World Bank memos

Henry C.k. Liu hliu at
Sat Dec 5 08:13:33 PST 1998


The problem with this type of debate is that it permits one to skip over an opponent's strong arguments and select detail openings to rebut, thus giving the unjustified impression that one's overall view is more valid. We are both guilty of taking advantage of this technique. Having said that, let me show you why you are wrong, ;-).

Enzo Michelangeli wrote:

> I'm talking about free markets, and the economic advancement they allow: not
> only to the the tycoons-without-a-degree, but also to those common people
> with a "decent job", who get their two or three thousand US dollar a month
> (after tax) as bank employees or accountants, instead of slaving in the
> fields or over production lines as their cousins in China do.

Henry rebuts: There is now a reverse daily and monthly commute back into China from HK as well as reimmigration because of high unemployment and lack of business opportunities in the current economic recession in HK. Many HK people are in fact moving to Shenzhen when rent and food is cheaper to commute daily to HK to work. Chinese tourists who spend money are promoted and welcome in HK. Also, you are stretching it to call HK a free market rather than the oligarchy that it really is. Also, the high wages (which is coming down very fast, faster the comsumer prices) in HK are neutralized by higher cost of living. There are higher rate of suicides and family violence due to financial pressure in HK than on the mainland. Capitalism has certain wealth production efficiency, but it is the excessively unfair distribution of these benefits and its structural nature that make capitalism both evil and self-destructive. That is why America adopted the the graduated income tax, to remedy this structural defect of capitalism. The GIT was first proposed by Adam Smith in 1776, the year of American independence.

> $9b spending spree turned up by auditors
> So much for the beneficial effects of state ownership.

What about LTCM, Berrings, the Savings and Loan Crisis, the nuclear energy industry, the insurance industry, defense waste, even scandals in the baby food industry. Fraud is everywhere, not only under socialism. The Grain account scandal showed precisely it was a Confucian structural type of social corruption and not one or two bad individuals pocketing the cash to lie on the beach in the French Riviera.

> >> If returns on investment were as large as you say, nobody would
> >> produce a single pin in America or Europe anymore.
> >
> >They don't. Have you noticed everything we buy in New York is made in
> China?
> So what are these American workers I keep hearing people talking? Has GM
> relocated to China? Is Boeing producing in Indonesia?

They are try hard relocate to China if China would open its markets to them. GM has invested over US$2 billion in China already and Ford and Daimler/Chrysler are competing fiercely to follow. GE has over US$1 billion in China. Boeing is laying off 48,000 workers because of the Asian crisis.

> I think you are kidding. Just last week, Legco has blocked changes to the
> current rules about electricity generation, not to "discourage the
> investors".

That is precisely my point. HK's "free market" requires a higher rate of return to capital than in China. HK should just buy electricity from China at low cost and forget about generating its own at high environmental abuse. The independent power source strategy was merely a left over relic of the Cold War and British colonialism For once, you got it right, ;-)

> >Is that an argument for pollution, that poor people will put up with it?
> It's a fact of life. Is China less polluted than HK? Was Eastern Germany
> less polluted than Western Germany? You may argue against inequalities (and
> I believe that the best way of smoothing them is through free trade and open
> markets) but when it comes to path of development, you should acknowledge
> that nobody has yet come out with a solution better than industrialization,
> with all its initial unpleasantness.

Nothing is just a fact of life. Humans are their own masters. We can ban environmental and labor abuses. Humans can make rational decisions under free enterprise, remember, you said so yourself.

That fact is: market capitalism is not as desirable as you claim and socialism is not doomed to fail as you predict. I can even understand why rich capitalists support capitalism because they are well rewarded by it, although many with a conscience have reservations and try to buy self respect through philanthropy. But I find liberal think tank propaganda to poison the unknowing middle and working classes obscene. Telling the slaves that slavery is good for them just does not wash. What I resent most in that the pervasiveness of market capitalism forces a lot of good people to participate in bad activities just to survive. A good social system should be one that ordinary people can do good things naturally, and not to have to play down their guilt in order to survive.

Note the emergence of socially conscious mutual funds in America. Do you think these investors hate money?

Don't forget to change the filter on you air conditioner. I want you to stay in good health to continue the debate,



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