“The world is flooded with Chinese products and the United States, Europe and Japan are right to be worried. » These are the first words of a recent Washington Post editorial about Chinese production. The bet is that the editors of the editorial might be induced to reconsider their pessimism. Production is bullish, by definition.
If the Post editorial board disdains really extensive Chinese production for the rest of the world, those same editorialists disdain the hard work department that is the basis of all productive progress. By extension, it behooves the Post editorial board to be dismissive of the automation of paintings and ideas that awaits us, since what improves human productivity (the automation of paintings and ideas) promises Herculean leaps in productivity for humans. United States, Europe, Japan and China, which will impoverish the supply in comparison.
It doesn’t matter if those who produce for us are on the other side of the street or on the other side of the world. What matters is that there is increasing production and quantities. To the extent that it exists, we all build ourselves up as the prices of goods and minimize along with our chances of making the paintings that are most affiliated with our unique skills and intelligence skyrocket. This is the case because imports, as well as the exchange of paints, allow us to specialize more and more, and when we are able to specialize, we are able to produce exponentially, so that our remuneration skyrockets.
The editorial goes on to report that “China’s exports overall grew about 13 percent last years,” and that the latter was by central decree. In the words of the editorialists, “China’s economy remains in the doldrums,” and “In hopes of pulling the country out of this hold, Chinese leaders are stepping on the gas for exports.” The bet here yet again is that the writers could be persuaded to rethink their pessimism about production and exports, including Post columnist Heather Long.
Recently, Long aired the aforementioned op-ed with a confident comment in which he stated that “China’s economy is suffering, and instead of encouraging Chinese consumers to buy more, President Xi Jinping is again seeking to reduce other countries’ costs by expanding their exports. “Perhaps she can also be persuaded to reconsider her analysis.
For one, if China’s would-be central planners or producers were really “trying to undercut other countries,” they wouldn’t be doing it by “ramping up exports.” Quite the opposite. It’s a lack of production outside a country that saps that same country’s economic vitality. Again, work divided is the biggest driver of productivity leaps, and nothing else comes close.
Second, we can never emphasize enough that producing is importing. In other words, there is no “increase in exports” without expanding imports. To be sure, Long and his fellow columnists can simply respond that because of the desperate poverty that was the norm in China not so long ago, the Chinese had a tendency to limit their exports. That’s fine, but even if it were true, no act of saving decreases demand. The stored cash is immediately loaned through monetary intermediaries (opinion banks) to those who have short-term customer desires. What is not spent through the productive ones is immediately transferred to those that will.
Which brings us to the editorial’s assertion that “China’s economy remains in the doldrums,” and that “The Chinese economy is struggling” (Long). Both assertions are rooted in the belief that the Chinese aren’t matching their production with consumption. No, that’s an impossibility. Bullish production is consumption, always and everywhere. China’s problem is economists, and their models, not its economy.