Essay: Slow and steady growth over the long term via capitalism and the rule of law versus short-sighted authoritarian economic growth that is costly to the long term economy

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Research indicates that in the long-term, non-authoritarian countries are more likely to experience greater economic growth. See: Time Under Authoritarian Rule and Economic Growth, CORI Working Paper No. 2007-02

Previously, I featured the below illustrative graphs in some my essays at:


"The United States and China are undoubtedly the two most powerful countries, but at least one more country must be roughly in their league for multipolarity to exist. This is where claims of multipolarity fall apart. Every country that could plausibly rank third—France, Germany, India, Japan, Russia, the United Kingdom—is in no way a rough peer of the United States or China." -The Myth of Multipolarity, American Power’s Staying Power, Foreign Affairs, 2023

However, a number of leading geopolitical analysts are skeptical about China remaining a global power as it faces a number of serious intractable problems (See: Skepticism about China remaining a global power).

I do agree with Donald Trump that America should not get into "endless wars" that do not serve America's vital interests.[1] I also agree with Trump's policy of not using the American military to "solve ancient conflicts in faraway lands".[2]
Chart of the growth of U.S. GNP from January 1947 to January 2023.

A great strength of the United States is its very consistent growth of its GNP over decades and its quick recovery the few times its GNP has gone down.[3]

In addition, research indicates that in the long-term, non-authoritarian countries are more likely to experience greater economic growth. See: Time Under Authoritarian Rule and Economic Growth, CORI Working Paper No. 2007-02

For more information on this topic, please see:

*Should You Be Bullish on America?

Why is America so rich?

*Size of a working age population in a country and its correlation with national GNP in advanced economies. The ability of the United States to attract some of the best and brightest workers in the world
Investopedia says about the importance of labor productivity to an economy, "Labor productivity is largely driven by investment in capital, technological progress, and human capital development. Labor productivity is directly linked to improved standards of living in the form of higher consumption."[4]

According the Yahoo Finance: "According to Yahoo Finance: "Efficiency in production, also coined as productivity, is one of the major driving forces behind economic resilience in a country... The United States has one of the strongest economies in the world. The country hosts some of the largest companies in the world, which contributes to the high GDP per capita in the country."[5]

As can be seen in the map above, the USA has one of the highest labor productivity rates in the world and it is significantly higher than both China and Russia.[6]

For more information, please see: The USA has one of the highest labor productivity rates in the world - significantly higher than both China and Russia

Steady, long term economic growth with the rule of law: Tortoises usually beat hares

Do you remember the story of the tortoise and the hare which taught that slow and steady wins the race?

It turns out that this is right when it comes to most economies. A great video on this matter is at Should You Be Bullish on America?

Do you remember the story of the tortoise and the hare which taught that slow and steady wins the race? It turns out that this is right when it comes to economies. A great video on this matter is at Should You Be Bullish on America?

A few points:

1. Capitalism is far superior economically to socialism/communism (See: Socialism vs. Capitalism: One Clear Winner). Many ardent cheerleaders of the multipolar fantasy are anti-capitalist individuals who don't understand basic economics. As a result of this, they are communist China cheerleaders.

China's multiple economic crisis:

In modern history, corrupt, one-party regimes are not known for their great longevity such as lasting over 100 years and China has one-party rule - namely the Chinese Communist Party.[7] Mint News reported that "Chinese President Xi Jinping is expressing concerns about the potential collapse of the Communist Party of China (CCP) as millions worldwide are renouncing their affiliation with the party."[8]

Corruption is so widespread in China that Wikipedia, an online encyclopedia founded by an atheist and agnostic, has an article entitled "Corruption in China".[9] On October 20, 2019, Wikipedia's Corruption in China article indicated, "Corruption in China post-1949 refers to the abuse of political power for private ends typically by members of the Chinese Communist Party, who hold the majority of power in the People's Republic of China."[10]

China fueled much of its economy in the past via debt-fueled projects which have had a low return on investment over the long term (ghost cities, etc.). In September of 2023, Reuters reported: "China’s debt-to-GDP ratio has doubled to a whopping 280%, opens new tab, with the bulk of liabilities held by local government financial vehicles (LGFVs)."[11]

According to Investopedia, "Deflation is not normally bad for an economy, except when it occurs in reaction to previous over-inflation."[12] Unfortunately for China, it has economic bubbles that are bursting in relation to its real estate and stock markets which is causing much economic hardship to many Chinese. Both of these markets had values that were highly inflated relative to their actual economic value. The Empower website notes that deflation "can lead consumers to spend less now, in part because they expect prices to continue to fall; it can push businesses to lower wages or lay off employees to maintain profit levels; and it makes existing debt more expensive for many borrowers.[13]

Presently, communist China is facing multiple crisis with the three major crisis below being signs of growing deflationary pressures on their economy:

Since 2021, China’s stock markets have lost about $7 trillion in value.[15]


2. The communist Soviet Union saw a spectacular rise in its economy and then crashed and burned. See: Why the USSR Collapsed Economically, Investopedia

Japan experienced lost decades of economic stagnation due to a balance sheet recession. China for some of the same reasons plus other major reasons is headed for long-term economic decline in all likelihood.

3. Capitalistic countries with the rule of law are far more efficient than communist countries with their rampant corruption and they are more efficient than non-communist kleptocracies as well. Many China/Russia cheerleaders turn a blind eye to the rampant corruption in China and Russia (See: Chinese Communist Party and corruption and Vladimir Putin is a corrupt kleptocrat and an authoritarian).

In 2023, the USA was over 200% more productive in terms of labor productivity than Russia when measured using purchasing power parity.[16][17] In 2023, the USA was over 400% more productive in terms of labor productivity than China when measured using purchasing power parity.[18][19] See: The USA has one of the highest labor productivity rates in the world - significantly higher than both China and Russia

For more information, please see:

4. Although Russia is achieving some increases in its GDP due to its war economy, it is doing so at the cost of its long term economic growth as can be seen in the data provided in the below articles:

Why has the West been so successful?

See: Why has the West been so successful?

In the above map, the Western World regions of the world are colored light blue.

There are countries in Asia that have adopted much of Western values such as Japan, South Korea and the Philippines.

The above graphic comes from the video Why the West Won’t Collapse with Stephen Kotkin (Stephen Kotkin is an American historian, academic, and author.)

For more information, please see: Why has the West been so successful?

Question: Are there very positive aspects of Western Civilization? If so, what are they?

The West:

Western values:

Why the United States should pay off its national debt

See also: The USA can reduce its national debt. It has done it before

The United States has a huge national debt (See: National debt of the United States) and it saw a major spike in the amount of its national pandemic during the pandemic and during the post pandemic presidency of Joe Biden.

If the USA has another Great Depression due to excessive debt, it will have a huge effect on Americans and the world. At the same time, the USA can reduce its national debt. It has done it before.

There is evidence that in the 2030s the United States has a good chance of experiencing another Great Depression due to excessive national government debt and other factors and it could be worst than the first one (See: The Coming Great Depression of the 2030s and Top 5 Causes of the 2030s Great Depression). However, just as the United States got through its first Great Depression, I believe it is resilient enough to get through its second one. Of course, I could be wrong and perhaps if such an economic depression occurs, it could be a major factor in the United States breaking up as a nation.

As far as the national debt of the United States, according to the Wharton School of the University of Pennsylvania article When Does Federal Debt Reach Unsustainable Levels?: "As of September 30, 2023, the federal “debt held by the public” (herein, “debt”) stood at $26.3 trillion, or about 98 percent of projected GDP...Table 1 shows that between 2040 and 2045---or in about 20 years---the U.S. debt-GDP ratio will hit between 175 and 200 percent under current fiscal policy, depending on the assumed interest rates. The Appendix shows very little difference when instead using CBO’s projections." Research indicates that government debt drags down economic growth beginning at 78 percent of GDP.[20]

However, consider this:

"Japan recorded a Government Debt to GDP of 263.90 percent of the country's Gross Domestic Product in 2022. Government Debt to GDP in Japan averaged 146.28 percent of GDP from 1980 until 2022, reaching an all time high of 263.90 percent of GDP in 2022 and a record low of 50.60 percent of GDP in 1980."[21]

While excessive federal government debt is a drag on an economy, an August 2023 article of the New York Times reported concerning the Japanese economy: Roaring Back From Pandemic, Japan’s Economy Grows at 6% Rate.

With that being said, the USA should pay off its national debt over time like in did post WWII. While it will probably be more challenging to do and will require sacrifices, the long term benefit in terms of economic stability and economic growth is well worth the price.

Graphs of the U.S. national debt as a percentage of GDP

See also: Graphs of the U.S. national debt as a percentage of GDP

Graph of the U.S. national debt as a percentage of GDP as of March 9, 2024


Graph of the U.S. national debt as a percentage of GDP as of March 9, 2024.

Historical graph of the U.S. national debt as a percentage of GDP


Historical graph of the U.S. national debt as a percentage of GDP.

East/West: Authoritarian vs. individualism/democracy: Economic growth and healthy society. Influence of the West on Singapore and Japan

Western civilization

Eastern civilizations

  • East: More collectivist. Rice farming more collectivist

Singapore (High standard of living and low crime). Had British/Western influence

Singapore: Hardworking, meritocracy, studious, disciplined, more collectivist than the West, low corruption and economic liberty and public spending with long-term thinking in mind in terms of return on investment.

The British/Western Influence on Singapore: "We have many good essays on the English language, the rule of law, the free port, free trade, open economy, the civil service, health, education, welfare, town planning, low-cost housing, anti-corruption, business, sports, culture, the commonwealth, etc. The British left a rich legacy in Singapore." See: Singapore and the United Kingdom: 1819 to 2019

Academic

Abstract: As an authoritarian country achieves more economic freedom, it is often urged by its citizens to start pursuing social freedoms. This has led to the liberalization of many authoritarian nations and pushed them to adopt more liberal policies. But not Singapore. Singapore is one of the most economically-developed countries in the world yet it has a surprising lack of social/political freedom. But how does it succeed where so many others have failed? Why is Singapore one of the most successful free-market economies as well as one of the most societally restrictive? And how long can it continue to succeed? As it stands now, the same political party has been winning elections in Singapore for more than 60 years. How long can they last?

Videos on Singapore's economic miracle. Videos on Singapore's highly developed and safe country

Singapore is the 4rth richest country in the world.

Once again, Singapore is so much better than Russia!

Map of Singapore

The article What America Could Learn from Singapore's Social Welfare System indicates:

“ To take a look at how and where such a minimal standard of welfare design has been implemented successfully, one need only look at the city-state of Singapore. The Singapore welfare system is considered one of the most successful by first-world standards. World Bank data shows that Singapore’s government health expenditure in 2015 is only 4.3 percent of GDP, a small fraction in comparison to other first-world countries—16.9 percent in the US; 11 percent in France; 9.9 percent in the UK; 10.9 percent in Japan, and 7.1 percent in Korea—while achieving comparatively equal or better health outcomes of low infant mortality and higher life expectancies. While most of Europe, Scandinavia, and North America spend 30-40 percent of GDP on social welfare programs, Singapore spends less than half as much while maintaining similar levels of economic growth and a society relatively free of social problems."...

By compelling Singaporeans to save, welfare in Singapore has traditionally been internalized first to the individual and the family/grassroots level. This forms the crux of the government’s “Many Helping Hands” social policy where the role of the family and immediate community in welfare provision is emphasized over government-funded programs. Such a form of privatized charity is neither new nor unique, as a wealth of research shows how mutual aid societies predated modern welfare states in the 20th-century United States and the 19th-century United Kingdom."[22]

”

Singapore has the 2nd lowest infant mortality rate in the world - so it is much better than Russia in this respect as Russia has about a 400% higher infant mortality rate.[23]

In addition, Russia has the highest abortion rate in the world.[24]

Question: If Russia's societal system is so good then why do Singaporeans live so much longer than Russians? The proof is in the pudding!

Singapore compared to Russia: Parts of Russia are so bad to live in that Russia offers free land to Russians and foreigners. Singapore raises threshold for foreign investors seeking permanent residency

  • Russia offers free land to Russians and foreigners: "In an attempt to boost the population and economy of the largely undeveloped regions,Vladimir Putin has ordered free land handouts in Russia’s Far East and Siberia. Last week he signed a law offering land plots to Russians and foreigners for free if they are willing move to the country’s remote Far Eastern and Siberian regions. Under the deal, all citizens can apply for a hectare of land (2.5 acres) – about the size of a football pitch – in a vast stretch of territory spanning the upper Arctic reaches near Alaska, down to islands off the coast of Japan and south to the Chinese border."

Japan (High standard of living and low crime). Had post WWII American influence

The flag of Japan

Japan: Hardworking, studious, disciplined, harmonious and collectivist (Government invest in key industries. East Asian model )

United States influence on Japan:

"After the defeat of Japan in World War II, the United States led the Allies in the occupation and rehabilitation of the Japanese state. Between 1945 and 1952, the U.S. occupying forces, led by General Douglas A. MacArthur, enacted widespread military, political, economic, and social reforms." - Occupation and Reconstruction of Japan, 1945–52

Influence of American management consultant William Edwards Deming on Japan: "Starting in 1950 and in subsequent trips to Japan - 27 trips in all - Deming taught the Japanese his management philosophy which eventually came to be called the System of Profound Knowledge. This work has widely been cited as a key reason for Japan's rise as an economic world power on the international stage." - The Influence of W. Edwards Deming (1900-1993)

Economy of Japan:

  • Economy of Japan, Britannica. Japan has developed a highly diversified manufacturing and service economy and is one of the world's largest producers of motor vehicles, steel, and high-technology manufactured goods (notably consumer electronics).
  • Japan’s economy, AsiaLinkBusiness. Japan is one of the largest and most developed economies in the world. It has a well-educated, industrious workforce and its large, affluent population makes it one of the world’s biggest consumer markets.

From the 1960s to the 1980s, Japan achieved one of the highest economic growth rates in the world. This growth was led by:

- High rates of investment in productive plant and equipment

- The application of efficient industrial techniques

- A high standard of education

- Good relations between labour and management

- Ready access to leading technologies and significant investment in research and development

- An increasingly open world trade framework

- A large domestic market of discerning consumers, which has given Japanese businesses an advantage in their scale of operations.

References

  1. ↑ Trump to West Point grads: 'We are ending the era of endless wars', Reuters, June 13, 2022
  2. ↑ Trump to West Point grads: 'We are ending the era of endless wars', Reuters, June 13, 2022
  3. ↑ Should You Be Bullish on America?
  4. ↑ Labor Productivity: What It Is, How to Calculate & Improve It, Investopedia
  5. ↑ 25 Most Productive Countries Per Capita, Yahoo Finance
  6. ↑ Most Productive Countries 2024
  7. ↑ China's Communist Party is at a fatal age for one-party regimes. How much longer can it survive?, Australian Broadcasting Corporation, 2020
  8. ↑ [Xi Jinping raises concerns over potential collapse of Chinese Communist Party: Report], Mint News, 2023
  9. ↑ Corruption in China, Wikipedia
  10. ↑ Corruption in China, Wikipedia
  11. ↑ China’s growth is buried under great wall of debt, Reuters, 2023
  12. ↑ Why Is Deflation Bad for the Economy?, Investopedia
  13. ↑ What is deflation?, Empower website
  14. ↑ What’s going on with China’s stock market?, MarketPlace.org
  15. ↑ What’s going on with China’s stock market?, MarketPlace.org
  16. ↑ Statistics on Labour Productivity, International Labor Organization website
  17. ↑ List of countries by labor productivity (Ranked using purchasing power parity)
  18. ↑ Statistics on Labour Productivity, International Labor Organization website
  19. ↑ List of countries by labor productivity (Ranked using purchasing power parity)
  20. ↑ Fast Facts about the U.S. Federal Debt, Cato Institute, 2023
  21. ↑ Japan's government debt as a percentage of GDP
  22. ↑ What America Could Learn from Singapore's Social Welfare System
  23. ↑ Infant mortality rate by country
  24. ↑ Abortion rates by country
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