International Forecaster Weekly

Inevitable but Completely Unforseen

No nation can prosper for long that’s predisposed to treat lies as if they were virtues. Alfred Adask explains why, contrary to belief, China will not be the great superpower of the 21st century as so many believe. Plutocrats rule, wherever they are, and in time they will all be thrown out in the same way. Where there is great inequality, there will eventually be revolution.

Alfred Adask | November 24, 2012

In A.D. 1856, Alexis de Tocqueville observed that the French Revolution was paradoxically both ''so inevitable, yet so completely unforeseen''. That social upheaval could not be avoided, and yet virtually no one saw it coming.   Could the same be said of today’s China?  What about the United States?

     Based on China’s size and extraordinary economic growth, some predict that the 21st century will be dominated by China.

     I disagree.

     In fact, I’ve disagreed for a least three years based largely on a single anecdote from a friend (“Donna”) who lived in China for one year.  While in China, Donna always had a guide.  The guide would never take her to the restaurants near her apartment.  Donna repeatedly asked why and always received an answer that seemed pleasant but untrue. 

     After several months, Donna insisted that the guide tell the truth.  The guide finally explained that the local restaurants served dogs and cats as meals; that the guide knew Americans loved their pets; therefore the guide would not risk taking my friend into such restaurants.

     The guide further explained that in the Chinese culture, a primary objective was to “maintain harmony”.  Everyone felt obligated to avoid “shocking” anyone else.  So, in order to “maintain harmony,” the Chinese people would routinely lie.  The guide lied to Donna to avoid shocking her.  In China, lying was culturally (“politically”) correct.

     I knew right then, that China would not become a permanent economic giant. They might flourish for 20 to 40 years, but they won’t last.

     No nation can prosper for long that’s predisposed to treat lies as if they were virtues.

     For example, even China’s Premier doesn’t know the actual size of the Chinese economy.  Why?  Because the heads of China’s various “states” routinely lie when they report their economic indicators.  The regional heads tell the Premier what they think the Premier wants to hear rather than the objective truth.  They routinely lie to “maintain harmony”. 

     Can any man or government manage an economy without access to honest economic indicators?  Of course not.  China’s predisposition to lies guarantee that China will suffer sudden calamities.

     Similarly, I don’t want to ride in a jet plane if the bolts holding the wings to the fuselage were tightened and torqued by a Chinese mechanic who believed his first duty was to “maintain harmony”.   I.e., suppose the foreman wants the wing bolts torqued to 125 pounds and asks the mechanic if that that job has been completed. Suppose the mechanic “maintains harmony” by lying that he had properly torqued the bolts when he had not.  I don’t want to ride on that plane.

     You can’t maintain a viable economy or technology with people predisposed to lie.  Insofar as a significant proportion of China’s people “maintain harmony” by telling lies, we can expect to see catastrophic Chinese failures when wings fall off aircraft, magnets fall off of high-speed monorails, and dams burst because the cement was made with sea salt rather than iron oxide. 

     “Maintaining harmony” may work in a world where people still travel on wooden wheels.  But in a civilization devoted to efficiency and travel at the speed of sound, “harmony” be damned—you must have a culture whose system of values predisposes all people to tell the truth, no matter how shocking.  

 The New York Times (“Amid Calls to Open China’s Politics, Party Digs In”) offers additional insight into China’s cultural predicament:

 “. . . . There is a rising chorus within the elite expressing doubt that the 91-year-old Communist Party’s authoritarian system can deal with the stresses bearing down on the nation and its 1.3 billion people. Policies introduced after 1978 by Deng Xiaoping lifted hundreds of millions out of poverty and transformed the country into the world’s second-largest economy.  But the way party leaders have managed decades of growth has created towering problems that critics say can no longer be avoided.”

     China’s “towering problems” are similar to the United States’ National Debt in two regards.  These problems:  1) are no longer avoidable; and 2) were caused by the Chinese and US governments.  The problems can only be solved by changes in government.  Neither government is willing to admit responsibility for causing the problems. Thus, these problems will not be solved.  They’ll simply fester until they inevitably explode.

“Chinese critics include billionaires, intellectuals and children of the party’s revolutionary founders. They say the party’s agenda, as it stands today, is not visionary enough to set China on the path to stability. [“harmony”] 

“What is needed, they say, is a comprehensive strategy to gradually extricate the Communist Party, which has more than 80 million members, from its heavy-handed control . . . . Only then, critics argue, can the government address the array of issue facing China, including rampant corruption, environmental degradation, and an aging population.”

     The 80 million Communist Party members constitute about 6% of China’s population.  There’s no way that those 80 million—who currently enjoy disproportionate power, privilege and wealth—will voluntarily agree to be “gradually extricated” from control over China.   Power concedes nothing.  The only way the Communist Party will be “extricated” from China is feet first. 

     So long as Party members won’t voluntarily abandon power, China can’t make the changes needed to sustain their previous growth and can’t address the “towering problems” caused by their communist government. 

     China can’t progress until they dump the Communist Party.  China can’t dump the Communist Party without a shooting revolution.  Communist inefficiencies should make a coming Chinese collapse or revolution inevitable. 

“At the root of the current economic model is the political system, in which party officials and state-owned enterprises work closely together, reaping enormous profits from the party’s control of the economy.  In this kind of economy, wealth concentrates where power is.”

     Apparently, the Communist government of China is not so different from the government of the United States.  Witness the growing number of Congressmen who’ve become millionaires while in office. Here, too, “wealth concentrates where power is.”

“The 400 or so incoming members of the party’s Central Committee, Politburo and Politburo Standing Committee, as well as their friends and families, have close ties to the most powerful of China’s 145,000 state-owned enterprises.”

     A government that has close ties to major corporations is generally described as “fascist”.   Thus, similarities between the governments of China and the US may flow the close ties between politicians and wealthy corporations. 

     China calls its government “communist”.  We call ours “democratic”. 

     Would it be more accurate to describe both governments as predominately “fascist”?

 “The growing presence of princelings—the children of notable Communist officials—in the party, the government and corporations could mean an even more closely meshed web of nepotism. It is a system that Xi Jinping, anointed to be the next president and himself a member of the ‘red nobility,’ would find hard to unravel, even if he wanted to.”

     China has “princelings”; the US has Wall St. Financiers.  Both China’s system and our own are similar in that politicians are increasingly close to, represent, or are even counted as members of, people of significant wealth.  The middle and lower classes tend to be unrepresented by the political “nouveau riche”.

     China’s “princelings” are further described in another New York Times article (“Dynasty of Different Order Is Reshaping China”):

“China’s princelings, who number in the hundreds, are emerging as an aristocratic class with an increasingly important say in ruling the country.  Many have already made their mark in the established order, playing important roles in state-owned enterprises [corporations].  Many countries have powerful families, but in China, they are becoming the dominant force in politics and business.  In this system, they have good bloodlines.” 

The conceit of plutocrats everywhere is that the rich are entitled—not by their work or integrity—but by their bloodlines and “breeding” to rule and exploit the inferior majority.

 “The ‘princelings’ are a volatile generation, often saw the worst side of the Communist revolution.  They are distinct from the current top rulers of China, most of whom owe their allegiance to institutions in the Communist Party. The ‘princelings’ have learned one thing, and that’s all you can count on is your family.

 “Without a Deng Xiaoping (former Premier) to settle questions, you have competition for the top spots,” said an independent Chinese political commentator.  “We don’t have elections, and we don’t have a system, so they go for the person with the most connections.” 

The man with the “most connections” will be obligated to his connections when he achieves power.  We can expect to see “rule by man” rather than “rule by law”.  People with “connections” will not represent the common people and will therefore tend to exploit them.  Exploitation by the “princelings” will predispose the common people to revolution which does not bode well for China’s economy and future.

     Peter Hartcher posted a brilliant article (“Bejing fears sparking its own French revolution”) in the Sydney Morning Herald:

“China's political leaders put stability [“harmony”] above all else. So it's remarkable that they are passing around well-thumbed copies of a book about the sudden, bloody outbreak of the French Revolution 225 years ago. Why would China's modern rulers be interested in Alexis de Tocqueville's The Old Regime and the French Revolution?

A:  Because they know they’re riding the tiger.

“Since the Communist Party seized power in 1949 in a violent revolution, its highest priority has been to guard against what it calls ''counter-revolution''.  Yet the popularity of Tocqueville's work suggests that counter-revolution is precisely what it now fears.

“Among the many passages that must send chills down the spine of China's dictators is the French historian's famous remark that the outbreak of France's violent upheaval was ''so inevitable, yet so completely unforeseen''.  And Tocqueville's 1856 prediction that the French Revolution ''for many years to come will trouble the sleep of all who seek to demoralize the nation and reduce it to a servile state,'' seems to be vindicated. 

     In other words, whenever the politicians, judges, lawyers, wealthy, multi-national corporations, plutocrats, bureaucrats, lobbyists, Kenyans and neo-cons think they’re so slick that they can not only run the country, but run it treasonously for their own benefit and at the gross expense of the people—you can bet that a revolution, complete with guillotines and gibbets, is “inevitable” but will nevertheless be “unforeseen”. 

     Such revolutions will occur as suddenly and without warning as the “Arab Spring” of A.D. 2011 when 4 nations’ governments were overthrown, and 13 more were threatened. 

''In all likelihood, these leaders sense an impending crisis that could imperil the Chinese Communist Party's survival in the same way that the French Revolution ended Bourbon rule.  Telltale signs of anxiety are already visible. Capital flight from China is now at a record high. Polls of China's dollar millionaires reveal that half of them want to emigrate.

“Tocqueville writes of a festering popular resentment at the privileges of the elites, at their feckless pursuit of self-gain.

“He observes ‘the steady growth among the people of two ruling passions.’ One was ‘an intense, indomitable hatred of inequality.’ Inequality in China today is at its greatest since the revolution.

     Inequality is also growing in the U.S..  The minority of super-rich Americans is increasingly separated from the growing lower classes.  We’re becoming a two-tier society wherein each tier has little in common with the other except mutual distrust and contempt. 

“The second ruling passion was ‘a desire to live not only on an equal footing but also as free men.’  How strong is this in modern China?  There are an estimated 500 protests, riots and strikes every day in China, four times the number of a decade ago.

     I read the growing number of protests, etc., as evidence of what results when a nation’s institutionalized lies can no longer suppress the truth.   The resulting protests remind me of the hairline fractures that occur in a metal part before it suddenly suffers a catastrophic failure.

“Nevertheless, the message from the outgoing President Hu gives is a reassertion of conservative core values—'the Party must pull out all stops to preserve its monopoly on power.''' 

     Power concedes nothing.  China’s communist party sounds much like the Republican elite “pulling out all the stops” to prevent Ron Paul and his supporters from winning the A.D. 2012 Republican presidential nomination.  If so, we might infer that whenever a ruling elite “pulls out all the stops” to retain their power, that power may be about to disappear.

''It's highly unlikely that the incoming president Xi Jinping will be able to achieve any political reform, at least in his first five-year term.'' 

     What are the chances that Obama will achieve any significant economic reforms over the next four years?  Aren’t Americans also locked into an economic fate that neither Obama nor Romney could evade?  Like China, aren’t Americans also trapped in an “inevitability” precipitated by our previous 40 years of fiat currency, free lunches and rising debt? 

     Yes, Obama & Co. can continue to kick the can further down the road, and then a little further still.  But everyone knows that the road (fiat currency) is a dead end.

Sooner or later, we’ll run out of road.  When we reach that inevitable dead end, we’ll reach the inevitable revolution. 

“Isn’t this the very time China's leaders need to pursue political liberalization to ease the building tensions that have led to parallels with pre-revolutionary France?”

“Not necessarily. Tocqueville wrote:  ‘Experience teaches us that, generally speaking, the most perilous moment for a bad government is one when it seeks to mend its ways. Only consummate statecraft can enable a king to save his throne when, after a long period of oppression, he sets to improving the lot of his subjects.’” 

     In other words, once a government turns “bad,” it dare not try to mend its ways.   Faced with the choice of doing right or protecting its own survival, every government will choose to protect itself.  That guarantees that the bad governments will precipitate an economic collapse or a political revolution that is both inevitable but unforeseen. 

     De Tocqueville observed that the French Revolution was both “inevitable” but paradoxically “unforeseen”.  That description may also fit today’s China.  China’s “towering problems” were primarily caused by China’s government.  Those problems may be solved only if China’s government is “gradually extricated” from power.  But power concedes nothing.  Thus, those problems will persist until some sort of revolution (the abandonment of institutionalized lies) inevitably occurs. 

     Nevertheless, that inevitable revolution will remain largely “unforeseen”—just as the Arab Spring was “unforeseen”—until something as unexpected as a Tunisian street peddler setting himself on fire triggers a political and economic collapse.

     Similarly, the U.S. has a national debt that can’t possibly be paid.  This national debt—and the fiat currency that made that debt possible—constitute America’s “towering problems”.  Those “towering problems” were caused by our government and won’t be solved until our government is “gradually extricated” from power.  But power concedes nothing, so our government will not only hang onto power, it will seek even more power.  Thus, our “towering problems” make an American economic collapse or even revolution “inevitable”. 

     If you’re reading this article, you already know that some sort of economic calamity is inevitable.   You just don’t know when the calamity will happen.  Neither do I.  Thus, as with the French Revolution, the Arab Spring, and the coming Chinese revolution, America’s coming calamity—though clearly “inevitable”—will nevertheless be sudden and “unforeseen”.  It might happen next spring.  It might happen next decade.  We don’t know.  

     Implication?  If America’s next revolution/economic-collapse is inevitable, now’s the time to prepare.  Food, water, guns, ammo, gold, silver.

     Buckle up for the inevitable . . . precisely because it will be virtually “unforeseen”.