Sunday, July 23, 2017

Lights Out for China?

Alan Koczela

Oh, the ad nauseam predictions of China's imminent economic collapse!  Yet the juggernaut keeps rolling.  Soothsayers cite China's high debt burden, wasteful infrastructure spending, and collapsing demographics as portents of the deluge.  While these are severe problems, none has stopped China's march toward manufacturing dominance. 

There's unlikely to be a silver bullet that ends China's stellar economic growth and manufacturing muscle.  Instead, a combination of forces will lead to a day of reckoning.  Advances in manufacturing technology, which created the Chinese Miracle, may trigger the end of China's moment in the sun.

Lights-out manufacturing, 3-D printing, A.I., and a myriad of new buzzwords ceaselessly spew from the heads of youthful commentators.  Emerging technologies suggest that all, or nearly all, manufacturing will become completely automated.  In the near future, the factory floor will need lighting only when humans replace or repair the robots or other machines.  Hence the term "lights-out manufacturing."  3-D printing enables the home production of goods, which eliminates the need for stores as well as factories.  A.I., or artificial intelligence, provides the ghost in the machine that keeps everything running like clockwork.  Some suggest that the result is The End of Workers and the dystopian doom this entails............To Read More

My Take - China did not commit to capitalism with profitability as the foundation for their production and industrialization potentials.  They committed to the socialist concept of total employment holding with the failed philosophy that if everyone was employed they would have enough money to keep an economy going.  It failed with Herbert Hoover and it's failed everywhere it's been tried.  

As for his comment - "the ad nauseam predictions of China's imminent economic collapse!  Yet the juggernaut keeps rolling", is in my opinion irrelevant.  The "juggernaut" that keeps rolling keeps building up long term negative consequence in their banking and production systems.  The fact it hasn't as yet hit is immaterial.  And all these emerging technologies he discusses will have a major impact on their economic philosophy of full employment, but it will still be just one more component of that collapse.  They may hasten the collapse - but the collapse is invertible. 

 

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