Monday, September 29, 2008

Conflicting memes

So John Gray writes in the Guardian:
Ever since the end of the Cold War, successive American administrations have lectured other countries on the necessity of sound finance. Indonesia, Thailand, Argentina and several African states endured severe cuts in spending and deep recessions as the price of aid from the International Monetary Fund, which enforced the American orthodoxy. China in particular was hectored relentlessly on the weakness of its banking system. But China's success has been based on its consistent contempt for Western advice and it is not Chinese banks that are currently going bust. How symbolic yesterday that Chinese astronauts take a spacewalk while the US Treasury Secretary is on his knees.
And this is seen as a sign of China's triumph and America's decline.

Well, okay. But while China's national government can, with a non-trivial commitment of GDP and educated workers launch a series of successful manned missions 40 years after the US, American billionaires are funding their own successful orbital launches for funsies. (Not quite, but you get my drift.)

So is America hobbled, stumbling in to the oblivion that all empires face against a rising power? Or is China still so backwards that it takes substantial and sustained national efforts to exceed the successes of individual American entrepreneurs? Both? Neither?

I think it's a reasonable point that America looks kind of wobbly at the moment, but if our self-selected anecdotes were statistics they'd have a margin of error of plus or minus 100%.

1 comment:

Flocons said...

I've seen China's banking system firsthand at the branch level. It's rather frightening. I believe only one of the major banks were "connected" between cities, in that if you had an account in Beijing, you would not be able to link up to your account in Shanghai.

Business owners have to constantly deal with cash, as cheques are not commonly accepted due to counterfeit issues... so business people have to carry large amounts of cash in briefcases back and forth to the bank with armed guards.

Also, there is a lot of red tape when dealing for foreign currency exchanges as China wants to discourage the use of foreign currency in the mainland. As a result, a lot of businesses go through Hong Kong banks to bypass the craziness.

My opinion is that China's banking system probably couldn't handle a major stress test like the American banking system is currently going through... but the Chinese government would never let it come to that before some kind of intervention.