Friday, September 11, 2009

Chinese Capitalism and American Socialism

Why is GM, a capitalist firm, so successful in Communist China and a failure in Capitalist USA? Apparently, the Chinese learned from the economic failures of socialism while the US Congress learned nothing and actively intervenes in the decision-making of American capitalist firms, imposing environmental restrictions few of which would pass the economic test that benefits should be equal to or greater than cost. It subsidizes energy-saving activities like insulating buildings, buying energy-saving autos and even light bulbs, none of which would survive the light of day as producers of net benefits. It orders banks to make bad loans, e.g., the Community Reinvestment Act. Through the EPA, it regulates factory emissions. It proposes a socialist solution to health care. It has declared its policy to replace fossil fuels with renewable alternative fuels. It pays a large portion of the costs of wind turbines and solar panels. The list goes on an on.

The fact that these activities require a subsidy almost guarantees that costs exceed benefits. Many of these subsidies are based on the mistaken belief that global warming is the result of man-made activities. But there are hundreds of scientists who believe climate change is the result of natural forces beyond the control of humans, principally changes in the cosmic ray inflow and the sun's radiations. The earth has experienced many cycles of warming and cooling before there was man. The global-warming fanatics cannot even explain why the last decade was one of the coolest during the past century!

Read it all here.

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