printWhat a disgrace. For the past few days I’ve heard assorted American economists and commentators—socialists all—complain bitterly about the Chinese saver. Yes, the Chinese may have a democracy deficit, as American politicians never cease to remind them, but they don’t believe in debt, personal or national, as do wastrel Americans and their political overlords.
This is one reason why the Chinese economy is exploding: savings, capital accumulation, and investment are the very lifeblood of a healthy economy. Solvency and fiscal prudence are virtuous qualities, and, in the long run, lucrative.
The Chinese save up to 40 percent of their Gross Domestic Product. In fact, they behave exactly like individuals in a truly free-market would behave; they save like there is no tomorrow. Or, more appropriately, like there is no welfare state, which, indeed, the Chinese don’t have. Or if they do have social programs, these don’t meet American standards of socialism.
Or so our leading lights have been claiming throughout the week of President Hu Jintao’s visit: The reason the Chinese save so energetically is because they don’t have an adequate welfare system, the pointy-heads have puled.
Yes, this is the message from the land of rugged individualism: develop more government programs. Of course, these do no good, other than for the bureaucrats that administer them. They are, moreover, based on immoral distribution. Yet this is what we wish on China.
I guess it’s a case of “leveling the playing field”—another expression that is often lobbed at the Chinese. Translated, it means wanting to see one’s rival sapped of his vitality too.
That the Chinese plan their lives as though there were no government hand-outs to rely on has incenses American economists and commentators (at least the ones I’ve had the misfortune to hear this week). They want Bully Bush to put pressure on Hu Jintao to set up some programs for his people, and, by so doing, make them more like us: inclined to spend, because of the knowledge that Uncle Hu will pick up the tab (like Uncle Sam does so magnificently. Think Katrina).
As Henry Hazlitt reminded us in Economics in One Lesson, and as the Austrian, and classical economists before them, taught: “The rational saver, in making provision for his future, was not hurting, but helping, the whole community.” Money isn’t stored under the proverbial mattress, it is invested either directly (by buying securities) or indirectly (via the bank, which lends deposits out), thus creating steady, sustainable growth.
However, even if all Chinese were sitting on their money—a ludicrous proposition—isn’t it theirs to hoard? What about the individual’s right to keep what belongs to him without being punished by central planners and social engineers? Anyone who openly advocates such tweaking has a cheek waving his “Land of the Free” credentials in the faces of foreigners.
Since they must fend for themselves, absent government largess, the Chinese are probably the best barometers as to the true state of our intricately linked global economy. Do as they do!