Imagine the looks on their faces, when Deng Xiaoping sold them out.
The old commies in China had tried to make steel in backyard barbecues. They'd carried the fat Mao on a litter, on a long march to nowhere. They'd pretended his Little Red Book was more than drivel. They'd endured one absurdity after another ... purges, starvation, and misery ... all for the cause.
And now this ...
"To get rich is glorious ..." Xiaoping is alleged to have said.
Whether he said it or not, millions of Chinese took it to heart. They got richer, faster than any people ever had. The economy is now 10 times larger than it was then; it grew 300 per cent just in the last 10 years. Incomes rose every year. There are now more millionaires in China than in France. Three times as many as in Britain. And more people are becoming millionaires there than anywhere else on earth.
Three decades ago, the world's hinge creaked. Deng Xioaping opened a door in 1979. He announced a new oddity, a "socialist market economy".
We can imagine the looks on faces in Washington and London too. And why shouldn't they gloat? They had won the Cold War; they had no idea that their victory would be fatal.
China took the capitalist road in 1979. Russia was not far behind. By the mid-'80s, it was already spending half its entire output on its military. And then the Americans started talking about neutron bombs and a "star wars" program. Leonid Brezhnev had a stroke. His successors faced the challenge, first with perestroika and finally with capitulation.
Meanwhile doors opened and shut in England, France and America, too. Maggie Thatcher moved into 10 Downing St. in 1979. Ronald Reagan brought “Morning in America” to the White House in 1980. Like Thatcher and Xioaping, Reagan was determined to reduce the government's role in the economy. And in 1981, Francois Mitterand entered the Elysee Palace in France. His stated goal was the opposite - to increase state involvement in the economy.
No matter what direction they claimed to be going, all the western economies ended up in more or less the same place - on the road to debt serfdom. While China got rich by encouraging (or perhaps merely allowing) capital formation, western nations got poorer, relatively, by consuming capital.
In France, and much of the rest of Europe, government led the consumption boom. While households continued saving at relatively high levels, Mitterand raised the cost of the welfare state. Minimum wages went up 10 per cent immediately. Then, he cut the work week and added so many benefits for the working man that the system barely worked at all. French government debt rose from 20 per cent of GDP in 1980 to 80 per cent now; in a couple more years, the government will have spent an entire year's output that France had not yet put out.
In Britain and America, government spending rose too. But household spending went up even faster. The resulting boom was almost magical; the effects were diabolical. Britain went from a debt/GP ratio of 43 per cent in 1980, to over 65 per cent today. Its deficits rose up too and now are projected to be the highest in the European Union - as much as 13 per cent of GDP. But the big expansion in both Britain and America was in private household debt. Combined with government borrowing, it pushed total debt from about 150 per cent of GDP in the mid-'80s to as high as 400 per cent today.
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