Meat, Milk and Motors: The New China Syndrome

August 21, theatres around the nation screened the documentary I.O.U.S.A. and a live discussion with America's most notable financial leaders and policy experts, including Warren Buffett; William Niskanen, chairman of the Cato Institute; Pete Peterson, senior chairman of The Blackstone Group and former U.S. Comptroller General, Dave Walker.

August 25, Mr. William Niskanen, CEO of the Cato Institute, confirmed his remarks on the I.O.U.S.A. post-broadcast panel discussion.
Dear Mr. Singer,
I do not have a tape of my remarks last Thursday evening. As I remember, however, I expressed being puzzled why the central banks of China, Japan, and South Korea have continued to invest so much in U.S. Treasury securities.  For these central banks have earned a negative real return on these securities, for which the interest rate has been lower than the depreciation of the dollar.

I would value your judgment about this puzzle... William A. Niskanen

China is a "Hot Topic" at the nationally and internationally recognized Center for Trade Policy at Mr. Niskanen's Cato Institute, but the research staff has been unable to find a political, diplomatic, military or economic solution to the China puzzle, because there isn't one.

China's economic policy is an enigma that would baffle Ludwig von Mises and Karl Marx.  The answer to the Chinese enigma: China is now the Air Pollution champion of the world.

No country in history has emerged as a major industrial power without creating a legacy of environmental damage. But just as the speed and scale of China's rise as an economic power have no clear parallel in history, its pollution problem has shattered all records as well.

China's environmental degradation is so severe it has become the world's problem. Sulfur dioxide and nitrogen oxides spewed by China's coal-fired power plants fall as acid rain on Seoul, South Korea, Tokyo and according to the Journal of Geophysical Research, much of the particulate pollution over Los Angeles originates in China.

Chinese officials, before and after the Tiananmen Square massacre, pretend to pursue economic development and industrialization for the benefit of their population, but in spite of the glitter of China's big cities and the rise of its billionaire class, the vast majority of the Chinese people are repressed, working in slave labor camps and living in poverty.

The path China took to industrialization was unusual.  John Watson, Professor at Reno-based Desert Research Institute, notes: "They're making a lot of the same mistakes we made in our air pollution history. You can just see the parallels: they're building more highways and encouraging more sprawl."

Mistakes?  Consider the Communists First Five-Year Plan
When Communism became the ideology of the people in 1949, they fought pollution during the successful First Five-Year Plan from 1953-57 and were moving towards 100% recycling until 1958 when the Great Leap Forward became the Great Leap Famine and between 16.5 million and 40 million people died before the experiment came to an end in 1961.

During the Five-Year Plan, Chinese articles and journals extolled the benefits of recycling. "When a case of pollution arose, there was scientific and collective action to undo the damage. The most harmful industrial wastewater is that which contains phenol. If this kind of poisonous industrial water is drained into a body of water (such as a river, lake, or sea) before treatment, it will pollute the water, kill the fish, and endanger the health of the people. And if such poisonous waste water is drained into the farmland, it will badly affect the normal growth of the crops."

The "Mistakes" explanation requires you believe no one in China read or studied the industrialization of the Western Countries. "Cost-benefit analyses in the U.S. show that emission reduction programs have provided much greater benefits than their costs, by a ratio of up to 40 to 1. Air pollution damage not only impacts the ecosystem but imposes major economic costs as well as, from premature mortality, increased health care and lost productivity and, more importantly, decreased crop yields."

Air Pollution thick as Pea Soup
A World Bank study found China is home to 16 of the world's 20 worst cities for air quality. Three-quarters of the water flowing through urban areas is unsuitable for drinking or fishing.

Pea-soup air in Beijing is caused in part by a sudden switch from bicycles to automobiles as a means of transportation. With nearly 156 million motor vehicles, bicycles are no longer welcome in cities that are being rebuilt to accommodate automobiles.

China's bike lanes have been sacrificed in the name of road and highway construction. In the Fujian province, Chinese city and regional officials went so far as to ban electric bicycles because they were worried "the lead-acid batteries are an environmental risk, and that the use of electric bikes undercuts the use of public transit." Both arguments apply far better to automobiles, but automobiles are encouraged and riding a bicycle without a license can get you arrested.

Following Western Pollution's Footsteps The U.S. also sacrificed mass transit in the 1930's when the National City Lines (NCL) converted the nation into an automobile-dependent society by dismantling most streetcar systems throughout the United States.

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Robert Singer is a retired information technology professional and an environmental activist living in southern California. In 1995 he and his cousin Adam D. Singer founded IPC The Hospitalist Company, Inc., where he served as chief technology (more...)
 

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