Geopolitical Update: Is the West converging with China?
by Christian Takushi, Independent Macro Economist. Switzerland 27 July 2023.
Growing state interventions & Monopolies are setting West on convergence course with China
Following the newsletter we issued on 22 July, we’d like to share with you some comments and a Podcast Mr. Takushi released today on the same topic.
The issues covered in the Podcast and newsletter are gaining traction in the US electoral process ahead of next year’s presidential elections.
On the surface it seems that two opposite superpowers are struggling for supremacy – a Free Capitalistic West is facing an autocratic China-Russia alliance. Two opposite poles seem to face each other.
Our independent analysis shows the differences are becoming smaller while the similarities between the two great powers continue to grow in recent years.
Well, we are sure freer than in China, but we are far away from where we used to be 25 years ago. In some ways all great powers seem to be converging in recent years. Our economies and societies are in a transition – we are in a mix. If you want to know where the overall economy is going, look at its financial sector. The financial market is essential in an economy – like the cardio-vascular system of our bodies.
In 2009 the USA and Europe seized control of their Financial Markets to avert a major recession and adjustment of asset prices.
Our governments intended it to be an extreme measure for just a short time. Sadly, they never retreated from the markets or couldn’t, financial markets remain under their control. It is 14 years now. As a result, since 2009 the G7 states are managing the financial sector, and controlling interest rates and asset prices, which reverberates throughout the whole economy.
Few people know that once the government dictates the so-called Risk-free Interest Rate, the 10 Year Treasury Yield and exercises control over Asset Prices (bonds, stocks, houses etc.) for a considerable time, everything else in the economy is affected. Everything – even nursing homes and schools. Over time it blurs our perception of free mechanisms and pseudo-free mechanisms.
We’d currently describe our leading Western economies as an increasingly state-controlled economy characterised by rising monopolies & oligopolies co-existing alongside remnants of free-markets. The monopolies are increasingly co-shaping regulation and policy, so those efficient free markets are regulated in a way that the role of the state and monopolies/oligopolies is getting bigger. You may not be trained as an economist, but you may have also noticed that our big Western economies are no longer working for the normal citizen, rather the big businesses that sway power in Capital Hill.
The issue is that with today’s technology and the growing activist-interventionist character of our crisis-shocked Western administrations, those huge monopolies can increasingly help the government (be it liberal or conservative) unduly influence or control citizens’s opinions, behaviour and the use of their money.
We make the proposition now that the Capitalistic Free Market Economy & Society that made America so powerful in the last century is being increasingly replaced by monopolies in business and public opinion.
Freedom of Speech (Competition of Ideas) and Capitalism depend on one another.
If America shall embrace free competition again, given America’s superior geography, resources and human diversity .. it could experience a powerful resurgence as a geopolitical-economic power.
But if the West stays on the current track of state interventionism and large monopolies, it runs the risk of increasingly mirroring China with its state control over the economy, social life and speech. Ironically, the West may increasingly mirror the very adversary it wants to contain.
Geopolitical Research Team
Research made in Switzerland
Research by Christian Takushi MA UZH, Independent Macro Economist and Geopolitical Strategist. Switzerland 27 July 2023.
Geopolitical and economic conditions need close monitoring, because they can change suddenly.
No part of this analysis should be taken or construed as an investment recommendation.
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