From Boom to Rust, Lavish Projects Are Languishing in Brazil –

There are ghost towns (metropolises built but abandoned) in China and an array of abandoned projects in Brazil. I noticed an interesting phrase in the NY times article below “state capitalism.” It is evident that state capitalism is coincident with inefficient spending. In contrast, “private capitalism” is coincident with overly efficient (I just made that term up) spending. The irony is that in the long term both cases (dare I say extremes) lead to a widening wealth gap.

The article below illustrates the wasteful spending and bureaucracies of “state capitalism.” The Mexican made engine in Chrysler’s “imported from Detroit” 200 is an example of overly efficient private capitalism. This results in bonuses for executives and lower wages for laborers. My favorite widening wealth gap example is personal.

I bought a Wisconsin made (the frame at least) Trek bicycle roughly 10 years ago for about $1000. I still have and ride it today. Last summer I wanted to get another made in America Trek so my son and I could ride together. The price was the same $1000 but the bicycle was made in China. I did not buy it. I pondered what happened to the executive/laborer breakdown of that $1000. Did it go from $600/$400 with American labor (read jobs) to $900/$100 with Chinese labor (read: unemployment here)?

One subtle point before I close. The widening wealth gap occurs when companies around the world do the same thing as Chrysler and Trek do here in the US. So what country has struck the right balance between inefficient state capitalism and overly efficient private capitalism?

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