Slate: What lies ahead for China politically?
Schiff: I think there will ultimately be more freedom than there is today. Will China ever become a one man, one vote democracy? Hopefully not, for the sake of the Chinese. Doing so has certainly not served our interest. We enjoyed a lot more freedom and prosperity when we were less democratic. In the 19th century we were quite undemocratic in the way government ran, and we benefited from that lack of democracy. But as we became more democratic, we grew less free and therefore less prosperous. If they’re wise, the Chinese won’t follow that example. They’ll try to model their government after what America used to be, before we screwed it up.
Slate: In 2010, there were 180,000 “mass incidents” (protests) reported in China. That’s almost 500 a day. The Communist Party spent $95 billion on “internal security” in 2011, more than it spent on national defense. Aren’t the costs of state capitalism, or of an authoritarian system that makes state capitalism possible, pretty high?
Schiff: People are dissatisfied in this country, too. We’ve got protesters—look at Occupy Wall Street. There is a great deal of inflation in China right now, which frustrates a lot of people. That is the cost of subsidizing the U.S. economy. If the Chinese simply allowed the renminbi to rise, instead of propping up the dollar, then you’d see far less unrest in China; the people would enjoy their prosperity and productivity more.
Methinks Schiff is blind in at least one eye. But you make the call.
