You know, even in the ostensibly capitalist West, most of the public toilets have toilet paper anyone can use. There’s no great fear of the proletariat just running off with all of it, like there is here! Just imagine, all the sanitary paper you could ever want… So even in non-socialist countries, you can see the forces of scarcity at work…

In the interests of diplomacy, I did not blurt out “Comrade**, the very abundance of which you speak was made possible by <insert germane classical liberal argument here. oh! better yet a slippery slope argument: the sanitary paper slippery slope: you can never have enough. time for an essay – ‘on the optimal allocation of sanitary paper: experimental algorithms’>.” 

* Actually it seemed like a good way to see what Chinese policy makers might have been taught about notions of redistributive equality, since it is very related to population integration and urbanization. It also seemed like a good way to keep learning Chinese, since I can get fired up vehemently arguing against the content. Socialist calculation debate = 社会主义计算讨论?

** That would have been a bad thing to say. Interestingly, in modern Mandarin, the term for a communist “Comrade” is an insult that means “homosexual.” As near as I can guess, this is due to Taiwanese pop-culture influence, since they have been making fun of the CCP for 50+ years; and the fact that the Chinese for ‘Comrade’ breaks down to “[one of] homogenous will,” sounding a bit like the Chinese for “[one of preference for] homogenous gender intimacy.” Any real linguists / Marxist historians out there; feel free to add more.

As of yesterday, however, wireless high speed is now broadcasting all throughout the Tony-Caeli Fulbright Safehouse in Wuhan. The fellow who came to install it was extremely friendly, and seemed tickled that he was conversing with a bunch of unwashed foreign-folk speaking semifluent Mandarin. Covering a number of topics, he noted that, “these health reforms are trash. Health care here is horrible. Have you ever gone to a doctor in China? Don’t. We are all terrified of getting sick.” Health care reform is one of the major planned changes that came out of the last CCP plenary session. Most of the common criticisms of healthcare here revolve around a skewed incentive structure whereby Doctors are primarily compensated for the amount of medicines they prescribe (through various legal and illegal kickbacks from local pharmaceutical corporations). 

Upon further inquiry, he revealed that queues are usually so long that some people are able to make a living selling queue numbers from hospital queues. Woho! The market wins again. Wait…

No one actually owns land here – they lease it for a period of time from the central government (usually around 40 years). It’s also impossible to sell land that you have leased – selling would imply ownership. You can sub-rent it to someone else, for the period of time remaining on your lease. The system works – sort of. They even have their very own real estate bubble. 

But at least they are up front about the ‘usage right’ aspect – which is all that a property right is, stripped of the liberal nonsense. What Rogers should have said was something about meaningless illusory pretense.

A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China’s central bank.

 

“If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,” Yu said in e-mailed answers to questions yesterday. “If it is not the end of the world, it is the end of the current international financial system.”

The end of the world? Mortgages are so much less climactic than nukes or killer plagues. Regardless, it does seem to be an increasingly popular meme that China (and other foreigners) might maliciously dump the bulk of their USD denominated investments.

This hasn’t been reported, so it’s either anecdotal, or not widespread enough to register: a fair number of people here are saying “sure the banks could try to sell – but who would buy all of it?” I mean, it’s obviously possible – they just seem more skeptical that it would be as logistically easy to tank all of their USD denominated investments. Or at least are more realistic about the zero-sumMachiavellian implications involved. 

Contrarily, it seems that the current regime will likely continue, precisely because they’re in so deep. This NYT article elucidates:

Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central bank’s tiny capital base. The bank’s capital, just $3.2 billion, has not grown during the buying spree…

 

The central bank’s predicament has several repercussions. For one, it makes it less likely that China will allow the yuan to continue rising against the dollar… The central bank has been the main advocate within China for a stronger yuan. But it now finds itself increasingly beholden to the finance ministry, which has tended to oppose a stronger yuan. 

How do you get a weaker yuan? Buy more foreign securities. Coupled with a general concern here about the impact a cooling world economy will have on China’s exports make it all the more likely that there will be pressure for the yuan to depreciate against the dollar (or at least, fail to appreciate as much as some in the U.S. have called for). 

Given the current political climate, it seems likely that a widening China trade deficit will increase cro-magnonesque calls for protectionism. It’ll be a return to the good ol’ days – with the slight wrinkle that the US government will be on the hook for god know’s how much in mortgage losses. Not worries though – state ownership seems to have worked out just fine here.