We should concede a state-driven economy has some advantages over free enterprise. Well entrenched within the Chinese system is a strong vein of "communist crony capitalism" that has its own special set of characteristics. This results in a system that tends to be predatory and geared to quickly exploit the weaknesses of its competitors.

It does not take a great deal of foresight to realize that America is on the verge of giving up its role as an economic leader if it continues on its current path. Those who surrender to the idea America's population is too small to remain a world leader fail to recognize that quality beats quantity hands down.

Countries that export goods at slightly below cost in exchange for manufacturing jobs are not stupid they are predatory and we in America are their prey. The article below explores China's economic and business model.

Comments (3)
No. 1-3
Sechel
Sechel

State Driven economy has some advantages in the short run but the state cannot allocate capital more effectively than the state. It worked well for Germany in the short run but France and Russia are two examples on how it failed. China too has huge misallocations of Capital and is straining at the moment.

Sechel
Sechel

America ceding economic leadership is not due to capitalism but lack of it.

Six000mileyear
Six000mileyear

State economies exist as monuments to those in charge. Decisions are made to preserve the existing power structure, not provide the best, or even better products and services. Improvements put forth by those outside the power structure are perceived as challenges to leadership. The time lag of reporting problems on the front line is so long that even if the correct response from the top is made, losses pile up (loss of capital) before the instructions to solve the problem arrive.

I do agree that a strong economy needs a strong manufacturing base. So if the state can create a general framework for international trade, but leave the specific problem solving to companies, an economy could have the best of both worlds.