While the liberal democracies, having allowed Cultural Marxists to infiltrate government at every level and implement socially and economically disruptive policies Ray Dalio, founder of Bridgewater, the world’s biggest Hedge Fund believes now is a good time to reflect on China’s progress towards its goal of replacing the USA as the world’s most powerful nation.
China’s growth as the size if its economy closes rapidly on that of the USA, speaks for itself, but Dalio adds:
“To have such rates of improvements in so many areas and for so many people has made it the greatest economic miracle ever.”
And from what Dalio has seen, he believes that the very impressive results that the Chinese leadership and the Chinese people produced came about primarily because of the powerful combination of a) China’s opening up and reforming following an extended period of isolation that led to a fast catching up (especially in the coastal regions of China) with the advanced developed world, and b) the power of the Chinese culture and it’s related ways of operating.
Crucially, Dalio points out that, if you haven’t spent time in China, you need to get any stereotypes you might have out of your mind because it’s not how it was. This is not your father’s communism. It is “socialism with Chinese characteristics” that has been significantly and very effectively reformed, which has made it much more vital, creative, and economically free.
Dalio’s ‘romantic’ view of a paternal China is definitely not the mainstream narrative:
“From my experiences and from what I am told by Chinese who should know, I believe Chinese leadership seeks to run the country the way they believe a good family should be run, from the top down, maintaining high standards of behavior, putting the collective interest ahead of any individual interest, with each member knowing their place and having filial respect for those in the hierarchy so the system works in an orderly way. One of China’s leaders who explained this concept to me told that the word “country” consists of two characters, state and family, which influences how they view their role in looking after their state/family.
One might say that the Chinese government is paternal. For example, it regulates what types of video games are watched by children and how many hours a day they play them. As a broad generalization, when the interest of the country (like the family) is at odds with the interest of the individual, the interest of the country (like the interest of the family) should be favored over the interest of the individual. Individuals are parts of a greater machine. As a result of this perspective, the system seeks to develop, promote and reward good character and good citizenship. For example it gives people a social credit score that rates the quality of their citizenship. And each person is expected to view themselves as parts of the greater whole.
This management from the top down includes visualizing what China 5, 10 and 20 years in the future should be like and then making and managing detailed multiyear plans to build out that vision, with the goal being to make China as great as it can be. China is run more like a giant company with many subsidiaries, some within the government’s direct control and some within its indirect control. ”
But, as the fund manager notes, while Chinese culture has been evolving, it has at its most fundamental level been operating in similar ways for many hundreds or even thousands of years and the results of operating that way are knowable in an approximate way.
I have recently been researching the rise and fall of reserve currencies, which led me to study the rises and declines of the world’s most powerful countries. That led my research team and me to put together the following indices of the relative powers of leading countries since 1500. These indices are a combination of six sub-indices that measure six different types of power:
1) innovation & competitiveness,
2) domestic output,
3) share of world trade,
4) financial-center size and power,
5) military strength, and
6) reserve-currency status.
…and they show when different countries reached their peaks relative to the rest of the world.”
And to support his position he has put together an impressive set of statistics showing how global and regional powers from Portugal in the west and China in the east, in the late medieval era, rose to economic dominance in the west, and how as Portugal declined to be replaced by Spain, then France, then The British Empire and finally the USA all rose to dominate while they had a stable culture and strong values, and all declined when political factors undermined that cultural stability and government started to medle in private affairs.
China on the other hand, dominated in the east from around 1200 to 1900 CE only being challenged by the British and the Japanese in India from the mid nineteenth century. China’s social system had stagnated through isolation, while Jaoan’s had been revitalised by contact forst with Portuguese and Dutch traders and then US government and business interests.
After the communists took over China’s still stagnant society the nation became even more isolated until the idealist Mao Tse Tung was replaced by equally totalitarian but more pragmatic leaders who opened up the country economically and allowed individualism and enterprise to flourish. The reformed communist party opened up the economy but maintained the cultural stability based on family, community and tradition.
And judging by Dalio’s take on American culture, it is clear where he thinks this is going…
“Most fundamentally, the US is a country in which individuals, individualism, and individual property rights are perceived to be of paramount importance it is directed from the bottom up (e.g., through “one man, one vote” democracies that empower people to choose their leaders), being revolutionary is considered a good thing, and conflict is valued more than harmony.
Rather than respecting top down control most American have a strong preference to keep government from interfering with their most individual choices. Character development is a personal or family issue, not a government issue (which leaves it largely neglected in areas with broken families, especially if they’re poor).
Rather than there being a long-term top down vision for the country and a plan to achieve that vision, in the capitalist and democratic system such directions are more bottom up determined based on commercial and popularity considerations.”
Thus Dalio comes to the conclusion that as the USA continues to fragment socially it’s economic decline will also continue, while the Chinese, bound by their strong and stable culture, will continue to forge ahead, with the inevitable result that the US$ will lose its reserve currency status, something which is already happening as we have reported HERE. Of course, the world’s largest hedge fund manager avoids directly slamming America’s ‘dream’ or supporting China’s central planners:
“I’m not saying which system is better. Each culture/system has its pros and cons that I’m not going to get into now.
I believe that the important thing to know are that while there will be trade wars and trade truces they aren’t the most important things. ”
So, in summary, “it’s not the economy, it’s the culture stupid!”