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Generational Dynamics Web Log for 8-Jan-2013
8-Jan-13 World View -- China quadruples rice imports for no apparent reason

Web Log - January, 2013

8-Jan-13 World View -- China quadruples rice imports for no apparent reason

Obamacare causes health insurance rates to surge

This morning's key headlines from

China quadruples rice imports for no apparent reason

Shoppers purchase discount rice at a supermarket in Chongqing (China Daily)
Shoppers purchase discount rice at a supermarket in Chongqing (China Daily)

United Nations agricultural experts are reporting confusion, after figures show that China imported 2.6 million tons of rice in 2012, substantially more than a four-fold increase over the 575,000 tons imported in 2011. The confusion stems from the fact that there is no obvious reason for vastly increased imports, since there has been no rice shortage in China. The speculation is that Chinese importers are taking advantage of low international prices, but all that means is that China's own vast supplies of domestically grown rice are being stockpiled. Why would China suddenly be stockpiling millions of tons of rice for no apparent reason? Perhaps it's related to China's aggressive military buildup and war preparations in the Pacific and in central Asia.

Heaven knows that I'm not a paranoid person, but it was just three days ago that I reported that Australians are running short of powdered milk formula because Chinese tourists are visiting Australia, buying large quantities of the formula in bulk, and taking it back to China. There's no apparent reason for that, either. China Daily and Bloomberg and Wall Street Journal

Obamacare causes health insurance rates to surge

According to a study by the New York Times, as President Obama's first term ends, health insurers in many states are demanding double-digit rate increases, sometimes as high as 20-25%, because of higher medical expenses resulting from Obamacare. President Obama promised in 2008 that Obamacare would “bring down premiums by $2,500 for the typical family” by the end of his first term. According to Aetna, a supporter of Obamacare, for people who are unlucky enough not to have subsidized premiums, rates will rise 20-50% on the average, and some will see 100% increases. Young people will pay the most astronomical increases, since they will be subsidizing the coverage of older people. Young adults should expect to see premiums double under Obamacare.

We are now seeing Obamacare's increasingly destructive effects on the economy that I predicted when the law was first proposed. (See "Obama's health plan, a proposal of economic insanity" from 2009.)

Inflation rate following the imposition of wage-price controls on August 15, 1971 (
Inflation rate following the imposition of wage-price controls on August 15, 1971 (

At that time, I wrote a detailed analysis comparing the Obamacare proposal to what had previously been the most disastrous economy policy in my lifetime -- President Nixon's wage-price controls. Nixon imposed wage-price controls on August 15, 1971, in an effort to control inflation which, at that time, was at 4% and falling. Instead of controlling inflation, the wage-price controls caused enormous economic distortions that caused inflation to spiral out of control. The controls were a disaster, and were rescinded in 1974, as inflation rates surged to an astronomical 12% level.

Now we see an even worse disaster in the making. Obamacare is destroying the medical industry, pushing medical prices and insurance prices through the roof. Lobbyists are flooding into Washington to demand special favors, whether they're acupuncturists or chiropractors or fertility specialists or medical device manufacturers, and the groups that have contributed the most to the Obama's campaign will get the most favorable treatment.

President Obama lives in Camelot, where you can pass a law that snow may never slush upon the hillside or that insurance premiums won't go up. And let's not forget that it was only a few months ago that President Obama was on the Tonight Show, bragging that he was unable to do eighth-grade math, which is entirely believable.

Ohhhh, isn't it wonderful that all we have to do is pass a law, and we can do anything we want. Let's pass a law to make alcohol illegal. Oh wait, we tried that. Let's pass a law that makes women's salaries the same as men. Oh wait, that is a law. Well, then let's pass a law that says that men will get pregnant from now on, rather than women. That makes as much sense as Obamacare.

Actually, there was one more economic policy in my lifetime that's worth mentioning, and it was even worse than Obamacare. It's Mao Zedong's Great Leap Forward in China, starting in 1958. Here's a summary:

Like Obamacare and Nixon's wage-price controls, Mao Zedong's Great Leap Forward was a disaster, though worse than either of the others. The Chinese bureaucracy at the regional levels lied about crop yields until it was too late, and by the time the government figured out that there wasn't enough food, many tens of thousands were forced to die of starvation. New York Times and Forbes

2013 versus 1913, the year before the start of the Great War

The world of 1913, a century ago, was an exciting place where life was good. The world was dynamic, modern, interconnected, smart -- just like ours. Radio telegraphy was being introduced, meaning that information would speed around the world with no need for wires. And with life so good in an interconnected world, it was thought that war had become impossible.

On the other hand, a historically minded person might have seen things differently. Particular themes recur throughout history -- human greed, the manipulation of technology, the importance of geography in determining military outcomes, the power of belief in shaping politics, a solid conviction that this time is different. You thought that the debt-fueled boom of the 2000s was different from all those other booms throughout history? Wrong. The ancient Greeks, with their understanding of greed, self-deception, hubris, and nemesis, would have been quite able to interpret the 2008 financial crisis without the need for an advanced degree in financial astrophysics from Harvard Business School. In 1913, as in previous years, an international exhibition was held to commemorate the advances of the world toward greater integration -- held in Belgium this time, in a city that would quake with the sound of artillery shells within a year. In 1913, German Kaiser Wilhelm II was viewed by some as a peacemaker. World War I, the Great War, changed everything. To take one example of how things might change today, a miscalculation in the South China Sea could easily set off a chain of events not entirely dissimilar to a shot in Sarajevo in 1914, with alliance structures, questions of prestige, escalation, credibility, and military capability turning what should be marginal to global affairs into a central question of war and peace. Charles Emmerson, Foreign Policy

(Comments: For reader comments, questions and discussion, see the 8-Jan-13 World View -- China quadruples rice imports for no apparent reason thread of the Generational Dynamics forum. Comments may be posted anonymously.) (8-Jan-2013) Permanent Link
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