I had trouble sleeping last night so I stayed up and watched the Bill Maher produced show ‘Vice’, which I have seen a few times before. While I don’t agree with Maher or think he is particularly funny comedian (he panders to his audience unlike many other GREAT comedians out there right now), but he has done a very good job with ‘Vice’.
Anyway, last night they did a story on the “Ghost Cities” of China. The Chinese government in their infinite wisdom has implemented a policy of massive construction projects throughout the country. Specifically, they have built cities for the sake of building , complete with high rises, parks and layouts that copy other world famous cities such as Paris (they even built an Eifel Tower).
Now, not surprisingly, the cities sit largely unoccupied. And when I say largely I mean like 90%, not like Detroit which people have been fleeing for years.
What does this tell us?
First, it tells us that central planning DOES NOT WORK. Period. Second, it tells us that governments “investing” in various construction projects for the sake of construction projects is stupid policy. Progressive liberals have been pushing this sort of nonsense for decades and occasionally have been successful. See: The bridge to nowhere and here in Massachusetts the proposed green line and south coast rail extensions.
A large component of why China is doing this is because it creates jobs. Milton Friedman had a great anecdote about this mentality:
At one of our dinners, Milton recalled traveling to an Asian country in the 1960s and visiting a worksite where a new canal was being built. He was shocked to see that, instead of modern tractors and earth movers, the workers had shovels. He asked why there were so few machines. The government bureaucrat explained: “You don’t understand. This is a jobs program.” To which Milton replied: “Oh, I thought you were trying to build a canal. If it’s jobs you want, then you should give these workers spoons, not shovels.”
In addition, think how much this misallocation of resources inflated prices across the globe for labor, fuel, cement, steel and every other imaginable commodity that could have been used elsewhere.
Remember folks, progressives like Paul and Obama truly believe that cutting back on any spending – austerity – is wrong. They want to keep the various bubbles going as long as possible. But nothing lasts forever and when this one pops it will make the 2008 subprime mess look like a mild case of diarrhea.
