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A April 2012
An Imaginary Press Confer rence by P President Obama: A Parody about Chin a na
(Th is not a parody about American politics or th Obama A his p p he Administratio the on; character and settin were chos solely to dramatize the argume rs ng sen o ents pertainin to China.) ng )
Good aftern noon. Late las night I rece st eived a call fro Senator P om Paul, congratu ulating me on being reelecte ed President of the United States. I would like to than Senator Pau for his con f S nk ul ntinued service to our natio e on, and for run nning a distinguished camp paign. I believ the Americ people we well served by the hone ve can ere d est debate he an I engaged in. nd i Starting tod my Adm day, ministration wi be making some signific ill cant political and economi changes. Th ic he aim of these changes will be to accelera our economic growth. I will first exp e l ate plain each of t key change the es, and will the elaborate up the larger rationale for emulating Ch en pon r hina. Let me begi with three key political ch in k hanges: First: The executive bran will now exercise com e nch mplete authorit and contro over all oth parts of th ty ol her he federal gove ernment, inclu uding the legislative branch the judicial branch and the Federal Re h, eserve. This w will streamline all decision-m a making and im mplementation processes, e n enabling my A Administratio to formula on ate and enact policy as effecti ively as possib for the goo of all citizen ble od ns. ur ystem will be nationalized. No outright o n ownership changes will tak place, and all ke Second: Ou financial sy the publicly listed securities will contin to trade. However, my A y nue H Administratio will now iss directives to on sue the management of our banks regardin all business and financia decisions. In short, the b b ng al banks are now a w de facto arm of the gover m rnment; this will enable us to finance som of our new economic priorities, which I w t me w h will elaborate upon shortly. (We have not yet determ n mined whethe other indust er tries will also b nationalize be ed, ntinue to study the matter carefully.) y c but will con Third: We will be rewriti the Const w ing titution. Amon the change to be made, freedom of s ng es , speech, freedo om of the press and the righ of free association will be reinterprete and in ma cases curt s ht b ed, any tailed. Since m my Administrat tion has the best interests of the Ameri b ican people in mind at all times, the ra n l adical freedom ms articulated in the Constit i tution are no longer necessary. In additio there will be no more e on, elections, as m my successor wi be selected via a secret pr ill rocess that serv the best in ves nterests of the nation. These politi changes will enable us to implement the following economic policies: ical w t First: It will now be the policy of the United States to exercise str control ov the value o the dollar. In l p U rict ver of the near ter this will help us elimin our trade deficit; mor broadly, we will hencefo rm, h nate e re e orth manage all capital flow to suit our economic aim We realize that the eco ws ms. e onomy of the United State is larger tha e es an China’s, so we will take account of our impact on ot a r ther nations in managing our capital flow But the da n ws. ays t e ets of allowing the world to take advantage of our open capital marke are over.
Second: In order to spur economic gro owth, we will be embarking upon a massive and sustained program of g infrastructu investment This investm ure t. ment will be financed by th banks, whi (as noted above) are no f he ich ow under gover rnment control. As part of our new policy of managi capital flo f ing ows, the abilit of citizens to ty invest outside the countr will be rest ry tricted; this sh hould result in significant g n growth of ban deposits th nk hat will fund th increased le he ending by our banks. Also, the increased savings from our new economic progra r d m am should result in a current account surp t plus, thus elim minating the n need to borro money from abroad goin ow m ng forward. ce ructure progra takes effec and econom growth ac am ct mic ccelerates, we expect inflatio on Third: Onc our infrastr to increase. At that poi . int, our new monetary policy will be to maintain negative rea interest rat n al tes indefinitely in order to maximize lendi and invest m ing tment. Althou we believe this policy is in the nation ugh e s n’s best econom interest ov mic verall, we do recognize the potential for inflation to in r nflict harm on some citizen n ns. For that rea ason, we will implement price controls and subsidies of key commodities as a p s appropriate. F For this those rare ti imes when it is necessary to tighten mon i o netary policy, t will be do by strateg one gically curtailin ng lending rath than allow real intere rates to bec her wing est come positive. . Fourth: We will begin to issue five-yea economic plans in order to address all structural def e o ar p ficiencies in our economy on an ongoing basis. Secreta Geithner will be publish n ary w hing our first Five Year Pla within a fe an ew weeks. The design and im mplementation of these pla will both e ans enable income to be redire ected where it is needed in th present, an also ensure that the econ he nd nomy develops the capabilit that will b needed in th s ties be he future; we will no longer rely upon the invisible hand of the mark for such im w e ket mportant tasks. Before I exp plain the large rationale fo emulating China, I want to reassure y that this n system w er or C t you new will not elimina the role of entrepreneur ate f rialism. China has correctl recognized the need for the innovatio a ly on that entrepreneurialism provides, and America has the world’s best entrepr d s reneurs. We w want people to continue ge etting rich by creating and running new businesses. W w What is neede is simply a harmonization ed where the entrepreneuria elements of capitalism are combined with the ben e al f a nefits of an a all-powerful an nd benevolent Central Government. w arger rationale for emulating China’s econ e g nomic and po olitical systems s. Let me now discuss the la Our goal is to achieve a similar rate of economic gr f rowth that Ch hina enjoys. A first, we con At nsidered simp ply emulating China’s economic system while leaving ou political sy C w ur ystem unchang But as we thought abo ged. e out it more deeply, we realize that the tw are inextric ed wo cably intertwin and that there was no way to chan ned, t o nge our econom system in such a fundam mic s mental way wit thout also fun ndamentally ch hanging our g government. Why emula China? Quite simply, because Chin is widely c ate Q na considered th world’s gre he eatest econom mic success over the past thre and a half decades, and because most analysts beli r ee t ieve its growth will modera h ate only slightly in the comin years. y ng Now, I know that many people think China’s situati is an excep p C ion ption. Accord ding to this vie China’s lack ew, of human freedoms, its opaque govern f o nment and its state-domina s ated economy have only fa y acilitated – or at least not hi indered – its economic gro owth due to special circum s mstances. Spec cifically, this v view states th hat China is in a special situa ation partly be ecause its level of urbanizati is only 50 (compared to 70-80% f l ion 0% d for developed nations), and partly becau it has inve n use ested so muc less capital per person than developed ch l nations. According to th view, it do not matter that the eco his oes onomic and p political reform unleashed in m China more than thirty years ago has slowed marked over the la decade and a half. All Ch – and on e y s dly ast d hina nly China – nee to do is to keep moving its citizens to the cities and keep investin on a massiv scale. eds g o d ng ve
This was als my view at first, but whe my Admin so en nistration thou ught about it m more deeply, w realized th we hat this made no sense. Beca n ause if this vie is correct, then the true underlying return on inv ew e, vestment shou uld have decline throughout the last fiftee years durin which econ ed en ng nomic and pol litical reforms appear to ha s ave stalled. Afte all, the mo China gro er ore ows, the less “catch-up” th remains, a therefore the more suc hat and ch investment should be wasteful and in w neffective: if China ultima ately needs to adopt West o tern reforms to ed succeed, the all the year of investme without re en rs ent eform should have created more and mo misallocate ore capital. The natural end state to this process woul be a bubbl and as we know from o own rece e ld le, our ent experience, growth and prosperity can look their bes just as the b p st bubble is abou to break. If the majority of ut f China’s eco onomic growth for many ye has been powered by w h ears wasteful and c corrupt invest tment, then th he inevitable bursting of its bubble shou be a cataclysmic event that would fu b s uld fundamentally alter its futu y ure economic prospects. ost a ve. t hina’s system is Yet this is not what mo financial analysts believ Our best and brightest feel that Ch onderfully, an that it face only a mod reduction in its future growth rate as it continu nd es dest n e ues working wo indefinitely to grow faste than the re of the wor If this is t er est rld. true, then Ch hina’s econom and politic mic cal system must not be a hin ndrance to its growth, and it should be a system that others can em mulate if they so choose. For all those who doubt whether America could ma such radica changes, I s Yes, we ca We can an al w ake say: an! nd we will rein economy. We are the change we have been waiting for. When A nvigorate our W America puts its mind to som mething, noth can stop us. hing u Thank you, God bless yo and God bless the Unite States of Am ou, ed merica. f sk ns been assigned t you. to Members of the press, you may now as the question that have b PATRICK WOLFF K Managing Member, Grandmast Capital g ter
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