The Bear’s Lair: Is the West adopting China’s model?

Under Xi Jinping, China has moved away from its previous mixed economy to one in which all major decisions are taken by the state and are subject to the Five-Year Plan. Business leaders must toe the party line, while foreign investment is allowed into the country only on terms that involve ceding most intellectual property to Chinese interests. All media are censored, payment systems are used for a controlling “social credit system” and rebellious spirits are liable to find themselves in a labor camp.

Isn’t this what the rest of the world is converging towards, also?

Technological developments in recent decades have given the state powers it should never have had, and inevitably greedy leftist governments in the West are now abusing them. The universal surveillance of the January 6 riot showed that government’s ability to track people it does not like has skyrocketed.

Then, the prosecution of 1000+ innocent participants by corrupt leftist judges and zombie juries selected from the District of Columbia’s stagnant monoculture voter pool, followed by the disproportionately harsh sentences imposed on the politically unpopular attenders showed an appalling lurch away from a fair judicial system. In the eyes of the DC justice system, if you demonstrated in favor of President Trump on January 6 2021, you are effectively a Uighur, with no political or legal rights. The Biden regime was astonishingly lucky that the Trump supporters were not a more organized movement; otherwise the martyred Ashli Babbitt would have become the movement’s Horst Wessel, with an infinitely stirring anthem celebrating her that brought in millions of new enthusiastic followers.

Further on the legal front, the Biden regime’s four indictments and one potentially ruinous civil prosecution of Donald Trump are thoroughly reminiscent of Chinese practices in the bad old days of Mao Zedong, or more especially of Stalin’s Soviet show trials. The rigged January 6 Committee set up by Nancy Pelosi, with Liz Cheney as its Andrey Vishinsky, had standards of veracity and legal protection of its victims fully reminiscent of Moscow in the late 1930s; the only blessing was that the Committee was unable to impose death sentences, as had its Moscow predecessor. Next time, perhaps! Trump in this case is Nikolai Bukharin, the Old Bolshevik whose beliefs proved fatal when they fell out of intellectual favor.

In regards to China’s social control, the West is following suit in monitoring of banking and electronic transactions with similar mechanisms of reputational bullying used to bring private industry in line. Nigel Farage’s “de-banking” by Coutts, which was followed by a refusal to open an account for him by the rest of the bloated British banking oligopoly, was typical. There was much reference to the possibilities opened by the Chinese “social credit score” but in fact China is relatively libertarian in this respect; social credit score monitoring was imposed by only a few provinces, over-eager to exceed the “norms” in the vaguely worded Five Year Plan; it has since been cut back.

Britain is in some respects more authoritarian than the United States, but the recent saga of the gentleman imprisoned for a substantial term for posting a funny meme about Hillary Clinton during the 2016 election demonstrates that, with Biden- and Obama-appointed judges infesting every level of the judicial system save the Supreme Court, the possibilities for Stalinist mischief are endless.

This managerial Meliorism is rapidly infecting every facet of modern life. In the workplace, employees find themselves subject to increasingly invasive tracking ostensibly to monitor minute-by-minute productivity but increasingly used to force compliance to the daily mandates of the HR department, itself increasingly subject to the various ESG and DEI scoring systems imposed upon the company by unaccountable NGOs. In the home, consumer electronics are happy to abet in thought policing: game consoles monitor and report ‘hate speech’ violations, virtual assistants record and send back their surroundings if they detect distress, and good luck if you decide to replace your front door lock with a 1984-esque Telescreen ready to lock you out if you offend its sensibilities.

The “digital dollar” continually threatened by the Fed would increase the possibilities for “de-banking” of the disfavored. (Thank goodness they put Accenture and other big consultants in charge of the project, thus ensuring that it will be indefinitely delayed and a thousand times over budget!) Indeed, should cash be removed from the system, the government and its friends would know all our transactions, and would have the ability to prevent them, an ability that neither the Soviet Union nor China has fully implemented thus far.

At the macroeconomic level, the ability of Western economies to self-adjust through the price mechanism is becoming increasingly constrained. A decade of artificially low interest rates, with the government setting the price of money far below the level that the market would demand, has had the same effect as the Soviet Gosplan setting the price of steel too high – it has devastated productivity and resulted in endless pointless ziggurats of investment that will now have to be dismantled, with the utmost pain inflicted on ordinary participants in the economy.

More important, the dead hand of regulation is spreading ever deeper into the interstices of the economy. The climate change mania has spawned all sorts of Soviet-style diktats about giving up one set of products and switching to another, none of which take account in any way of relative costs and consumer preferences. The attempt to abolish gas stoves and gas-fired central heating is economically wholly irrational, as are the Dutch attempts to cull the cattle herd. “Agenda 2050” and the like will not only impoverish people, thereby infuriating voters especially in countries where all main parties accept this nonsense, but it will also push the economy still further into the hands of oligopolistic behemoths, thereby preventing small companies from competing and stifling innovation.

The same is true of the new “Artificial Intelligence” market, where the Biden administration has rushed to impose fatuous regulations about how AI bots must obey the dictates of political correctness, without having the slightest idea of how the market and the products may develop. These regulations will do little damage until a bureaucracy is set up to enforce and extend them; given the Biden administration’s track record, such a bureaucracy will very soon appear and bloat, as bureaucracies do, then imposing a Britannica-sized set of regulations that will freeze innovation in its tracks. Mandatory checklists for new models entrench major AI players (who already benefit from economies of scale in model training), likely driving small businesses and the legally unaccounted for open source work underground, reminiscent of the Soviet Union’s second economy.

The Chinese economy is currently showing that moving from a relatively free-market system to one controlled by the government depresses growth rates and prosperity. The same is even more true for the West, whose economies were built in the 19th and 20th centuries on the ability to make choices in a free market. On both climate change and AI, China is showing an admirable contempt for the constraints that are so important to Westerners; it is thus likely that in these areas at least, China will eat our lunch. It will run its industries on cheap and efficient coal, thereby undercutting the West in energy as well as labor, and without the constraints of idiot regulation will rapidly surpass the West in AI, an area in which China is currently behind but recognizes its importance (and the possibilities of intellectual property theft).

For those of us who are more “Economic Man” than political wannabes, the civil liberties restrictions that technology is imposing may be survivable. Like Jack Ma of Alibaba, we could perhaps navigate a politically restrictive environment like the China of 1995 quite successfully, thanking our lucky stars that success did not require the employment of a massively unpleasant goon squad, as success did in Russia at that period. However, the Sovietization of business life, its gradual progress from “liberalism” through “social democracy” to outright “command and control” would be both intolerable and impossible to overcome in our business ventures.

The West is undoubtedly converging on China, but it lacks China’s economic pragmatism and good sense. Instead, it is far more likely to find itself in the position of the Soviet Union of Leonid Brezhnev – who at his death was five years younger than President Biden and considerably more intellectually agile.


(The Bear’s Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of “sell” recommendations put out by Wall Street houses remains far below that of “buy” recommendations. Accordingly, investors have an excess of positive information and very little negative information. The column thus takes the ursine view of life and the market, in the hope that it may be usefully different from what investors see elsewhere.)