Central Planning "Sucks"

Post #573

Globalist elites are attempting to invoke a Great Reset where more central planning would dictate the allocation of resources. But central planning “sucks.” An example from history is the Soviet central planning which kept their nation poor:

By trying to “invest” their way out of stagnation — investing just as much or more than the USA — the Soviets ended up with just one third of the consumption level of the USA.

That’s because their investments “sucked.” An example of “sucky investments” would be to spend 15% of GDP on defense, when it only takes 2-4% of GDP to properly defend yourself against foreign invaders.

Total investments comprised up to 38% of their GDP.

But the money spent on army tanks doesn’t help regular people, though the politburo cannot be concerned with their own citizens, because there are quotas to meet.

Because too much of investment went into output of new units rather than technological improvements and repurposing, the average lifespan of heavy equipment and machinery approached 30 years.

If the average tractor or machine is 25-to-30 years old, then you are spending a good chunk of your time just trying to make the machine run right. China, with 40% of GDP locked up in investments, is also trying to mimic the plight of the USSR.

That’s understandable, because they are Commies — i.e., statists who think that they are so powerful that they can even break economic laws.

But most disturbingly, it looks like the USA did not learn from the USSR, because central planning — measured by the ratio of federal spending to the private GDP (GDP - all government spending) — has been increasing for 94 years:

In 2020, federal spending was over 50% as high as private-sector GDP. But this is a pathway to ruin (as the USSR showed us). If the USSR isn’t a good enough example, maybe the USA can learn from China.

In China, debt is growing at 15% a year, and corporate debt is 150% of GDP. But that is a ticking debt-bomb, and it could make China increasingly aggressive toward others. Let’s not make the same mistakes, because that could only bring on WWIII.

Reference

[Soviet consumption only one-third of US consumption, even after putting 38% of GDP toward investments] — Government Accountability Office. https://www.gao.gov/assets/nsiad-91-274.pdf

[investment is 40% of GDP in China] — Reuters. https://www.reuters.com/breakingviews/chinas-growth-is-buried-under-great-wall-debt-2023-09-13/

[corporate debt is 150% of GDP in China] — Thomson-Reuters. https://fingfx.thomsonreuters.com/gfx/rngs/CHINA-DEBT-HOUSEHOLD/010030H712Q/index.html

[China’s general government debt was $7.1 T in 2018, but $12.7 T in 2022 — a 15% annual growth rate] — Statista. https://www.statista.com/statistics/531423/national-debt-of-china/

U.S. Bureau of Economic Analysis, Federal Government Current Expenditures [AFEXPND], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/AFEXPND

U.S. Bureau of Economic Analysis, State and Local Government Current Expenditures [ASLEXPND], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/ASLEXPND

U.S. Bureau of Economic Analysis, Gross Domestic Product [GDPA], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/GDPA