Once the system is tightly integrated enough, it stops mattering. Der fuhrer Trudeau and his corporate sponsors own all print and broadcast media thanks to massive conflicts of interest in funding, and those media conglomerates pass on whatever messages they demand.
This level of power accumulation isn't likely to end well, and it's likely to blow up soon, in part because the shit they're pulling is starting to have real global consequences. Central planning doesn't work, and it isn't different this time.
This level of power accumulation isn't likely to end well, and it's likely to blow up soon, in part because the shit they're pulling is starting to have real global consequences. Central planning doesn't work, and it isn't different this time.
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By the numbers, corporations don't prove that central planning works. Most corporations fail, and as time goes on the failures mount. 18.4% of private sector businesses in the U.S. fail within the first year. After five years, 49.7% have faltered, while after 10 years, 65.5% of businesses have failed.
The decentralized nature of having an unlimited supply of corporations is the only thing that saves capitalism as a whole. When one corporation makes a mistake and fails, there's a bunch of other companies that were run differently that can swoop in, buy the assets cheaply, and maybe succeed (at least for a while).
That's one reason why monopolies are so dangerous -- you've got one centralized authority making decisions, and if it makes the wrong decision then everyone suffers. Without other companies acting in different ways. Without competition, when the company fails, everyone's in trouble.
The nation-state has a geographical monopoly. You can't choose between two or three different nation-states without leaving the place you live in. And when the nation-state fails (or the nation-state causes the entire economy to fail by treating it like a single corporation through central planning), everyone's in trouble.
Incidentally, you chose China as a success, but it sort of proves my point. Mao's great leap backwards killed tens of millions of people. That's not a success. And the ultimate success of China's economy didn't come from central planning, it came from decentralized markets which ended up being some of the most free markets in the world for a relatively short period of time. Now Xi Jinping is talking about a return to central economic planning, I expect we'll see a return to the bad old days in China.
Of course, China also has one of the problems that don't always look like problems.
Central planning is a force multiplier. By having everyone forced to do the same thing, good policies end up doing way better, but bad policies end up doing way worse. So is debt.
During the good times, debt feels great -- it's like cocaine. Problem is, during the bad times debt feels terrible -- it's like cocaine withdrawal. The Japanese economic miracle came about in large part because of massive amounts of debt that have now crippled their economy for decades, and China's economic miracle was similarly fueled. And while it looked great for everyone while the debt was being spent, now that debt isn't as available it's starting to destroy the Chinese economy.
When a company makes bad decisions and finances them with debt, it goes bankrupt. Some people lose their jobs, but ultimately that's the end of it. By contrast, when a nation makes bad decisions and finances them with debt, there's no going bankrupt. The choice are to default, to inflate the currency, or to buckle down with austerity. Each of these options causes mass hardship on the common man who ultimately pays for the largesse of the central planner.
Now, debt can be used for good reasons and can cause overwhelming returns on capital, but let's go back to the numbers -- on a long enough timeline, the mortality rate for everyone reaches 100%, and the same is virtually inevitable for companies, and the same is virtually inevitable for centrally planned economies. Eventually you make an incorrect decision, and you go all-in on it, and everything blows up and you're stuck taking one of the bad options.
And since we've got an oligopoly of states colluding together, all making the same decisions, we're all in trouble.
The decentralized nature of having an unlimited supply of corporations is the only thing that saves capitalism as a whole. When one corporation makes a mistake and fails, there's a bunch of other companies that were run differently that can swoop in, buy the assets cheaply, and maybe succeed (at least for a while).
That's one reason why monopolies are so dangerous -- you've got one centralized authority making decisions, and if it makes the wrong decision then everyone suffers. Without other companies acting in different ways. Without competition, when the company fails, everyone's in trouble.
The nation-state has a geographical monopoly. You can't choose between two or three different nation-states without leaving the place you live in. And when the nation-state fails (or the nation-state causes the entire economy to fail by treating it like a single corporation through central planning), everyone's in trouble.
Incidentally, you chose China as a success, but it sort of proves my point. Mao's great leap backwards killed tens of millions of people. That's not a success. And the ultimate success of China's economy didn't come from central planning, it came from decentralized markets which ended up being some of the most free markets in the world for a relatively short period of time. Now Xi Jinping is talking about a return to central economic planning, I expect we'll see a return to the bad old days in China.
Of course, China also has one of the problems that don't always look like problems.
Central planning is a force multiplier. By having everyone forced to do the same thing, good policies end up doing way better, but bad policies end up doing way worse. So is debt.
During the good times, debt feels great -- it's like cocaine. Problem is, during the bad times debt feels terrible -- it's like cocaine withdrawal. The Japanese economic miracle came about in large part because of massive amounts of debt that have now crippled their economy for decades, and China's economic miracle was similarly fueled. And while it looked great for everyone while the debt was being spent, now that debt isn't as available it's starting to destroy the Chinese economy.
When a company makes bad decisions and finances them with debt, it goes bankrupt. Some people lose their jobs, but ultimately that's the end of it. By contrast, when a nation makes bad decisions and finances them with debt, there's no going bankrupt. The choice are to default, to inflate the currency, or to buckle down with austerity. Each of these options causes mass hardship on the common man who ultimately pays for the largesse of the central planner.
Now, debt can be used for good reasons and can cause overwhelming returns on capital, but let's go back to the numbers -- on a long enough timeline, the mortality rate for everyone reaches 100%, and the same is virtually inevitable for companies, and the same is virtually inevitable for centrally planned economies. Eventually you make an incorrect decision, and you go all-in on it, and everything blows up and you're stuck taking one of the bad options.
And since we've got an oligopoly of states colluding together, all making the same decisions, we're all in trouble.
So to start with, don't take my long posting as some big attack rant or anything, I just like to let the ideas I'm talking about stretch my legs. That's what makes writing replies fun often. I'm trying to figure out what the truth is for myself alongside anyone I'm discussing with.
It seems to me that your first bit sort of showed me my error -- I was assuming you were trying to say that central planning actually works, but what you're really saying is that it works just good enough and just long enough to make it seem like a good choice. I can get behind that, to be honest. The irresponsible policies I'm talking about about have made people appear rich just long enough that they think they work. You see it in people's personal lives too, where people do things that we all should know are bad, but they don't cause an immediate collapse so people keep doing it assuming they figured out a way to do the bad thing that works. One hit of cocaine doesn't destroy your life, but deciding after one hit of cocaine that it's actually good for you is how you get to the point where you're an addict who has destroyed their lives.
China is a really odd case in a lot of ways. It's obviously an authoritarian regime, but in a lot of ways it's also been until recently quite free. For example, they extract less of their economy in taxation than any other advanced economy (it's a huge problem for them), and if you're a faceless megacorp they were happy to let you break the environment as long as you brought in money and jobs. I expect that now that they start to clamp down and remind everyone they're authoritarian the miracle economy will end.
Debt is almost always what brings the boom, and Japan and China are no different. They had the capacity for growth and there is no doubt that they were lined up to be profitable, but it's the debt that took incremental growth of a good performer and gave it a burst of explosive growth. That's where the capital comes from to build an entire country worth of factories in just a couple decades. Not just government debt, but corporate debt, as well as household debt. Feels great during the boom, but when the money dries up it hurts bad because you went from not having to actually support yourself to having to support yourself today and yesterday just to keep your head above water. Globally we're at a point where the money has to dry up after progressively loosening monetary conditions for 25 years, and when the tide goes out you get to see who isn't wearing a bathing suit.
It seems to me that your first bit sort of showed me my error -- I was assuming you were trying to say that central planning actually works, but what you're really saying is that it works just good enough and just long enough to make it seem like a good choice. I can get behind that, to be honest. The irresponsible policies I'm talking about about have made people appear rich just long enough that they think they work. You see it in people's personal lives too, where people do things that we all should know are bad, but they don't cause an immediate collapse so people keep doing it assuming they figured out a way to do the bad thing that works. One hit of cocaine doesn't destroy your life, but deciding after one hit of cocaine that it's actually good for you is how you get to the point where you're an addict who has destroyed their lives.
China is a really odd case in a lot of ways. It's obviously an authoritarian regime, but in a lot of ways it's also been until recently quite free. For example, they extract less of their economy in taxation than any other advanced economy (it's a huge problem for them), and if you're a faceless megacorp they were happy to let you break the environment as long as you brought in money and jobs. I expect that now that they start to clamp down and remind everyone they're authoritarian the miracle economy will end.
Debt is almost always what brings the boom, and Japan and China are no different. They had the capacity for growth and there is no doubt that they were lined up to be profitable, but it's the debt that took incremental growth of a good performer and gave it a burst of explosive growth. That's where the capital comes from to build an entire country worth of factories in just a couple decades. Not just government debt, but corporate debt, as well as household debt. Feels great during the boom, but when the money dries up it hurts bad because you went from not having to actually support yourself to having to support yourself today and yesterday just to keep your head above water. Globally we're at a point where the money has to dry up after progressively loosening monetary conditions for 25 years, and when the tide goes out you get to see who isn't wearing a bathing suit.