- - Thursday, January 3, 2019

ANALYSIS/OPINION:

There is a historical truth about the American economy — it is deep, wide, and resilient.

Our economy renews itself repeatedly, at least when it is left alone by the socialist do-gooders of the world like Bernie Sanders and newly minted New York Democratic Rep. Alexandria Ocasio-Cortez. Even in the face of misguided and maligned influences, the American economy usually bounces back. It is built on solid, free-market principles, which always work.

Managed economies, or communism, by contrast, may work for a period of time, due to favorable economic winds. But eventually you have to pay the piper.

It’s a lesson that China is about to learn the hard way.

China has built its rise on its heralded “managed economy.” Even the American left has become enamored of its decades-long success. Not a single mainstream U.S. media outlet has backed President Trump’s aggressive tariffs against the Chinese, even though Beijing have been ripping us off for years.



For all the criticism, however, Mr. Trump is correct, and the weakness of China’s system leaves it uniquely vulnerable to the U.S. pressure campaign.

China’s economy is starting to fail. While this won’t be surprising to anyone who has studied history and free markets, it is coming as a shock to the legions of Wall Street analysts and establishment media talking heads who have drunk the Kool-Aid of Chinese exceptionalism.

The Chinese aren’t exceptional — except maybe at cheating.

U.S. leftists believed in a China that had to build scores of empty cities just to keep its people employed, lest they riot and demand political reforms. American apologists grew adept at making excuses for this vast misallocation of capital, pushing the narrative that this showed how brilliant China was to prepare for the future.

Now with the Trump tariffs, China’s economic house of cards is collapsing. It has always been a one-way bet, banking on perpetual American stupidity to let Beijing protect its markets, subsidize its companies and steal our technology in order to catch up and surpass us economically and militarily.

Now, with import prices to the United States higher due to their malign trade practices, the one-way train has come to a screeching halt. Without the big PX in the Sky, China’s economic model can’t function.

The ranks of the jobless will rise. People without jobs will riot. The Communist regime will lose power. It is that simple.

In facing the first American president in generations with a backbone, the bosses in Beijing has basically two options. They can try to wait out President Trump (while continuing to influence our elections), relying on their fellow travelers in the media, universities and Hollywood to push their “America is in decline” narrative.

Or, they can attack — militarily.

Many Chinese generals believe they have reached the point where they can challenge the United States military, especially in the Pacific. They believe the Obama administration left the U.S. Navy so weakened that it is a shell of its former self. They may be right.

Thankfully, Mr. Trump has begun to the rebuilding process. However, this will take a long time and faces an uncertain political future.

And that’s where our resilient economy enters the picture. Once we get past the current stock market correction, the federal coffers will begin to grow again. Frankly, with all the socialist, or communist-lite, regimes taking root in the world, the United States will likely soon be the only true major capitalist economy in town. In his second term, Mr. Trump can tackle our national debt, our Achilles heel.

To recapitulate: Capitalism works; communism doesn’t. Now we wait for China’s leaders’ response to the threat to their hold on power posed by Mr. Trump.

⦁ L. Todd Wood is a former special operations helicopter pilot and Wall Street debt trader, and has contributed to Fox Business, The Moscow Times, National Review, the New York Post and many other publications. He can be reached through his website, LToddWood.com.

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