Communist China, once a pillar of the international communist movement, is now capitalist in all but name. Chairman Deng Xiaoping’s reforms started China on the path to capitalism and unleashed one of the greatest industrial revolutions in economic history. He encouraged foreign investment.
His successors built upon his lessons. They encouraged capitalists, even capitalists from Taiwan, to invest. They preserved Hong Kong.
And most of all they encouraged private initiative. They understand that the essence of capitalism is the individual and not the state.
The tax on capital is zero. Zero on long term capital gains. Zero on short term capital gains. Zero on same day trades. All the Communist Party asks is that the capitalists stay out of politics.
The Chinese believe in real capitalism – not the state sponsored capitalism of Russia, nor the capitalistic socialism of Western Europe.
Chairman Deng learnt the lesson from the disastrous Cultural Revolution.
We though have forgotten our lesson from Plymouth Rock. The earliest Pilgrims practiced socialism, owning the land in common. The harvests were distributed to each family in accordance with their needs. The result was starvation as no incentive existed to work hard. The common was to provide for all so no one had to provide for the common.
When President Obama was told during the campaign that raising capital gains tax rates results in a reduction of tax revenue, he replied that raising the capital gains tax rate is a question of fairness. Taxing the rich is a matter of fairness. Squeezing insurers and medical providers is a matter of fairness. Limiting salaries and bonuses is a matter of fairness.
Fairness to the Chinese is economic growth and employment. Fairness to President Obama is equality and class warfare.
How ironic the Communists became capitalists and the Democrats became statists!