The massive distortions in the real estate market have stemmed from the wall of money created by decades of near-zero interest rates. This has driven serious malinvestment.

Was that capitalist? Well, the money supply is indirectly controlled by the Fed, which -- due to political pressure -- attempts to iron out the business cycle by creating walls of money every time it looks like things are getting choppy.

One could argue -- and I would agree -- that this is better than the pure unfettered capitalist alternative, which would see bank failures and people's life savings wiped out for no fault of their own. However, as a consequence, we get this absurd malinvestment problem.

There's more to this. You might ask, why doesn't the Fed just set the interest rate higher, so that people really need to have a productive use for money before they go buy up a bunch of houses? That hits at the heart of the stated goal to create persistent low levels of inflation, which allows the government (and debtors everywhere) to debase their debts. Because otherwise people wouldn't borrow as much money to drive economic growth. I find this nonsensical, because we loosening capital requirements creates precisely the malinvestment we want to stop. However, it's the government likes the ability to continuously debase its debt.

So it's not capitalism, and it's absolutely the result of policy choices, and it doesn't have to be this way. But it is because it suits the needs of powerful people in society.

Communists countries found ways to incentivize people to work. It's just that people ended up doing all the wrong things (in aggregate), and the system became hopelessly byzantine and corrupt. They really needed prices as a signalling mechanism for demand and scarcity. There's a great book on this by an economist. Socialism, the failed idea that never dies. Niemietz spends most of the time talking about the history of how people talk about socialism, but there's sections of the book specifically dedicated to a clear explanation of why it always must fail, and why it always must turn authoritarian. There's a short counter-factual story at the end, where East Germany is a non-authoritarian communist state, with precisely zero human rights abuses, and how the system of socialist incentives lead to complete dysfunction.

Indeed, complete with the "lost decade" that turned out to be 30 years of no-growth, and an aging population causing deflation. Except in China the problems are larger in scope, and the gradients are steeper. I'm not saying that China is going away. I mean, Japan is still there. It's just that the narrative changed on Japan, and it will change on China too.

In this video, university professor Patrick Boyle explains how short sighted pension plans destroyed the American auto industry. Once you look at the math, it's pretty obvious.

The misallocation of resources does have some benefits. It's still a misallocation, and thus, by definition, overall a problem.

Housing prices in the USA are set by the rate of interest (which sets mortgage serviceability), and the ability to build. As interest rates go up, housing prices go down. And houses are cheaper in red states that have fewer building restrictions, but still have, nonetheless, good job markets.

People made huge amounts of money off of housing in the USA, because interest rates slowly decreased from the 1980s until just a few years ago. Every time the interest rate was cut, incumbent home owners laughed all the way to the bank.

Those days are _done_. Interest rates bounded off near 0%, and we're staring down the barrel of sustained inflation. Nobody is going to make a fortune off of sitting on real estate for several decades.

If you want to buy a house, move some place where supply meets demand, making houses a little more expensive than the cost to build. There are many such places in the USA.

This is true. It's because China has high skilled and almost-slave labour colocated. And America has labour laws. What China is doing is impressive nonetheless.

It's absurd to compare freedoms in the USA to that of China, where political prisoners are literally chopped up to sell their organs. And Chinese people aren't stupid: about 3-4 million emigrate each year.

Parts of the Chinese economy are "pretty normal capitalism". However the majority of capital is directed by state banks to state industries. This is classical socialism, where the government controls the "commanding heights" of the economy. So pretty far from capitalism which relies on price signalling in the allocation of capital.

It's a brute fact that China's economy is suffering from a lack of price signalling, and that this is causing a massive misallocation of resources. The same thing happened to the USSR and the Eastern block, which certainly succeeded in driving steel production higher than the USA. Just... there wasn't any productive use for the oversupply. In the 1980s, one economist wryly noted that East German heavy machinery was worth less than the raw materials it was made out of.

The CCP is big on selling you on the idea of the inevitable rise of China. It's all optics. The psychological warfare of fear and greed. They are sitting on unprecedented levels of capital misallocation. Great. They can fix all that. But they'd have to change the system that produced the misallocation in the first place, and I certainly don't see that happening.

China isn't going anywhere. It's still going to be here in the future. The CCP has the tools of social control to pick winners and losers, and grind the underclasses to keep the system going. What's going to change is the optics.

One frustrating thing with this list is that communists *always* have to get rid of labour power. Should be obvious. The Nazis did the same thing for the same reason. You cannot be socialist and have the workers revolting. Instead, you take over the unions.

And this issue about corporations being protected... well, yes. More like co-opted. Like Nazi officials in every business mediating labour relations and directing some business decisions. So just like China. Corporations protected. Yes. But are they really corporations or defacto parts of the government?

This is unsolvable in many ways, because tribal knowledge (religious/political) is invariably dripping with nonsense. As humans we cannot see this in ourselves. It's to do with knowing who is and isn't on your side, so we are primed to censor and attack each other based on what amounts to cr*p that we don't know is cr*p.

Humans are a bad example here because of the "learning/maturation" confound. A baby goat is born, and walking withing minutes. They're almost immediately good at not bumping into stuff -- it seems problems mainly due to muscle coordination. Or how about a chicken, that has perfect stereo vision depth perception without any learning at all. This was tested by putting hoods on the chickens that let them see through one eye. (You have to alternate the exposed eye each day, so that the eyes still develop.) The instant you remove the hood: perfect depth perception. 100% maturation. No learning.

The irrationality myth comes from confusing people's goals with people's reasons. Reason serves the goals. Behind the vast majority of "irrational behaviour" is some game-theoretically optimal reasoning to a desired goal.

Further, reason is fundamentally different to pattern matching. If humans were mere pattern matchers, we'd be incapable of testing ideas, and we'd need millions or billions of years to examples before we could write or talk. Humans also do "one shot learning".

We can create reasoning computer systems, and "one shot learning", and pattern matching (LLMs). The problem is how do you merge these together. That is a giant mystery that the human brain does on 20 watts of power.

If this were true then it'd take a child about a million years to learn how to talk. Humans have pattern matching, sure, but we also have reasoning, and "one shot learning", and some secret sauce to coordinate all of these.