China has become a leading exporter to America. Over the last year or so there has been a lot of bad press about the inferior quality of Chinese goods. This has caused a lot of pressure to be put on China. American policy makers have literally visited China over this issue, and the American press constantly pushes Chinese authorities to clean things up. Last month Treasury Secretary Paulson said it would be a top issue when he met with Chinese ministers for talks. I don’t know how effectively, but China now appears to be responding.

All good and well, except for this: Why is America a capitalist country, pushing China a communist nation towards greater regulation, that is towards greater centralization. How can that be?

Let me speculate. Again, this is just speculation.

The communist government of China is a vast centralized bureaucracy that because of its bloated inefficiency exerts very little control at the local level. As the government has begun to take a more hands off approach, cowboy capitalism has begun to expand rapidly in any area where the government has chosen to … well, basically … do nothing. So in areas where the government does nothing, China’s economy is now expanding at a near frantic pace.

However, the situation in America is different. America doesn’t have cowboy capitalism. America has what Ron Paul has described as “soft fascism“, big business in bed with big government.

Now compare the dynamic growth of China with America’s sluggish growth and inflationary economy. We’re told this is just because America is a mature economy, while China is a developing one. Really? Given that new technology and innovation are constantly changing the economic landscape how can that possibly make sense? How can one ever differentiate between a mature economy and an emerging one? What makes more sense is that literally in some areas, China now has a more freewheeling capitalist market than even America. Strange as that may sound, it is probably the case. That’s what is spurring the growth.

Most of us at some point or another have been lead to believe that business and government are anathema to each other. Well, yes and no. It depends on how you look at it.

While I am an ardent capitalist and free marketer, I am aware that when big business lies down with big government, the spawn of that evil union is regulation. Regulations are always crafted to support the status quo. You want to open up a new restaurant or build a new toy factory? Well, you face a uphill battle to get through all the paper work to make sure you are in compliance with all the necessary regulations. You’ll need an expensive lawyer just to explain it all to you, and that’s just the beginning.

That’s good if you are already the status quo. That’s good if you are already in business. But it’s not good if you want to enter the market as a new player. The current status quo competitors have managed to fight you off before you ever began with government regulations. This may help them, but it hurts the market, and it stifles innovation.

So perhaps when people say a mature economy can’t grow like an emerging one, they mean that a regulated economy can’t prosper as much as an unregulated one can. And that certainly is the case. So what’s really happening, is China is so unregulated at this point (no safety laws, barely any minimum wage laws) that it’s companies are too competitive. And there’s the real problem! Current status quo big business feels threatened.

Regulation supports the current players on the market and helps them win via government interference. It stifles competition. But big business likes this because that is exactly what they want. They want to stifle the competition.

I mean, what’s wrong with the “not-for-profit, privately owned and operated product safety testing and certification organization,” UL. You don’t need government regulation. Look at the fantastic job UL has done since its inception, and without any help from the government. What we need are more organizations like UL. We’ll only get this when people begin to take more self-responsibility for the products they purchase.

The irony here, is that America, the capitalist country is pushing China, the communist country towards “soft fascism.” We want their big business to lie down with their big government and to lay some regulation eggs. That will turn them into a mature economy. That will make them less competitive like us.

But guess what? They’re big business is gradually becoming our big business. Maybe that’s why many of them support the so-called “free trade” agreements and the World Trade Organization.

Who sets trade policy for America, ordinary Americans? Less and less so.

Who sets trade policy for China, ordinary Chinese? Less and less so.

On both sides, corporate elitists fund private think tanks that suggest and eventually control policy. This can be done in the complete open because people so passively accept it as something good.

Unbound by any democratic process, gradually important elements of your sovereignty are being taken over the WTO. This is not a conspiracy theory, just an objective view of the situation. See here for a great essay on this.

So while communism may be on the way out, so perhaps is free market capitalism. And the new philosophy of the day is, again, to use Ron Paul’s term, is “soft fascism.” Some day perhaps we can all have mature economies, full of safety and security … and the status quo. For example, your medical care will be just as good as your international neighbors. All the world’s medical care will be equal. But in the absence of innovation, it will also be quite mediocre.

Okay, that is a bit extreme, but that would seem to be the general direction.

What is particularly sad about this, is it would appear that that’s what the people want. After all, what was your first reaction when you heard there were major problems with certain Chinese goods?

A) Okay then, no problem, I simply won’t buy any more Chinese goods until I can be sure of their safety.

B) The government needs to do something about this.

Therein lies the real problem. We don’t need a conspiracy theory to understand what’s happening. We simply need to look at ourselves in the mirror.