The inevitable result of the centrally planned Asian Miracle Model is credit bubbles and the crippling misallocation of capital in Building Bridges to Nowhere.
Japan’s extraordinary rise from the ashes of World War II created an “Asian Miracle” template that other Asian nations have followed, and continue to follow.The outlines of the model are straightforward.
The growth engine is export-dependent mercantilism: organize the economy to prioritize exports at the expense of domestic income and consumption. The central government manages the mercantilist project in conjunction with favored cartels or state-owned enterprises (SOEs). In other words, The Asian Miracle Model is central planning plus credit expansion plus export-based cartel-capitalism.
The Asian Miracle form of centrally planned capitalism depends on these four pillars:
1. Integration of government ministries and private-sector cartels,
2. Heavy reliance on export sectors for growth and profits,
3. Domestic savers provide the capital for export expansion,
4. Defaults and write-offs of bad debt cause loss of face and are thus hidden from public view or rescued with government bailouts or zombie loans.
Written by: WASHINGTON’S BLOG– continue at