POSTED RESPONSE TO A COLUMN BY THE DAILY TELEGRAPH'S RICHARD SPENCER
Rapid economic development never does create equality. Anyone who claims that it does, simply doesn't understand economics.
Indeed, it does quite the opposite. It creates great differences, and these differences are an important part of how economic growth works.
Just as with a pressure or temperature gradient in physics, the differences generate flows of resources and effort.
Contemporary Britain is experiencing the same thing on a lesser scale.
The United States has examples of this that would shock many unfamiliar Britains. Some Americans live literally in dumpy shanty towns with dirt streets while the successful build copies of Versailles on thousand-acre estates.
It is the proper role of government to curb the worst excesses without trying to level the entire system, something which when done brings economic growth almost to a halt.
In the United States, the federal government has literally given up this role. That is what Bush's titanic tax-cuts really represent. That is the path to re-creating late-18th century France.
Eventually, in the very long term, most members of a growing society do become better off. This is what is meant by the expression 'a rising tide raises all boats.'
But this is not in the short or medium term. Unfortunately, the stresses induced by great and growing inequality can cause social problems. Riots and revolutions come out of these stresses. That is why there is role for government, under capitalism, to do some sensible and limited re-distribution.
In China, considering the early stage of things and the government's inexperience, we may make a less strong judgment.
Foreign investment of the reserves China is collecting is important and a natural development.
Why on earth would China want to sit on trillions of U.S. dollars forever?
China's gigantic pile of American cash represents an ever-great threat to the dollar's stability. It is also a tempting target for American authorities to hurt China through devaluation.
Unfortunately, the United States has already blocked off some perfectly logical paths for Chinese investment, as in American energy companies.
The U.S. constantly preaches to the world that its own foreign investments are good, but then it behaves in such high-handed ways towards others. An economy is about flows, back and forth, and we live in a globalized world. You can't have goods flowing West and only dollar bills flowing East.
