Those of us who believe that the free market typically make better planning decisions than governmental agencies — that motivated investors and entrepreneurs, who are looking out for their own money and returns, are likely to be more capable judges of economic realities than bureaucrats — need look no farther than China for confirmation of those beliefs.
China has been making massive investments in its infrastructure, raising entire cities from nothingness. These huge investments, and the jobs they have produced, have helped to account for China’s impressive gains in its gross domestic product. But, as the BBC reports, China’s central planners have made lots of bad decisions. As a result, the country is dotted with vacant apartment buildings, shopping malls, and cities — even a deserted theme park — that are standing vacant and gathering dust. The failed relics of China’s central economic decision-making include Chenggong, a planned city populated with apartment buildings, public art, and empty suburbs, but no people, and the New South China Mall in Dongguang, a sprawling shopping mall that has spaces for 1,500 stores, all but a few of which are unoccupied.
We often hear commentators citing China’s economic growth statistics and urging America to follow China’s lead. China’s development has been extraordinary — but we also need to remember that those remarkable growth statistics have been produced, in part, by investments in ghost cities and empty apartment blocks that created construction jobs and not much else. Vacant stores and buildings are not going to produce income streams and long-term economic prosperity. In America, these would be viewed as utterly failed investments.
Proponents of big government always assume that government, presumably armed with reams of statistics and perfect information and unfettered by the profit motive that propels capitalists, will make nothing but good decisions in allocating resources and planning for the future. As China’s experience shows — and as the Obama Administration’s failed Solyndra investment also reflects — that clearly is not the case. China’s political system may allow its government to fritter away billions on ghost towns and crumbling theme parks without consequences. How do you think Americans would react if their tax dollars were wasted in similar ways, in the interests of achieving a better short-term GDP?