High Taxes in the West Means China Wins
Doug Casey lays out yet another reason for China’s rise in a way I hadn’t considered…
Take an American and a Chinese, each with a dollar. Say both are equally smart and hardworking, and each is able to double his dollar every year—2, 4, 8, 16… The only difference is that the American pays 35% in taxes and the Chinese pays nothing. Actually the American is paying close to 50% and the Chinese is paying something, but the difference is about the same. With only that differential, by the time the American has one million dollars, how much does the Chinese have? The answer is that by the time the American has a million dollars in 28 years, the Chinese has 268 million.
Actually the situation is even grimmer. The Chinese will probably work harder. He’s in an environment where, if only because of minimal regulation, he’ll make his capital grow faster. If Herrnstein and Murray are right in their book The Bell Curve, the Chinese guy is smarter (105 v. 100 average IQ for Europeans). And then, when the American dies, the government will take half of his piddling million dollars for estate taxes, so his kids start with no meaningful financial capital. And probably minimal intellectual capital, if the obvious dumbing down of American schools has anything to do with it. Meanwhile, the scions of the Chinese will have an untaxed $268 million, and probably a much better education and stronger work ethic to help them deploy it.
The average American has been so brainwashed that he thinks he has a moral obligation to give the government whatever it asks for; he thinks he’s being dishonest and cheating if he puts his own and his family’s welfare above the demands of the State. At the same time, he thinks the State has a moral obligation to provide for his health, education, welfare, and retirement.
The average Chinese, however, recognizes the government as his adversary and feels no moral obligation at all towards it, only to his family. He knows the guy calling himself “the government” is just a successful warlord, and a successful warlord is just a major league criminal. He considers it his duty to deny resources to the State because he knows he can’t feed the beast and his family with the same grain of rice. And he has no concept of the State taking care of him; that’s something his family does.
Most of the reasons I’ve seen for China’s rise (and the West’s decline) is for economic and cultural reasons. Regardless of its booming growth, in China, the culture is that your kids need to take care of you in your old age. In the West, the culture is that a politician like Bernie Sanders needs to take care of you in your old age.
Yet Casey makes a great point; there are tax and governmental reasons as well. Governments and taxes in the West just keep growing and growing forever, regardless of who you vote for. (Both Trump and Hillary are believers in big government.) At some point, this system will break. Yet China will just keep growing, even if it has problems (which it will; it’s about to suffer a huge real estate crash, but this won’t stop it from ruling the world in a few decades).
As usual, I’m acting on this information. As part of my moving out of the country plan and long-term business plan, I’m now developing plans to get a full-time, year-round office or studio apartment in either Shanghai or Hong Kong. The target time frame for this is 2017-18. Hopefully the real estate crash over there will happen soon, then I can scoop up some property very cheap. Once I have it, I can fly out to Asia literally whenever I feel like it, not worry about office space, meeting rooms, or hotels, not worry about how long I stay there, and be able to actually leave stuff over there.
It will be my home base in Asia, and I will maintain it even if I end up moving to South America in 2025. Any costs I incur because of it will easily be offset by the new business I get over there. It’s a wealthy and hungry market, great for Western business consultants, workshop leaders, and information marketers like me. I’m also penciling out a Chinese version of the Alpha Male 2.0; that has the potential to be bigger there than in the West, not just for economic reasons (wealthier market) but simply because of population size; 1.3 billion people and growing.
One of my long-term business objectives for down the road is to have at least 60% of my income originate from non-US and non-European sources. Asia is the ideal source for this. South America, Australia, and New Zealand are acceptable but not as good as Asia. Income I receive from the US or Europe I consider temporary and not to be relied upon for the rest of my life. I don’t like saying that, but I know the collapse is coming; I just don’t know when it’s coming. Better to be safe than sorry. Even if I’m wrong (and I’m not), China will still have way more money than the West. There’s no reason I shouldn’t have a piece of that. No reason you shouldn’t either.
China, here I come!