China Does Capitalism Better Than America

[Music] yes or no to this statement China does capitalism better than America I'm John Donvan welcome to another debate from intelligence squared us we have four superbly qualified debaters two teams of two who will argue for this motion and against this motion we go in three rounds of debate then the audience votes to choose the winner and only one team wins our debaters each connected in his own way to the China story Orville Schell who heads the Center for us-china relations at the Asia Society your partner is Peter Schiff who heads euro pacific capital and who has advised Ron Paul on the side arguing against the motion that China does capitalism better than America Ian Bremmer founder and president of Eurasia group and your partner mentioning pay professor of government at Claremont McKenna College we have explained that we want to have you about two times tonight you are live audience serve as our judges we have your vote now we have you vote again at the end of the debate to tell us which side you think is actually presented the better argument so if you go to the keypads at your seat our motion is China does capitalism better than America on to round one round one is opening statements from each debater in turn these statements are uninterrupted to speak first for the motion Peter Schiff CEO for Euro Pacific Capital he writes books he has a radio show radio shows named after you so there's no burden of false modesty or reticence here luckily for us ladies don't what on the show please estimate Peter Schiff was stated it China is a communist nation in name only it's not communist in the way that the Soviet Union was was communist and unfortunately a China kind of gives communism a good name in a way that we give capitalism a bad name and I thought maybe a more appropriate way to a framed this debate is not you know does China do capitalism better but it might might be does America do capitalism worse than China because neither modern America or China does capitalism anywhere near as well as we did it in the 19th century but the problem is China is closer to what America used to be than America is today if you look at taxes which is a real measure of freedom now back in American 1900s we had no income taxes we had no corporate income tax no state income taxes Americans were truly free in the sense that they got to keep the production the fruits of their labor if you look at modern America and modern China taxes are very high they're just a lot higher here than they are in China also if you look at the regulatory environment in both China and the United States I would argue that young entrepreneur in America today is going to face much greater hurdles bigger obstacles in his path that have been placed there by the government than you would have in China the cost of complying with all the rules and regulations in America exceeds the costs in China and not just the rules and regulations but surviving the litigation that is a byproduct of those rules and regulations if you looked at China and the United States and just compare the results of their economy China is today the world's largest creditor nation America is the world's biggest debtor nation China has large trade surpluses America has enormous trade deficits so if he thought about it as a nation China has got I mean if you look if you thought about the nation as a country or as a cult as a corporation rather China has a lot of assets on its balance sheet and lots of income lots of profits America is loaded up with liabilities and we're hemorrhaging red ink so if you think that America is more capitalist than in China or China is more socialist than you must think that socialism is a is a better economic system because after all the Chinese are more successful if you want to measure it by the accumulation of assets by the the the positive balance of trade and more importantly they are accumulating massive savings if you look at China the you know they have a savings rate of close to 50% we have a savings rate but basically negative in fact we rely in America on a Ponzi scheme called Social Security they don't have social security in China they don't have a lot of these big government programs that we have in the United States look at our look at our monetary system I mean we have the Federal Reserve price-fixing interest rates at practically zero and all the macroeconomic imbalances that we create we micromanage our economy through our tax code we've got the US government subsidizing or guaranteeing almost 100 percent of all the mortgages in the United States so it's not up to the free market credit isn't being allocated by the market it's being allocated by government the government is deciding who should get money and who should get money and who it should subsidize and who which should penalize it does all of this through the tax code and through the Federal Reserve yes you've got something similar going on in China only in China I think it's a more aboveboard and when you have the US government taking such an enormous share of our GDP and taking such an enormous share of our tax of our output in taxation and and then trying to regulate it and micromanage it from Washington DC we're not even close to being a capitalist country anymore in the United States the unfortunate thing is that China is closer but what's more important is the direction in which the pendulum is swinging in China it's swinging towards capitalism unfortunately in America it's swinging away thank you Peter Schiff our motion is China does capitalism better than America and our next debater is going to speak against the motion Ian Bremmer his company you raised your group makes its money by helping companies figure out when investing overseas is risky or not and so being right about China is practically his business model ladies and gentlemen Ian Brenner getting China right is hard one thing we do all need to admit is that the level of volatility in outcomes in China over the next 10 to 20 years is vastly greater than the level of volatility in the United States or in Europe or Japan can China make it can they fundamentally transform their economic and political system country of 1.3 billion people we know they need to do it world bank just made it very clear the Chinese government admitted it themselves doesn't mean they can do it it's never been done before it's a bet I bet against but it's bad if you have to make a bet you bet on the United States a lot of people do that's why the u.s. still has the world's reserve currency China is a system where if you want to do well at the highest levels 52 percent of the GDP is 62 percent of GDP is state-owned enterprises absolutely there's no rule of law there's no transparency you don't have as many regulations in China's the u.s. that is true does that mean China does capitalism no it means that if you're Chyna and you want to move a village and build a road you can it is not clear to me that that is capitalism and its most effective or even most rapacious form that's the state doing what it wants to do for the state that's the problem you want to talk about state intervention we've got it we've got it in China look it's unfortunate to me we're even debating this five years ago we wouldn't it shames me it shames me as an American because there are people out there that believe that the United States can't do capitalism as well as China there are countries now that are doing capitalism better than the United States we were having this debate about Canada we wouldn't have as much of a problem we wouldn't right look the Chinese system is not just capitalist its state capitalist state capitalism is a system where the state is the principal actor in the economy and it uses markets ultimately for their own political gain if it turns out that profit is useful for their political game they'll go for it if it turns out it isn't they'll go against it and that's true whether we're talking about Chinese firms or whether we're talking about Western firms I mean Facebook's doing a pretty good IPO but they're not in China why China doesn't want Facebook in China make a lot of money and make a lot of money for China that's not the point right that's not capitalism that's a problem ultimately when we've seen state capitalism work globally it works until it fails and it works because despite the fact the state is massively inefficient and I suspect Peter admits that the state is massively inefficient and it is in lots of forms but it it can hide its inefficiency through cheap stuff Argentina was state capitalist looked as good as the United States in the Western Hemisphere over a hundred years ago until they ran out of cheap land and then they started defaulting Venezuela looked great on cheap oil not so much anymore right China's looked great for thirty four years on the basis of cheap labor China will ultimately run out of cheap labor so what we have in China is this extraordinary car with a huge engine going very fast down a long road and that road has been straight for 34 years but coming up there's a big turn in the road and we've never seen steering know maybe maybe thank you mom maybe maybe they have steering but we don't know another problem with Chinese state capitalism is it creates enemies you know there are a lot of folks around Asia they see the Chinese economic miracle but they're begging the United States to maintain a presence why because China does capitalism better than the United States I don't think so we got to watch what people do not what people say what they do did you see that piece in The Wall Street Journal talked about the disposition of Chinese millionaires how over fifty percent of Chinese millionaires say they prefer to live in the United States and China and yeah it's about quality of life yeah it's about the environment yeah it's about opportunities for their kids it's also about no rule of law in China and worrying about corruption and the sanctity of their assets over the long term now maybe Peter believes that those 50-plus percent of Chinese millionaires are stupid because ultimately the United States is in decline and so they shouldn't be coming here in which case fine but then China's millionaires aren't that bright those are the entrepreneurs so we shouldn't bet on them either way you're in a catch-22 sir I understand that the Chinese are saying that they don't like the US dollar reserve currency but where are they putting their cash in the US now Ron Paul and Peter say they shouldn't do that and then we're in big trouble okay well when are they gonna stop because that I don't believe the Chinese are stupid for me that's not an inch an interesting analytical model for me what's interesting is presuming the Chinese understand their interest and they're putting all that money into Treasuries because they believe that's safe over the long term we are entering an environment of fear we're entering an environment of volatility when things get more volatile we don't just bet on gogo growth anymore we put our money under the mattresses central banks do that too and in that environment the world's largest economy also ultimately the most resilient the United States of America thank you very much thank you Ian Bremmer here's our motion China does capitalism better than America we have heard the first two speakers and now on to the third Orville Schell is head of the u.s. Center for us-china relations at the Asia Society you have also written something like nine books that have the word China in the title and some that don't have China in the title you know what you're talking about ladies gentlemen Orville Schell well I find myself in the awkward position being an American deeply believing in this country and its ability to innovate and in its entrepreneurial powers to defend a marxist-leninist economy and I beg you to marshal every bit of scrutiny you can to my argument and please convince me I am wrong by voting against me at the end of this debate I would say that the comparison between capitalism in the United States and China is as much divided by the fact that capitalism here has in many ways failed its promise and they're in a very counterintuitive way when we hardly have expected the Chinese Communist Party has managed to graft on a certain kind of guerrilla mobility on the Leninist rigidity to make their system actually function in a way which I think all of us would agree over the past three decades has been quite extraordinary something none of us who were standing in the middle of ten on one square in 1989 when there were a million people demonstrating there thought could ever possibly happen so I think if we look at America we find a country that is in quite a bit of psychological self-doubt at this particular moment we find a country has had much of its government many of its leaders besieged by irrationality religiosity they don't believe in evolution they don't believe in climate change we cannot pass a simple measure in Congress to extend the national debt which is not going to not happen let's quickly just look at what we see in China I spoke of the psychological dimension of the problem in this country and I think everybody in this room feels it there is a sense of I think lassitude at the same time agreed is quite a force aloft in the land there's a great deal of self-deception at work if you look at China who's running the government in China now they're all engineers in many ways the very things that we used to impute to China as a great weakness namely over reliance and ideology are now the very things that are hampering our own country while China governed by engineers and technocratic at reason there are no climate deniers in China I have never spoken to a Chinese who doubted evolution China also has managed in a way that I think it deserves our esteem to combine the public with the private and to act when things need to be done when a stimulus program needs to be enacted they look at the facts and they enacted do you remember when we looked at five-year plans as quaint kind of throwbacks to some retrograde period of Stalinist economics well I think the United States could do with a good five-year plan we can't plan for in three months ahead I think this ability of China to marshal facts rationally to Marshall its resources and make policy and allocate capital where it needs to be allocated in times of crisis is something that our own country could learn from I want to read a quick quote from Henny sender from the Financial Times the combination of Chinese SOS and debt from state-owned banks is a powerful alliance that will increasingly resonate outside of China as well as within it I think that's an interesting statement from a paper that's basically a laissez-faire capitalist paper so finally I would say that we would do well not to assume that China has nothing to teach the United States it may be that this system will not endure in the future it has many structural weaknesses but today I would say it has been ascending while our own form of capitalism replete with the weaknesses that you all well know has been in a state of decline and whether we have the ability to grab it at the last minute from its final collapse is a question which will remain for years to come thank you Orville Schell our motion is China does capitalism better than America and our final debater speaking against the motion speaks the Chinese language better than anyone on this stage he has the advantage of having been born there but he has been living here for decades a professor of government at Claremont McKenna the titles of his books and articles on China's future used phrases like China's trapped transition looming stagnation so we don't need to ask what he really thinks but here's more of what he does think ladies and gentlemen mentioning pay I'm not going to speak in Chinese I think that the impression that China is doing kept tourism better than the US is understandable that's because it's a very superficial impression one reason why that impression is widespread is that China has been growing fast but there's a reason Chinese growing fast low-income countries tend to grow much faster than rich countries because they have much bigger growth potential so what are the facts if you look at corporate profits US companies are far more profitable than Chinese companies and that is to think that we can trust Chinese accounting and then when you look at tax collection I have to disagree with Peter he said the Chinese the Chinese stick collects less taxes and yours the opposite is true the US government takes about a federal state about 30 percent of GDP the Chinese government collects 35 percent but that's not the end of the story because in the u.s. you actually get some back something back from the government in the form of social security health care Medicare Medicare Medicaid in China you get very two back because the bulk of government taxes is Spain on government consumption administration if you go to China and get treated to a twenty cause of you use like that's great that's Chinese hospitality but don't forget it's being paid for by Chinese taxpayers not in the USA you do not get that kind of treatment when you go to Washington DC and then you look at sort of whether China's growth is using less natural resources and here the u.s. is three times as more efficient as China because for every dollar of GDP produced in China China has to consume three times more in terms of its natural resources water clean air land the u.s. in other words is a lot more efficient then you look at overall economic competitiveness because capitalism is known for its efficiency and competitiveness here the u.s. is ranked nice number one number five what about China China is number 26 so way way behind the US then you look at something like innovation ranking the u.s. is number seven China is 29 you look at ease of doing business this is by the World Bank because a really capitalist country should be one in which it is very easy to the business overall ranking for the u.s. is number four in the world China is number 91 then start your business u.s. is number 13 Chinese number 151 the list goes on air and I don't want to bore you finally I won't want to imagine what will the Politburo members think about this debate if for some reason they've learned that in New York City they are debating whether China does capitalism better than the US I think their first reaction is not to laugh then the second reaction they say the Americans are really easy to impress you stage and Olympics they sing Chinese number one so the second the suit thought that would come to their mind is a the Americans have very short memories because when Sputnik was launched everybody thought the Soviet Union was to dominate the world and then in the late 1980s I think in this city people should have good memories about who was buying the Rockefeller Center right Japan was dominating the headlines everybody saw Japan was doing capitalism better than the US now look at what where the pain is after 20 years so I think what we are saying seeing here is not a China does capitalism better than the US we are experiencing a period of self-doubt the real issue is about the u.s. u.s. can do cap tourism much better than it does but China at least for the moment and for the foreseeable future will not be doing capitalism anywhere better anywhere close to the US in terms of competition efficiency even social justice thank you thank you anything Hey now on to round two of this intelligence squared us debate this is where the debaters address each other directly and answer questions from the audience and for me we have here two teams of two who are arguing out this motion China does capitalism better than America we've heard the team arguing in support of the motion Peter Schiff and Orville Schell basically saying that China does capitalism better because there's actually more freedom to do things that involve capitalism that there are fewer regulations that there are lower taxes it is not pure capitalism and they're not arguing that but they're saying that it's more pure than the US has had in the last hundred years the team arguing against the motion Ian Bremmer and mentioning pay they're making the argument that what China is doing even if it could be called capitalism is something that's probably cruising for a crash that when the government is the biggest player in the market as they argue that it is point out that it is this tends to lead to corruption and to cronyism and ultimately to exposure of the lack of real innovation so I want to take a question from this side's argument to that side and that's that argument that what we're seeing from China this enormous growth rate your opponents have pointed out number one is the result of China coming off a much lower baseline and when when things get really volatile things can really fall apart there and they're essentially saying that what's happening in China over the long haul is a blip is it a blip people's I mean first of all there are a lot of countries that are starting on low baselines and are not having any kind of economic growth at all as far as whether the trajectory is sustainable I think not only is it's just sustainable but I think it's going to get better because the real country that's headed for a crisis is America and I think what's dragging the Chinese down is their currency peg they're loaning America all this money so America can keep buying the products that Americans really can't afford and so as a result that Chinese are debasing their currency and they're creating a lot of inflation which is destabilizing their economy and I think undermining the standard of living of their own citizens which would be rising even faster if the Chinese government simply let the RMB rise in value let the dollar so if that is so unwise by the Chinese government is there's a blip period for them then well I think they're gonna they're gonna figure this out and and and they're not gonna play this game anymore and the real crash is coming here because then interest rates skyrocket the dollar tanks consumer prices go through the roof and we have our Greek moment only there's no Europe to bail us out in Bremerton respond well yeah we're not heading for a Greek moment I mean comparing us with Greece is as almost as ludicrous as compared and it's not fair to that Greeks I don't I don't think you even believe that but let aside um look I mean you gotta read my books oh I'll get there I'll get there um look with the United States has so many strong intrinsic advantages in terms of not just the matter of where the dollar sets but also in 30% of the world's calories come from the United States people increasingly fighting over food that's a real problem for China the environment in China is absolutely falling apart if you look environment adjusted GDP it's so much worse than the growth you see presently we already heard from mention about just how much more profitable American multinationals are than Chinese deso E's and yet that China is moving more in the direction towards SOE is not towards private sector especially since 2008 all of these things are problematic and the ability of the Chinese to suddenly make a decision to go away from the dollar you have to go into something what exactly are you going into you going into the Euro an enormous way I don't see that in terms of massive growth opportunities going into Japan we already said we had two lost decades there you're going to go into gold or hard commodities you can do some of that you can only do so much and as you go away from the doll you of course ruin the position that you have in the rest of those dollars so China's not going to do that they haven't and they're not going so let's bring you into the debate you know this isn't exclusively about one country or another we're doing a comparison here and we're talking about recent history not an idealized America and we'd be very foolish to idealize China and I think what we have to reckon with is the chances of each country finding a new state of equipoise the United States included I think what's going on in Washington right now is so utterly mad and broken that I put no confidence whatsoever in their ability to play that essential role at every government and I may disagree with you here Peter but every government must play and we are not playing and the Ord will show you you in making that point before you went on to say that you think that the model of planning which we used to think was quite quaint and slightly ridiculous maybe we should be looking at a new light now mentioning pay what about that is a little planning well they have drawn a lot of pointing they plan a lot except they do nothing about the plans they draw up because if you look at Chinese 5-year plans using my gosh these guys are very strategic then five years later and you do some kind of plan account and you see what has been accomplished very little because if they have actually follow through on their promises China today will indeed be doing capitalism a lot better than the u.s. Peter says well I you want to respond to that point well not not that particular point but there's there's some other points that he made earlier though all right did I tell us what the point was and go for it well well first of all one of the things that you mentioned you said that American citizens we get all kinds of benefits from our government that the Chinese citizens don't get well I would say that we get a lot more liability if you try to figure out what each American share is of the national debt it is enormous and if you're talking about capitalism defending capitalism by saying we get Social Security what's capitalistic about a centrally planned retirement system that's financed like Bernie Madoff ran his investment business I think it's much better that the Chinese are free to keep their income and plan for their own retirement did you pay take my take on the question whether take on the question of whether the existence of Social Security compromises the u.s. claimed to be capitalist I think it's Peter's point I don't think so because capitalism produces efficiency but it also has a lot of risks modern capitalist societies are not riskier than traditional agrarian societies because in a modern capitalist society once you lose your job you really have no source of income you cannot grow your own potatoes let me just say something about China the debt we know about because Peter said that in the u.s. you every citizen gets a lot of shoulders is responsible for a lot of government debt the same thing is true of China because the Chinese national debt is actually higher than the American debt in China Atacama ah okay in China they're the nominal debt is low 20 percent but the Chinese government knows better than Bernie Madoff okay does a much better job in hiding its liabilities the trouble with the Chinese people is that after paying taxes having their government incur so much debt they get no Social Security they get no social protection so that's why I think even capitalists are coming to this country to enjoy some kind of protection wait a minute China is implementing trying to implement a healthcare system a social security system and you when you say the Chinese people have got nothing out of the last 30 years of development you surely seen the infrastructure the China has built which benefits everybody in some way or other or will take 10 15 seconds to describe specifically the kind of inter struck infrastructure you're talking about housing roads you look at the highway system you look at the rail system we haven't built a tunnel in New York City since the 1920s in the 1930s China is throwing these things up overnight bridges you know subway systems you name it now I don't I don't want to idealize China's system but I do want to you know give credit where credit is due and it is unfair to say that no benefit is derived from the amazing development of the last theories aside concede that point no I don't concede that point okay well so Ian Bremmer why do you want to come in on this it's I wouldn't say that to say the Chinese get nothing of courses is ludicrous that's like comparing the United States to Greece we don't want to do that right there clearly Chinese citizens are doing better on average than they were before there's no question although if you ask where a lot of the profitability from that development is gone it's gone to the United States I mean you look at Apple you look at the manufacturing the iPad $9.00 is ten dollars is captured by China about 60 goes back to Apple and its shareholders most of whom were Americans I like that trade right I mean there's a reason why American multinationals actually do better look we have a problem in the United States that increasingly a large percentage of Americans write a book that I think you probably have read by charles murray coming apart increasingly you know they're not doing as well they don't have as much opportunity we have to address that because if not long-term those folks are going to get upset but they're not going to be as upset as the hundreds of millions of Chinese that will eventually face a crash and will have no opportunity no option to really revolt against we still live pretty good because we're able to borrow all this money we have a phony economy that is perpetuated based on debt this debt bubble bursts and and this whole thing comes toppling down it's going to be a whole different story or show the real question is the standard sustainability of our own enterprise and you've just written a wonderful book called every nation for itself and I thought it very interesting to read the following you talk about the serious psychological toll in this country of the financial crisis and economic near economic collapse and you say worse still is the fear that America's leaders can't fix these problems because the US political system is broken beyond repair is it no that's the fear that they believe that you don't you believe that that we will regain our sense and be able to restore reason to our decision-making and pull out of this nadir of you know I thought you was interesting that you brought up the fact that you know the United States government you know was trying to get this 1.2 1.4 trillion in reductions passed the Democrats and Republicans had a basic agreement about it some of it was Iraq some Afghanistan some was going to be increased airline fees someone's going to be reductions in agricultural subsidies it was fairly easy to do and in the last minute they decided not to do it but in part the reason they decided not to do it is because they're not being pressured in Europe one second and I know you're cited in Europe right and in Europe right they are being pressured and they're finally acting and it got really ugly before it had to happen with the unfortunate lesson that we are all learning since 2008 the world is getting faster governments are not getting faster and that's true in the United States we're kicking the can it's true in Europe they've done a lot of kicking the can but Japan but the largest can getting kicked hardest down the road is the Chinese can zing pay there's a lot of pessimism about the US on this side that's a fair way to argue this because there's a two part this is a two part argument China up and us down so they're more heavily I would say on us down in China up you guys are well people inside China are not very optimistic either about the country's future prospects the the high growth period for China is over I urge you to read the World Bank's latest report on China called China 2030 it's free for downloading on world bank's website this is what it says from now till 20 city of China does well its average growth will be somewhere between six and seven percent and if China does not do the set of reforms the World Bank recommended probably China cannot even achieve a much reduced level of growth because China is coming enjoy era where savings will be a lot lower the population will be a lot older the environmental costs will be a lot more visible if you I'm sure a lot of you have been to Beijing in the future when your Beijing you should bring along a spacesuit want to go to quite audience questions now and Norbert sua sake I lived in China for five years Chinese workers are known for their hard work this is a question on labor to what to what extent does the labor market in China fuel Chinese economy or as the labor market in the United States seems to thwart it how is that statement ammunition for you on this motion that for the motion which is that if you look at the labor mouths per se you would say China's labor mark is not as free as well developed or even regulated than the US right in the center sir thank you very much my question is for the panelists in favor of the motion while you're arguing the same conclusion it seems to me that your premises are at odds with each other if I understand them correctly on the one hand mr. shell seems to say that for America do capitalism better we need more top-down planning by government presumably well mr. Schiff is arguing that we need much less of that and more undirected bottom-up economy could you reconcile the drivers behind your I want to see this the complex answer to your question is no be a debate within a debate but but yeah I mean I you know III don't think the solution is for America to become less free and to try to emulate what China does wrong but to pick up on what China is doing right and I think China needs to do the same thing not follow the the poor example of modern America and all the things that we've done to wreck our capitalist economy but to turn back the clock and to try to incorporate the system and the values that were enshrined in the Constitution by the framers I think that is real capitalism hi my name is MacKinnon Webster I was curious that no one mentioned human rights once this evening and I'm wondering if you think that that plays a role in a debate on capitalism you know I think the Shah the United States has over the last decade been not exactly exemplary as an evangelist for human rights which has stilled our voice to some degree and this is an aspect of the Chinese system which is not exemplary and we don't need to and wouldn't want to imitate it but having said that I think we have to be honest that authoritarian capitalism has been able to do things that a freer form of capitalism sometimes fails to be able to do that's Jean remembers I mean god forbid you're forced to hand hire disabled people right all right yes but but we can't compare human rights the United States with China obviously the u.s. still makes it does a lot of things wrong it's like this broader debate the u.s. does a lot of things wrong on capitalism but it still vastly more effective than China the US has a lot of problems in human rights but China isn't in the same league right and on the same league sheets let's be very clear and while I think that a certain level of human rights abuses facilitates rapacious capitalism especially in the short term at the long in the long term it will bite you in the hiney right and and there are other places that you get problems too I did talk about transparency in the fact that places like Facebook and Google and Twitter a problem for China because they want to own that data they want to control it they want to shape it they want Chinese state internet just like the Upstate capitalism that's a problem for them when I think about you know responses in terms of general transparency you know in in in the United States you know you do actually know largely what your officials are up to look Solyndra was a disaster so bad thing for the United States Peter and I will agree on that right but we found out about it right and we found it was unbalanced I mean people got egg on face in China they don't want to tell you about Solyndra you don't have media that's getting inside the you know sort of the dirty laundry of serious Chinese officials they are engineers that run the country they're also billionaires let's remember that okay and and that's the problem of the lack of human rights and transparency in China's doesn't facilitate creative destruction it doesn't facilitate allowing the Chinese people take advantage of a free market maybe the Chinese people would be just as good capitalist as we are but unfortunately their system doesn't allow it to be that's a problem hi my name is guy Wiggins I just wanted to hear from the panel that thoughts on how the one-child policy has affected capitalism in China and what the future means when you have far more men than women and how that's going to basically I think lead to all kinds of rationality inefficiencies in the market I wondered how you were going to turn that to the motion that was very good that was very good or Michelle here I would say the advantage is emphatically on the American side because we have immigration China does not and China has one of the most rapidly aging populations and the lower reaches are not being replenished with the one-child policy so it's going to have a huge burden of taking care of elderly people and not have younger people coming in on the bottom to support them that's going to be a giant problem I want to ask each panel how you define capitalism rather than go one two three four I just want to let each side pick somebody to answer that question I'm assuming you agree with each other I capital to me is where the means of production are controlled completely privately where the factors of production production land labor and capital are allocated through a market where prices for all goods and services wages interest rates are set by the market as opposed to a centrally planned or socialist economy where a lot of these decisions are made by bureaucrats and where the means of production is being micro managed from a centrally planned Authority where they're making decisions based on politics this should be produced that should be reproduced this should be favored that should be favored and whether the government does it directly like a communist would by nationalizing the means of production and actually owning them or whether it takes a different route by controlling them through the tax code through what it taxes and what its subsidies and how it regulates and what businesses and favors and what it punishes you know when you start doing that you don't have capitalism you have something else so by that definition either China nor the United States is well that's what I started I said the question should be which country does it worse not which one does it better why I cannot have said better I think that's the best description of the Chinese economic system the part about what capitalism is not but I would add one more thing I think modern capitalism also has a legal system the rule of law without the rule of law there can be no capital T and China does not have knew of law so I'm Peter Goodman with the Huffington Post and former Shanghai bureau chief of the Washington Post want to get your thoughts on how the growth slowdown plays out in China does that cause the state to double down on the state-owned sector and hang on to control state-owned enterprises or does it tend toward more liberalization and attempt to get a little more vibrant out of private sector as the World Bank's diagnosis shows that the slowdown is coming no matter what the debate is when it's going to happen and the speed at which the slowdown is going to happen what the Chinese government is going to respond when there were two paths one is to the Buddha as you said to do the things they've been doing that is a lot of investment in infrastructure that's going to yield decreasing returns and growth will continue to slow and that will be a dead end the other would be a very different trajectory that is to really become capitalist which means to increase domestic consumption to allocate capital much more efficiently incidentally in China the capital market as we know it does not exist most of the savings is allocated through state controlled banking sector so they've got to change that in other and they've got to privatize stay-on enterprises lots and lots of things that can be done to avert that kind of dramatic slowdown but that means China will have to do capitalism Peter Schiff well you know III think ultimately and this is a bet that I'm making that the Chinese are gonna make is the biggest problem that is that is impeding economic growth in China is is their currency pegged and and and the miss allocations of resources that are being created in that economy by their desire to prop up the dollar so that American consumers can keep buying Chinese products when in effect we're too poor to buy those products because we have nothing to export to pay for them and I do believe that the Chinese are going to see the error of their ways and and and when they allow this train change to happen when they allow an appreciation in the value of their currency and they allow their citizens to more fully reap the rewards of their hard work and their savings I think you're going to see a much greater growth to directory in China and I think a lot of some of the problems that we're discussing we'll discussing here will go away as the Chinese economy is allowed to prosper and the government gets out of the way and lets it happen ok we have time for one more question and last question sir blue shirt hello my name is ed Saban first of all thank you all for being here tonight it's pretty striking to me we've been talking about capitalism I haven't really heard much discussion about entrepreneurship so I'd be curious to hear from the panelists what's your view of the link between entrepreneurship and capitalism and which country does it better Orville Schell well I have to say I mean this is something America does exceedingly well this is the part of American capitalism that really works our innovation our scale of bringing stuff to market scaling it up Silicon Valley and China does this less well but I have to say I've been around this block for a number of decades and what I see happening in China is a lot of incredibly interesting self-made entrepreneurs bubbling up from underneath where they go where the private sector of the economy goes went can it become the majority sector that remains to be seen but this is a very vibrant place don't write it all there is innovation there is innovation there is innovation not full spectrum they don't have Nobel laureates yet at this far end but there is innovation these guys are crafty they're good they're smart and boy they're on a roll did you catch it these are the facts if you are a private entrepreneur yet you cannot go into you cannot open a private bank you cannot get into telecom services you cannot get into energy you cannot get international resources you cannot get into 14 as a very important sectors because these are the sectors reserved for state-owned companies you cannot get bank loans you don't have secure property rights if you get into a dispute with another entrepreneur with another businessman whether you wing that dispute does not depend on whether you have a good case it depends on whether you know the communist party secretary in charge of the legal system and that concludes round 2 of this intelligence squared us debate and here's where we are we are about to hear brief closing statements from each debater in turn they will be two minutes each remember how you voted before the debate because this is their last chance to convince you that they have argued best and you're going to be asked to vote again once they finish these statements a few minutes from now and you will pick the winner by doing so but first on to round 3 closing statements closing statements by each debater in turn our motion is China does capitalism better than America and here to summarize his position against the motion Ian Bremmer he is president of Eurasia group and author of the upcoming book every nation for itself winners and losers in a g0 world thank you very much my colleague partner mentioned just talked about all the things you couldn't do to set up in China terms of entrepreneurship but he didn't mention fruit stands those you can and perhaps there's a Tunisian model in the future for China I think it's an interesting question look I thought I'd I thought I'd end I thought I would end with the future you know one of the things the United States does better than anyone else in the world is creative destruction I like independent bookstores but I tell you when Amazon came along right they got smashed that may not be a society that you all want to live in you may like independent bookstores but it's society does capitalism better we see that all over the place creative destruction is what powers the American market I know that the Chinese are doing more patents they're increase their small their engineering patents there's slight improvements on processes don't take away from them they're very smart in China they're being educated well they're great but if you want to talk about the game-changing stuff that you want to bet on that's going to make the world work over the next 20 years overwhelmingly that stuff is being driven in the United States of America I don't know if it's Bill Gates's new battery technology it's going to work and be the next game changers can be in biotech to me nanotech but if you want to make that bet and by the way the Chinese central bank wants to make it too you're going to make it here I love the fact that we live in a society as well where broad ideologies can come together work together and make lots of money I applaud the fact that we live in a place that a guy like Peter Schiff can make enormous coin for himself and I think you guys should too thank you very much thank you Ian Bremmer our motion is trying to does capitalism better than America and now to summarize his position for the motion Peter Schiff he is CEO and chief global strategist of Euro Pacific Capital he's also author of the upcoming book the real crash a blueprint for a bankrupt America Peter Schiff rebuilding I think you know part of the problem having this debate at this particular point in time it kind of be like having a debate in 2005 over which country does real estate better the United States or China because in 2005 everybody thought it was great in the US or the housing market everybody was buying a house even the people that couldn't afford them everybody had second homes and and it was great but of course it was a bubble and it couldn't last and that's the same thing with the US economy if you want to look at the US economy and measure it by how much money we spend and and how much we consume and the Chinese they're not making a big bet on the US Treasury market because they want to is because they think they have to if they can wave a wand and replace all their Treasuries with gold they do it the problem is they're afraid because they know if they try to sell they'll crush the market but we are on the verge of this collapse and it's because we abandon all the principles of capitalism that we once had and these are the principles that china is now adopting and as I said earlier what's really more important is the pendulum and the direction in which it's swinging look at where we started from complete capitalism and China started they had none of it and look at how much ground we've surrendered and look at how much the Chinese have gained thank you Peter Schiff our motion is China does capitalism better than America and here to summarize his position against the motion mentioning pay professor of government at Claremont McKenna and author of China's trapped transition the limits of developmental autocracy does China do kept tourism better than the US we have to add one adjective China does do a certain kind of capitalism better than the US that's crony capitalism and I don't think Americans want to excel in that category because in China under that kind of capitalism you're not going to get clean air to breathe you're afraid to buy baby formula because if you have babies in the household you better go to Hong Kong to buy imported baby formula because crony capitalism cannot provide food safety and if you are part of the elite crony capitalism serves you really well because I've read that elites in China print elites and now installing air filtering systems in their cars in their homes but what about ordinary people the vision of capitalism Peter champions is a vision of 19th century capitalism thank God America has come a long way I will not go back let's also imagine 20 years from now which system will be there I can save the bed 20 years from now democracy democratic capitalism will still be around in the US but can say this about the Communist Party in China so at the end of the day it will be American capitalism that tribes over crony capitalism thank you min Qiang hey this is our motion China does capitalism better than America and here to summarize his position in support of the motion Orville Schell an award-winning journalist and director of Asia Society Center on us-china relations well mention Amen I really want to agree with you and I truly hope you're right it would be nice but who would have thought five or ten years ago that we would be sitting here tonight even having this debate that there would be any kind of equilibrium even to discuss between these two great economic systems no 120 years ago impossible 30 years ago when I first went to China it was unthinkable China is undeniably in transition we are a more finished product trying to regain our balance and I worry about the United States I think we have a good model but I think we haven't we haven't played it very well I think we've deceived ourselves I think we've fallen into a lot of self-deception about what has made this country great and strong it's a combination between regulation and control and wisdom at the top setting equitable and fair system and a free market with a vibrant set of entrepreneurs and innovators at the bottom and I think everyone in this room should acknowledge that despite all its imperfections despite the human rights questions despite all these other things that what China has accomplished as counterintuitive as it was no one could have predicted it is pretty extraordinary something has been working pretty well we don't know where it's going to go in the future and all we can do is sit and wait but if we want to fix something we're not going to fix China the question is are we going to fix ourselves Thank You Orville Schell and that concludes our closing statements and now it's time to learn which side our live audience kills has argued best we're going to ask you to go to the keypad at your seat that will register your vote we have asked you to vote twice once before the debate and once again after the debate this is the the final result on who wins this argument according to our live audience here our motion is China does capitalism better than America before the debate 17% of you were in favor of the motion 50% against and 33% undecided after the debate 9% of for the motion that's down 8 percent 85 percent support the motion that's 35% six percent are undecided the team arguing against the motion China does capitalism better than America wins this debate our congratulations to them and thank you for me John Donvan and intelligence squared us we will see you next time [Applause] [Music] you you

Channel: Open to Debate

Views: 130,873

Keywords: Intelligence Squared, IQ2, China, Chinese, America, American, Capitalism, Money, Wealth, Government, Orville Schell, Peter Schiff, Minxin Pei, Ian Bremmer, PBS, debate, foreign policy, Socialism, Communism

Id: sAQvUEK2OCw

Length: 57min 11sec (3431 seconds)

Published: Tue Jun 12 2012