Thursday, 30 July 2009

The Western world's Great Leap Forward

Students of history will likely be knowledgeable about the Great Leap Forward. This was the great centrally directed plan of Mao Zedong's "government" [read despotic autocracy] to transform the structure of the Chinese economy from one that predominantly produced, consumed and was employed in agricultural industry on a small or individual enterprise basis into one in which consumption, employment and output was more oriented towards heavy industry and employing mass production techniques.

The plan was to simply direct everyone, collective organisations (the Communist equivalent of western companies) and individuals to produce steel predominantly, but also other industrial processes

So how did it pan out? For those of you who don't know, not too well. To say the least. Tens of millions starved to death, the population went into decline. There was homelessness and all round severe deprivation. Not for Mao or his cronies of course, but everyone else.

Fast forward 50 years and the liberal Western world, who always knew such government intervention in economies was stupid to say the least (aren't we clever), seem to have decided that a Great Leap Forward is required for ourselves. I should be more specific about this. It is the environmental lobby and their political partners in crime who have decided that is our required medicine.

Climate change and jobs top priority
House to vote on cap and trade bill

Are just two examples, but pretty much all of Europe and the wider Western world is in on the fun.

Make no mistake, this is our Great Leap Forward. Governments and lobby groups who are convinced that we need and can affect a change in the nature of our economies and improve our welfare. They will follow the same Chinese game plan with some modern liberal economic twists and:

  • Autocratically direct what may or may not be produced. For example, we must produce electricity from anything but coal, we must not use cars, we must use CFL light bulbs etc.
  • Direct us to consume certain things. Examples as above via direct means, but also indirectly by taxing us and spending the money for us on all manner of "green" initiatives through government budgets.
  • The additional twist is that we use markets to help determine prices and so governments will attempt to use that mechanism to further advance the policy via carbon taxes, emissions permit trading etc. The objective being to make "bad" things more expensive so that we consume, produce and draw employment into "good" things.

Of course the results will be the same. The larger the change governments try to affect the more ruinous the affects on our economic welfare will be. And we are not just talking about falling wages and salaries. We are looking at reduced total income across the economy available for the things we like to provide for ourselves centrally, like good education systems, good health systems and decent welfare systems among other things. We will be able to afford less of all this stuff because we will not be as well off.

So go ahead and support your local Green/Left lobby group or NGO. But read a little about the Great Leap Forward. Better still, talk to a Chinese person, ideally someone alive in the 1950s, if you are able. You might find out why China appear less willing to follow the Western lead on this and appear far more economically liberal than us. I suppose they've been there, done that and have the T-shirt.


Fungus FitzJuggler III said...

It was a failure in its stated aims. But when did an Emperor ever tell the truth?
As a result of that and a thousand flowers blooming, we now have a very cheap manufacturer of all our trinkets! We also have a new chinese aristocracy as the new millionaires are the non-political offspring of the PLA abnd ChiComm who run the Chinese empire. They too will provoke a further change! Care to guess?
Sadly, Laos did not have such a wise emperor and ended up with the killing fields and one third of the population were slaughtered.
Rwanda is another example of a society that did not manage itself well. China doubled in physical size after the second world war. Tibet and Sinkiang.
Name one other regime that did so well?

emullally said...

It looks likely that the age of cheap energy will come to an end in our lifetime. This is not just because of greenwashing (carbon taxing etc). We are at a time when fossil fuels are peaking but consumption will continue to increase dramatically as developing countries increase their Standard of living (e.g. Nano car, $100 laptop). The B.R.I.C countries are currently growing the most rapidly in the world. If we do not ween ourselves of imported energy we are going to sink into a black hole. A great leap forward, I say get ready for a gently shuffle backwards as we learn to live in an era of very expensive energy.