Street-Level Free Enterprise

An article in Zerohedge got me thinking:

Apart from the financial ups and downs, one of the tragedies of modern America has been the steady monopolization of the restaurant industry by the big chains, the fast-food franchises and even other kinds of operations such as Olive Garden (good food, but the menu is virtually the same from maine to California).

The operating principle in the US has been standardization and monopolization. A few Mom-and-Pops exist, and some small-time ethnic restaurants. But these are on the margins of the economy.

While there are challenging aspects to living in China, and a some things with which I do not agree, the overall picture is positive. The benefits are visible in everyday life, and the restaurant scene is varied. Most restaurants here are not chains. There are certain themes holding the experience together (hot pots, dishes, etc.), but each city and even each neighborhood has a lot of variation. McDonald’s and KFC have actually struggled in China.

Also, there is a lot of street food. People cart things around, cooking right from these platforms, or selling oven-baked potatoes and so on. There does not seem to be much licensing or regulation involved. The civilization or culture sets the standards. When people fall short of those standards, there are formal and informal ways to address it.

By contrast, anyone trying to sell potatoes in the US out of the back of their cars would be arrested. That’s not even debatable.

The general model of the Chinese economy actually makes more sense than the US model. In China there is small-scale free enterprise (freer than in any American sector). It is infinitely easier to open a restaurant or small business in Chengdu than it is in Chicago.

However, as one goes up the economy of scale, to involve vast industries such as energy, communications and so on, with tens of thousands of employees, then the state becomes increasingly involved as it should be (the only other alternative is to have oligarchic families run the show). Of course there is local and provincial corruption in China, with the ever present factor of human nature.

However, generally speaking, “the state” in China, along with its officials, are subject to, and live by, rather strict guidelines of ethical behavior – kind of a mix of Confucianism and China’s version of socialism, whose ideology centers on modernization, modernization, and modernization.

The new American model is to have very little economic space at the street level, where rules and regulations are written by larger economic players (in the proivate sector). Also, the American state has been subject to oligarchic and financial capture in the fullest sense of the word. The state is a mere appendage of Wall Street and the public-private partnership known as the military-industrial complex.

I think I’m being objective. If I had to bet which of the two countries would be enjoying greater prosperity in the year 2030, I’d guess it would be China. It is a safe bet.

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