It's Not Just Japan That's Failed; The "Asian Miracle" Model Has Also Failed
The inevitable result of the centrally planned Asian Miracle Model is credit bubbles and the crippling misallocation of capital in Building Bridges to Nowhere.
Japan's extraordinary rise from the ashes of World War II created an "Asian Miracle" template that other Asian nations have followed, and continue to follow.The outlines of the model are straightforward.
The growth engine is export-dependent mercantilism: organize the economy to prioritize exports at the expense of domestic income and consumption. The central government manages the mercantilist project in conjunction with favored cartels or state-owned enterprises (SOEs). In other words, The Asian Miracle Model is central planning plus credit expansion plus export-based cartel-capitalism.
The Asian Miracle form of centrally planned capitalism depends on these four pillars:
1. Integration of government ministries and private-sector cartels
2. Heavy reliance on export sectors for growth and profits
3. Domestic savers provide the capital for export expansion
4. Defaults and write-offs of bad debt cause loss of face and are thus hidden from public view or rescued with government bailouts or zombie loans.
This combination of central planning, credit expansion and export-based capitalism ignites a rocket booster of rapid growth. Since the Asian nations pursuing this model are starting from relative poverty, the rapid expansion of credit, exports and employment in the export sector are all the more miraculous.
But the model runs off the rails when central planning and credit expansion reach diminishing returns. Central planning is very effective at allocating scarce capital in the boost phase, because the capital is invested in building an efficient export machine and in essential infrastructure that enables exports: ports, railways, highways, etc.
But once all this basic infrastructure is built out and exports reach their zenith, central planning slips from miraculous to disastrous. The state bureaucracies that guided the Miracle boost phase have no other plan other than more credit expansion and more investment in infrastructure.
The inevitable result of the centrally planned Asian Miracle Model is credit bubbles and the crippling misallocation of capital in Building Bridges to Nowhere. China has already burned through the booster phase and has reached the credit bubble/building ghost cities stage.
The hubris of central planning knows no limits. Though the only possible endgame of the central planning plus credit expansion plus export-based cartel-capitalism model is stagnation and implosion, central planners in Japan and China remain supremely confident in their ability to re-ignite a rocket with no fuel.
Following Japan's Failed Economic Model with Gordon T. Long:
Are you like me? Ever since my first summer job decades ago, I've been chasing financial security. Not win-the-lottery, Bill Gates riches (although it would be nice!), but simply a feeling of financial control. I want my financial worries to if not disappear at least be manageable and comprehensible.And like most of you, the way I've moved toward my goal has always hinged not just on having a job but a career.
You don't have to be a financial blogger to know that "having a job" and "having a career" do not mean the same thing today as they did when I first started swinging a hammer for a paycheck.
Even the basic concept "getting a job" has changed so radically that jobs--getting and keeping them, and the perceived lack of them--is the number one financial topic among friends, family and for that matter, complete strangers.
So I sat down and wrote this book: Get a Job, Build a Real Career and Defy a Bewildering Economy.
It details everything I've verified about employment and the economy, and lays out an action plan to get you employed.
I am proud of this book. It is the culmination of both my practical work experiences and my financial analysis, and it is a useful, practical, and clarifying read.
Test drive the first section and see for yourself. Kindle, $9.95 print, $20
"I want to thank you for creating your book Get a Job, Build a Real Career and Defy a Bewildering Economy. It is rare to find a person with a mind like yours, who can take a holistic systems view of things without being captured by specific perspectives or agendas. Your contribution to humanity is much appreciated."
Laura Y.
Gordon Long and I discuss The New Nature of Work: Jobs, Occupations & Careers(25 minutes, YouTube)
NOTE: Contributions/subscriptions are acknowledged in the order received. Your name and email remain confidential and will not be given to any other individual, company or agency.
| Thank you, Vladimir T. ($25), for your monstrously generous contribution to this site-- I am greatly honored by your steadfast support and readership. |
