Wednesday, July 9, 2014

Jack Lew Applauds Chinese Keynesian Economic Moves

Treasury Secretary Jack Lew is in China and delivered a speech at the 2014 Strategic and Economic Dialogue Economic Track Opening Session.

One of the bizarre concepts of Keynesian economics is that it is consumption rather than investment that causes an economy to grow. Among other things, this flies in the face of basic supply and demand economics. Keynesian economics also sees a major role for government distortions of free market economies, which, in fact, do nothing but result in cronyism and suffocate economic growth. Yet, during his speech, Lew hailed moves by China for moving in this direction. Lew went even further and hailed China's "state-owned enterprises to strengthen social welfare."

Mao would be proud.

From Lew's remarks:
We also meet at an important moment in China’s economic transition.  You are seeking to shift to a new growth model that is structured around household consumption – rather than on investment and exports – and one that increasingly relies on the market to foster new firms, industries, and technologies.  In pursuit of these objectives, China unveiled an ambitious set of economic reforms at the Third Plenum last November, reforms that encourage competition and officially give the market a decisive role in the economy.  Strong determination in the implementation of Third Plenum reforms will help China achieve sustainable and balanced growth in the future.

The United States supports this reform effort, and looks forward to your success.  We are encouraged that the reforms China has outlined in the Third Plenum reflect many of the steps we believe are needed for China to have a prosperous future.

Measures to boost household income and mobilize the profits of state-owned enterprises to strengthen social welfare are a key part of the rebalancing.

No comments:

Post a Comment