Obama Buddy Advocates Socialism

I was just going to write WSJ publishes op-ed advocating socialism, but then I realized who the guy was.

The author of this piece is Andy Stern.  According to Wikipedia:

Andrew L. "Andy" Stern (born November 22, 1950), is the former president ^{[7] [8]} of the 2.2 million-member Service Employees International Union (SEIU)

[...]The union spent another $85 million on Democratic candidates in 2008; $60 million going toward the election of President Barack Obama,^[29] with a significant chunk of that money funding door-to-door canvassing and other GOTV efforts,^[30] as well as voter registration.

[...]Stern has been a frequent visitor to the White House since Obama's election.^[32][33] Between Inauguration Day and February 23, 2011, Stern visited the White House 53 times.^[34]

I believe he was actually the number one visitor at that time.

Anyway, here's part of what he wrote in the WSJ:

For me, the tension resulting from the chorus of American criticism paled in significance compared to reading the emerging outline of China's 12th five-year plan. The aims: a 7% annual economic growth rate; a $640 billion investment in renewable energy; construction of six million homes; and expanding next-generation IT, clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection—all while promoting social equity and rural development.

[...]Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5% annual growth and 49% growth in annual tax revenue, with wages rising more than 10% a year.

Ahhh, yes, a "five year plan." What could go wrong with that?

Anyway, Mr. Stern's complete ignorance of history aside (he's teaching at Columbia now: stay away,) let's take a look at China's actual economy.

Firstly, Stern talks about China's gdp. 

Folks, if China's gdp numbers were a Thanksgiving turkey, it'd be done. They cook those numbers beyond belief.  Here's the thing: Chinese stimulus spending is counted as part of their gdp.

Let's take a look at what they're actually spending their money on:



Now, if gdp were really growing at the rate they state, wouldn't demand be matching up?

Well, it's not:

Private consumption growth has slumped to 0.3 per cent in Q1 from 2.6 per cent in Q4 of last fiscal. Growth in investments has plummeted to 3.7 per cent. Government consumption growth is negative. The data is at odds with strong anecdotal evidence of consumer demand.

Now lets take a look at China's actual debt.  They manage to hide a lot of it.

Telegraph:

Chinese provinces are, in some cases, equivalent in size to major European countries and run with a degree of fiscal autonomy. The southern province of Guangdong, for example, has the same population size as Germany.

However, provincial budgets have been classified as state secrets until now and this is the first time that China has disclosed the level of local government debt.

Mr Liu said the ratio of debt to disposable revenues at some local governments was over 100pc and in the highest case it was 365pc.

He said the audited debts of 18 of China's 22 provinces, together with 16 cities and 36 counties amounted to 2.79 trillion yuan (£279bn) in 2009.

Several observers believe the situation is far worse. The China Daily newspaper, which is run by the government, suggested that the total sum could add up to between 6 trillion and 11 trillion yuan (£590bn-£1.08 trillion).

Victor Shih, a professor at Northwestern University in the United States, believes the sum in 2009 was 11.4 trillion yuan, equivalent to 71pc of China's nominal GDP.

Their government-run corporations are also laden with debt.

Op-ed News:

[L]ocal-government investment companies had a total of $1.7 trillion in outstanding debt at the end of 2009, or about 35% of China's GDP. Banks have extended $1.9 trillion in credit lines to local investment companies on top of that. Collectively, the debt plus the credit lines come to $3.8 trillion. That is about 75% of China's GDP, which is proportionately quite a bit smaller than U.S. GDP. None of this is included in the IMF's calculation of a gross-debt-to-GDP figure of 22%, says Shih. If it were, the number would be closer to 100% of GDP.

Sorry Mr. Stern, the facts don't bear out your wishful thinking, although I'm sure you'd love socialism so you and your all-knowing bureaucrat buddies could be in charge of the economy.

Just for good measure, let's take a look at a handful of other problems in China:

Inflation is ramping up.

Lead poisoning is a major problem.

They keep secret files on all their citizens

You want to talk about 99% vs. 1%?: "About 90 per cent of China's billionaires are the children of high-ranking officials."

Their urban/rural income gap is at a 32 year high.

They kill girls.

They rank 95th in per capita gdp.

How is their banking system?: "Analysts said that their working assumption had been that a minimum of 30 per cent of the total Rmb7,700bn ($1,100bn, €875m, £732m) bank lending to Chinese local governments was unlikely to be repaid."

What about the black market economy their overbearing state creates?: "China's households hide as much as 9.3 trillion yuan ($1.5 trillion) of income that is not reported in official figures, with 80% accrued by the wealthiest people, a study showed."

And so on and so on.  Mock trials, summary murders, etc., etc.