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The U.S. Marches Toward State Capitalism With American Characteristics​

President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy​


🎁 —> https://www.wsj.com/economy/the-u-s...8?st=RdZth8&reflink=desktopwebshare_permalink

“A generation ago conventional wisdom held that as China liberalized, its economy would come to resemble America’s. Instead, capitalism in America is starting to look like China.

Recent examples include President Trump’s demand that Intel’s CEO resign; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct.

This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises.

China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France.

So call this variant “state capitalism with American characteristics.” It is still a sea change from the free market ethos the U.S. once embodied.…”
 
nycfan said:

The U.S. Marches Toward State Capitalism With American Characteristics​

President Trump is imitating Chinese Communist Party by extending political control ever deeper into economy​


🎁 —> https://www.wsj.com/economy/the-u-s...8?st=RdZth8&reflink=desktopwebshare_permalink

“A generation ago conventional wisdom held that as China liberalized, its economy would come to resemble America’s. Instead, capitalism in America is starting to look like China.

Recent examples include President Trump’s demand that Intel’s CEO resign; the “golden share” Washington will get in U.S. Steel as a condition of Nippon Steel’s takeover; and the $1.5 trillion of promised investment from trading partners Trump plans to personally direct.

This isn’t socialism, in which the state owns the means of production. It is more like state capitalism, a hybrid between socialism and capitalism in which the state guides the decisions of nominally private enterprises.

China calls its hybrid “socialism with Chinese characteristics.” The U.S. hasn’t gone as far as China or even milder practitioners of state capitalism such as Russia, Brazil and, at times, France.

So call this variant “state capitalism with American characteristics.” It is still a sea change from the free market ethos the U.S. once embodied.…”
Click to expand...
“… Many in the West admire China for its ability to turbo charge growth through massive feats of infrastructure building, scientific advance, and promotion of favored industries. American efforts are often bogged down amid the checks, balances and compromises of pluralistic democracy.

In his forthcoming book, “Breakneck: China’s Quest to Engineer the Future,” author Dan Wang writes: “China is an engineering state, building big at breakneck speed, in contrast to the United States’ lawyerly society, blocking everything it can, good and bad.”

To admirers, Trump’s appeal is his willingness to bulldoze those lawyerly obstacles. He has imposed tariffs on a broad array of countries and sectors, seizing authority that is supposed to belong to Congress.…”
 
nycfan said:
“… Many in the West admire China for its ability to turbo charge growth through massive feats of infrastructure building, scientific advance, and promotion of favored industries. American efforts are often bogged down amid the checks, balances and compromises of pluralistic democracy.

In his forthcoming book, “Breakneck: China’s Quest to Engineer the Future,” author Dan Wang writes: “China is an engineering state, building big at breakneck speed, in contrast to the United States’ lawyerly society, blocking everything it can, good and bad.”

To admirers, Trump’s appeal is his willingness to bulldoze those lawyerly obstacles. He has imposed tariffs on a broad array of countries and sectors, seizing authority that is supposed to belong to Congress.…”
Click to expand...
“…There are reasons state capitalism never caught on before. The state cannot allocate capital more efficiently than private markets. Distortions, waste and cronyism typically follow. Russia, Brazil and France have grown much more slowly than the U.S.

… State capitalism is an all-of-society affair in China, directed from Beijing via millions of cadres in local governments and company boardrooms. In the U.S., it consists largely of Oval Office announcements lacking any policy or institutional framework.

“The core characteristic of China’s state capitalism is discipline, and Trump is the complete opposite of that,” Wang said in an interview….”
 
nycfan said:
“…There are reasons state capitalism never caught on before. The state cannot allocate capital more efficiently than private markets. Distortions, waste and cronyism typically follow. Russia, Brazil and France have grown much more slowly than the U.S.

… State capitalism is an all-of-society affair in China, directed from Beijing via millions of cadres in local governments and company boardrooms. In the U.S., it consists largely of Oval Office announcements lacking any policy or institutional framework.

“The core characteristic of China’s state capitalism is discipline, and Trump is the complete opposite of that,” Wang said in an interview….”
Click to expand...
“… State capitalism is a means of political, not just economic, control. Xi ruthlessly deploys economic levers to crush any challenge to party primacy. In 2020 Alibaba co-founder Jack Ma, arguably the country’ most famous business leader, criticized Chinese regulators for stifling financial innovation. Retaliation was swift. Regulators canceled the initial public offering of Ma’s financial company, Ant Group, and eventually fined it $2.8 billion for anticompetitive behavior. Ma briefly disappeared from public view.

Trump has similarly deployed executive orders and regulatory powers against media companies, banks, law firms and other companies he believes oppose him, while rewarding executives who align themselves with his priorities. …

… Trump’s first term, CEOs routinely spoke out when they disagreed with his policies such as on immigration and trade. Now, they shower him with donations and praise, or are mostly silent.

Trump is also seeking political control over agencies that have long operated at arm’s length from the White House, such as the Bureau of Labor Statistics and the Federal Reserve. That, too, has echoes of China where the bureaucracy is fully subordinate to the ruling party.

Trump has long admired the control Xi exercises over his country, but there are, in theory, limits to how far he can emulate him.

American democracy constrains the state through an independent judiciary, free speech, due process and the diffusion of power among multiple levels and branches of government.

How far state capitalism ultimately displaces free-market capitalism in the U.S. depends on how well those checks and balances hold up.”
 

A New Generation of ‘Buy the Dip’ Investors Is Propping Up the Market​

Investors were told to fear the crash and instead learned to love the dip​


🎁 —> https://www.wsj.com/finance/stocks/...c?st=UMcFxU&reflink=desktopwebshare_permalink

“… When markets swooned this spring in the face of tariff turmoil, individual investors jumped in to buy the dip. They helped propel a rebound in stocks to record levels and even resurrected meme trades.

For many Wall Streets pros, this is yet another sign of froth at a time when stocks, especially the biggest tech names, are historically expensive. The meme-stock trades are rekindling memories of the dot-com boom.

But the resilience of individual investors may signal something more than just misplaced optimism. Their willingness to stick with stocks may be more enduring than many veterans realize. That, in turn, may help temper any eventual reversion to the mean for highflying stocks.

… Take the financial crisis. Investors yanked almost $50 billion from U.S. equity funds in 2008 and continued pulling money for four consecutive years even after stocks bottomed in March 2009, according to EPFR data. Those who sold missed out on the beginning of the longest bull market since the S&P 500’s inception.

Meanwhile, after the dot-com bubble popped, the S&P 500 didn’t claim a new high for around seven years.

… This has occurred at a time of a wider societal shift: Trading and betting has morphed into entertainment for many Americans. Group chats pop with comments from friends on sports, hot stocks and memes. Everyone seems to know someone who made millions overnight in cryptocurrencies.

Changed attitudes toward gambling have coincided with tech advances that have made it easier, and cheaper, to trade a wide variety of assets. Some brokerages have sought to “gamify” investing, creating the look and feel of a casino within their apps. At the same time, they also offer high-octane trades on things such as options and prediction markets….”
 
nycfan said:

A New Generation of ‘Buy the Dip’ Investors Is Propping Up the Market​

Investors were told to fear the crash and instead learned to love the dip​


🎁 —> https://www.wsj.com/finance/stocks/...c?st=UMcFxU&reflink=desktopwebshare_permalink

“… When markets swooned this spring in the face of tariff turmoil, individual investors jumped in to buy the dip. They helped propel a rebound in stocks to record levels and even resurrected meme trades.

For many Wall Streets pros, this is yet another sign of froth at a time when stocks, especially the biggest tech names, are historically expensive. The meme-stock trades are rekindling memories of the dot-com boom.

But the resilience of individual investors may signal something more than just misplaced optimism. Their willingness to stick with stocks may be more enduring than many veterans realize. That, in turn, may help temper any eventual reversion to the mean for highflying stocks.

… Take the financial crisis. Investors yanked almost $50 billion from U.S. equity funds in 2008 and continued pulling money for four consecutive years even after stocks bottomed in March 2009, according to EPFR data. Those who sold missed out on the beginning of the longest bull market since the S&P 500’s inception.

Meanwhile, after the dot-com bubble popped, the S&P 500 didn’t claim a new high for around seven years.

… This has occurred at a time of a wider societal shift: Trading and betting has morphed into entertainment for many Americans. Group chats pop with comments from friends on sports, hot stocks and memes. Everyone seems to know someone who made millions overnight in cryptocurrencies.

Changed attitudes toward gambling have coincided with tech advances that have made it easier, and cheaper, to trade a wide variety of assets. Some brokerages have sought to “gamify” investing, creating the look and feel of a casino within their apps. At the same time, they also offer high-octane trades on things such as options and prediction markets….”
Click to expand...
“… Of course, every bull market ends. And the higher that valuations are at that point, the more jarring the fall can be.

But if there has been a meaningful change in investor psychology, there could be an underappreciated cushion that limits the damage. Today’s new, bullish investors might function like short sellers did previously, stepping in to buy when everyone else was selling.

Charles Schwab recently surveyed its customers and found that around 80% said they planned to buy if markets grew volatile in coming months.

The impulse to stay invested might be more powerful, and durable, than many in markets appreciate.…”
 
nycfan said:
“… State capitalism is a means of political, not just economic, control. Xi ruthlessly deploys economic levers to crush any challenge to party primacy. In 2020 Alibaba co-founder Jack Ma, arguably the country’ most famous business leader, criticized Chinese regulators for stifling financial innovation. Retaliation was swift. Regulators canceled the initial public offering of Ma’s financial company, Ant Group, and eventually fined it $2.8 billion for anticompetitive behavior. Ma briefly disappeared from public view.

Trump has similarly deployed executive orders and regulatory powers against media companies, banks, law firms and other companies he believes oppose him, while rewarding executives who align themselves with his priorities. …

… Trump’s first term, CEOs routinely spoke out when they disagreed with his policies such as on immigration and trade. Now, they shower him with donations and praise, or are mostly silent.

Trump is also seeking political control over agencies that have long operated at arm’s length from the White House, such as the Bureau of Labor Statistics and the Federal Reserve. That, too, has echoes of China where the bureaucracy is fully subordinate to the ruling party.

Trump has long admired the control Xi exercises over his country, but there are, in theory, limits to how far he can emulate him.

American democracy constrains the state through an independent judiciary, free speech, due process and the diffusion of power among multiple levels and branches of government.

How far state capitalism ultimately displaces free-market capitalism in the U.S. depends on how well those checks and balances hold up.”
Click to expand...
Related:






 
lawtig02 said:
Those Trump Checks that are coming in September 2026 have to be funded somehow.
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TBH, Trump is missing a golden political opportunity — dedicate all or at least half of the Tariff income to refilling the Social Security Trust Fund and he would have a major political victory, IMO. Say half to pay down debt, half to fund Social Security. It isn’t nearly enough to fix either long term but hundred of billions could extend the looming deadline when SS benefits will have to be reduced to about 75% of current benefits in the 2030s if nothing is done. And some conservative economists likely prefer having a use tax accomplish that rather than increasing the SS tax (or removing the cap on income subject to SS tax).
 
nycfan said:
TBH, Trump is missing a golden political opportunity — dedicate all or at least half of the Tariff income to refilling the Social Security Trust Fund and he would have a major political victory, IMO. Say half to pay down debt, half to fund Social Security. It isn’t nearly enough to fix either long term but hundred of billions could extend the looming deadline when SS benefits will have to be reduced to about 75% of current benefits in the 2030s if nothing is done. And some conservative economists likely prefer having a use tax accomplish that rather than increasing the SS tax (or removing the cap on income subject to SS tax).
Click to expand...
That's a good idea. I'll be shocked if he does it, though, because Trump is playing entirely to his non-college educated base, and he knows that group will be far more impacted by a check signed by him than by an esoteric payment plan for a revenue source they count on but don't understand.

I also think we may be approaching peak tariff revenue. Importers have been willing to pay them so far because they're hoping Trump will TACO. But it's not sustainable, and we're about to start seeing companies taking creative steps to avoid the tariffs.
 
lawtig02 said:
I also think we may be approaching peak tariff revenue. Importers have been willing to pay them so far because they're hoping Trump will TACO. But it's not sustainable, and we're about to start seeing companies taking creative steps to avoid the tariffs.
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I doubt it. The reciprocal tariffs just kicked in. That will raise revenue, the same way income tax rates raise revenue when increased despite creative steps to avoid.

I think companies are just going to pass on the costs and/or shut down/move elsewhere.
 
IMG_8729.jpeg

🎁. —> https://www.wsj.com/opinion/who-is-...4?st=VhPKZr&reflink=desktopwebshare_permalink

“… [Miran] summed up his central argument in a widely cited November 2024 essay:

“From a trade perspective, the dollar is persistently overvalued, in large part because dollar assets function as the world’s reserve currency.” Foreign central banks hold huge dollar reserves and most of the world’s goods are traded in dollars. He says this global demand for dollars results in an overvalued greenback that leads to trade imbalances and harms Americans.

His solution? Manage a decline in the dollar’s value over time by reducing the global demand for the U.S. currency, or at least mitigate the effects of its overvaluation. Tariffs do the latter in his view by forcing foreigners to pay for the fact that their currencies are undervalued and boost their exports to the U.S.

But his ambition goes beyond tariffs. In that 2024 essay he laid out other policy options for negotiating a weaker dollar and diminishing its reserve-currency status. One idea is to tax foreigners who hold U.S. Treasury debt as an incentive to hold less of it. This would amount to a de facto default on current debt.

More ambitiously, Mr. Miran floats a “Mar-a-Lago Accord” in which leading nations would negotiate a new global financial system to rebalance currency values. This echoes the Plaza and Louvre accords of the 1980s that coordinated monetary policies to arrest the surging dollar amid the rush of capital and goods into the U.S. during the Reagan economic boom….”
 
I've addressed Miran's paper before on this site. It is incoherent. It also completely ignores services.

The idea of selectively taxing foreign debt is bonkers, not only because it's a default. It's also impossible. Anyone can form a US holding company, throw Treasuries into it, and sell bonds that just happen to pay the same as Treasuries. If some of the investors are Americans, what the hell is the government going to do? Miran probably should have talked to someone with actual experience in finance.
 
nycfan said:
IMG_8729.jpeg

🎁. —> https://www.wsj.com/opinion/who-is-...4?st=VhPKZr&reflink=desktopwebshare_permalink

“… [Miran] summed up his central argument in a widely cited November 2024 essay:

“From a trade perspective, the dollar is persistently overvalued, in large part because dollar assets function as the world’s reserve currency.” Foreign central banks hold huge dollar reserves and most of the world’s goods are traded in dollars. He says this global demand for dollars results in an overvalued greenback that leads to trade imbalances and harms Americans.

His solution? Manage a decline in the dollar’s value over time by reducing the global demand for the U.S. currency, or at least mitigate the effects of its overvaluation. Tariffs do the latter in his view by forcing foreigners to pay for the fact that their currencies are undervalued and boost their exports to the U.S.

But his ambition goes beyond tariffs. In that 2024 essay he laid out other policy options for negotiating a weaker dollar and diminishing its reserve-currency status. One idea is to tax foreigners who hold U.S. Treasury debt as an incentive to hold less of it. This would amount to a de facto default on current debt.

More ambitiously, Mr. Miran floats a “Mar-a-Lago Accord” in which leading nations would negotiate a new global financial system to rebalance currency values. This echoes the Plaza and Louvre accords of the 1980s that coordinated monetary policies to arrest the surging dollar amid the rush of capital and goods into the U.S. during the Reagan economic boom….”
Click to expand...
Just the most recent and laughable example of the Trump admin looking at a global economic system that WAS BUILT TO BENEFIT THE USA and saying "I think we should ruin that." Just incredibly stupid stuff here. Yeah, you guys are right, things WILL be less expensive if you just ruin the US economy. These guys literally think we will be better off if millions of Americans are sitting in factories sewing socks and putting together Iphones. Bonkers stuff.
 
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