about how the GDP has developed in relation to world average.

[giblets]

China had been declining relative to the rest of the world since the 19th century. Their position relative to the world did not change much under Mao.

[Berzerker]

Ohh, dear. Do you mean that the state should intervene to counteract perceived price bubbles (which have been created by free people in the market)? Want to offer an example where you could see this as a smart move?

What Oerdin described was not a price bubble created by free people in the market

[Perfection]

Market forces work when there's a free and fair market.