An Interesting Defence of Capitalism in the Face of the Financial Crisis

Since conservative Americans are deemed too boorishly provincial to defend our capitalist system (yes, The Elitist Snob is ahead in the polls,) it’s noteworthy that Chan Akya is doing so in Asia Times Online.

The article deserves an full read, but some snippets.  First, a different source than usual for this debacle:

Just so we are clear though – the entire charade can be traced to the decision of Asian central bankers (or more importantly their governments) not to float Asian currencies. In a free-floating system, Asian currencies would have appreciated sharply, rendering returns on US government securities too low to bother. This would have shifted up meaningfully the US yield curve, destroyed the basic mortgage math of a few million Americans (that is, made mortgages too expensive for them), and thus failed to create the hundreds of billions in mortgage-backed securities that now swirl around the world.

Some on the other side of the Pacific would like to solve this problem by essentially reverting to interventionism, but Chan Akya shows that interventionism is what got us into this mess to start with.  It’s interesting to compare this to Kissinger Associates’ President Paul Speltz’ remarks on the need for Asian financial systems for more openness after the 1997 crash. It’s also worthy of note that the same argument can–and has, in the Village Voice no less–been made here.

The second is a litany of problems of state controlled economies:

  • Let us recall the standard of living of Russians when the Soviet Union collapsed under the sheer weight of lies imposed by communism in the early 1990s, their long bread queues, the low fertility and longevity rates and so on.
  • What about those socialists? Think of the shortages of coal and fish in Britain thanks to hare-brained socialist policies: an amazing achievement for an island country surrounded by fish and bedded on coal.
  • Spare a thought for the millions of people in Zimbabwe who suffer from hyperinflation, corruption and government oppression thanks to an interventionist geriatric sporting a Hitler-style moustache and espousing Leninist nonsense.
  • The income and wealth gap that opened up between India and South Korea from the 1950s to late-1980s, when the 3.5% annual growth of India left hundreds of millions in abject poverty. This is by far the greatest statistical evidence of the gap between capitalism and socialism in terms of trickle-down wealth effects.
  • The opening up of the Chinese economic system to capitalist forces by Deng Xiaoping, which ushered in one of the greatest periods of economic transformation ever witnessed on the planet. As a communist state with Maoist principles, it is unlikely that the Chinese economy of today would be even one-third of the size that it is.

Having seen some of this up close myself, I can attest to to the fact that we have no business forgetting such things.

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