At Arm's Length: 09.12.04

The Chinese have a problem of enviable heft and it is getting better - even as it worsens. Much of the disruption in the cost of raw materials worldwide has been due to the Chinese. Each time they decide to fund the creation of more industry, they create another problem for world economics.

Here is how it works. The government offers low cost industrial loans and that creates jobs. Those jobs are grabbed up by city bound rural folks. What they do then is create products in such quantity with low cost to allow these workers to increase their own standard of living.

While this has been good for China, they realize that such rapid expansion could have consequences beyond their own borders. Within their borders though, arable land is disappearing under this growth creating inflation in food prices.

The effort by China to provide low cost loans to farmers has seemed to work creating a growing improvement in rural lifestyle.

At Arm's Length though, the problem that faces the Chinese is on a grander scale, similar to ours when the Bush administration took office. Had the President chose to finance the ownership society he often proclaims to want, giving those citizens a higher standard of living may have been the easiest way to achieve a more disciplined growth in a lagging economy. The surplus would have remained intact and been used for the emergencies that followed three years ago, helped with financing serious changes in Medicare, and even secured the country against future attacks.

But then, we would have had to pass on the war in Iraq as well, a problem that China does not have.

The previous week's articles.

NEW!
Our Glossaries One dollar off for a limited time!

COLUMN REQUEST | AT ARM'S LENGTH ARCHIVE | WHO WE ARE | CONTACT US | LEARNING CENTER

COPYRIGHT 2002 - 2004 THE BLUE MONEY REPORT - ALL RIGHTS RESERVED