Is China Winning the Race for Resources?: Ronald Bailey at Cato Unbound

China Overpays: Still In Thrall to Failed Ideology of Central Planning, Argues Ronald Bailey


Cato Unbound

I am participating in an online discussion over at Cato Unbound on the headline question with economist Dambisa Moyo, author of Winner Take All: China's Race for Resources and What it Means for the World, Justin Logan, Cato's director of foreign policy studies, and Ian Bremmer, the president and founder of Eurasia Group. Each of us has contributed an essay addressing the issue and my essay—China Overpays: Still In Thrall to Failed Ideology of Central Planning—just went live.

Among other things, I point out that commodity prices have already fallen nearly 50 percent from their economic super-cycle peaks. I conclude:

Moyo makes the same mistake as China's leaders in taking the current super-cycle's recent run up in commodity prices sparked by China's own economic development as signaling permanent scarcities in natural resources. She is, however, surely right that in order to maintain power China's Communist Party leaders "must continually move the population to better living standards," or at least claim credit for doing so. But wasting money by overpaying for natural resources abroad instead of investing in productivity enhancing innovation and education at home will not achieve that goal. The Party leaders evidently are still in thrall to the failed ideology of economic central planning and the ultimate results of those policies will not be pretty.

All four of us will be responding to and discussing each other's arguments and insights for the rest of the month. Go here to read and comment on the discussion.

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    /panicky progderp

    IN 1798 Thomas Robert Malthus inaugurated a grand tradition of environmentalism with his best-selling pamphlet on population. Malthus argued with impeccable logic but distinctly peccable premises that since population tended to increase geometrically (1,2,4,8 ) and food supply to increase arithmetically (1,2,3,4 ), the starvation of Great Britain was inevitable and imminent. Almost everybody thought he was right. He was wrong.
    In 1865 an influential book by Stanley Jevons argued with equally good logic and equally flawed premises that Britain would run out of coal in a few short years’ time. In 1914, the United States Bureau of Mines predicted that American oil reserves would last ten years. In 1939 and again in 1951, the Department of the Interior said American oil would last 13 years. Wrong, wrong, wrong and wrong.
    “Plenty of Gloom”, The economist Dec 18th 1997

    1. Remember when Japan Inc was gonna own 9/10 of the US and we were all gonna have to learn Japanese?

  2. Derp.

  3. Is Japan Winning the Race for Prime Real Estate?


    1. Friend back then: “You know the one thing you can never get more of?”

      Me: “Matter?”

      Friend back then: “……uh, REAL ESTATE!”

      1. The backstory – he’s dead, and I’m still not in the real estate bidness….

      2. “You know the one thing you can never get more of?”

        I would have said “intelligence”

      3. I wonder about the possibility of a chain of volcanic islands arising out of the Pacific (or Atlantic) ocean anytime soon.

        1. Maybe one that can become a state and a popular tourist destination?

    2. Oops.
      Shoulda read farther down.

  4. I wonder what the political consequences of China’s looming economic disaster will be? They have a kind of middle class now, which really likes to revolt when the cash stops flowing.

    1. Not to mention that they have 15-20 million “excess” men due to the “one child” policy… It will be interesting to see what happens when their bubble pops.

  5. This seems like one of those questions that don’t merit getting bogged down in the details, like asking whether or not a particular perpetual motion machine will work. Resources ultimately flow to the one making the best use of them, you simply cannot continue wasting resources on lesser-value outputs for forever. In order to believe that China is making the best use of resources you would have to believe that satisfying the wants of the few are a better use of resources than satisfying the wants of the many. The many are going to win, sooner or later. All the (few) experts agree that Saks Fifth Avenue and Ruth’s Chris Steakhouse are better than Walmart and McDonalds, just as a Rolls Royce is better than a Ford Taurus, but which one does the (many) common man insist get the resources?


      1. Is that the new name that Santa now uses?

  6. … failed ideology of economic central planning ….

    TOP. MEN.

  7. As long as they use those resources to make cheap stuff for us to buy, then I’m fine with it. Especially if their government subsidizes it. That must makes the stuff even cheaper. Sucks for the Chinese taxpayers, but hey. Why should I care?

    1. It’s a wretched shame that mercantilism has not died the ignominious death it deserves.

      1. The problem is that arguments against it require actual thought to understand, and most people would rather emote (They’re stealing our jerbz!).

  8. Does 21.5 million valid American social security numbers qualify as a resource?

    1. Naw, Social Security is broke

      /end joke.

      1. You know who else ended a Social Security joke thread too early?

    2. We’ll know in about six months when the Chinese Navy unveils its new fleet of Bayliners.

  9. I make up to $90 an hour working from my home. My story is that I quit working at Walmart to work online and with a little effort I easily bring in around $40h to $86h? Someone was good to me by sharing this link with me, so now i am hoping i could help someone else out there by sharing this link… Try it, you won’t regret it!……

  10. “The Party leaders evidently are still in thrall to the failed ideology of economic central planning ”

    So is Thomas Friedman.

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