Listen now | Noah Smith & Brad DeLong's 30:00 < [Length of Weekly Podcast] < 60:00: Key Insights: 1. I do not understand how the Chinese economy works. 2. Party has enormous reach and control, but somehow that has not triggered the “soft budget constraint” problems. 3. Financial constraints are not real. 4. Real resource constraints are real. 5. You can hide for a while from real resource constraints by bubble-overvaluing the low-value infrastructure and real-estate investments that you are making, but you cannot run. 6. There is lots to read that is good. 7. HEXAPODIA!!
What people can afford is a real resource constraint. Real estate as a business exists to evade this constraint while redistributing risk on to the defenseless.
It looks like the Party has decided to designate the real estate businesses as the defenseless while unwinding their overleveraged real-estate sector.
Note that people have an axiomatic "land = safe investment", "house = safe investment"; this is not factual at the best of times and it's emphatically not factual in the time of angry weather. Like any other false axiom, these by themselves produce market distortion.
The Party does not tolerate any means of escaping its control BUT it is also aware that you can have success OR control, you cannot have both. So you get an economy where the Party can effectively set bounds on permitted activity. (This is not true in the North Atlantic; money dissolves all bounds.) This is not conceptually very different from the historical wartime full Keynesianism; you will do these things in these inputs, and you will do them while subject to market constraints. (Also remember; planning works if you can keep the number of entities sufficiently small. There's not any strong reason to suppose that the entities can't be sectoral abstractions.)
What people can afford is a real resource constraint. Real estate as a business exists to evade this constraint while redistributing risk on to the defenseless.
It looks like the Party has decided to designate the real estate businesses as the defenseless while unwinding their overleveraged real-estate sector.
Note that people have an axiomatic "land = safe investment", "house = safe investment"; this is not factual at the best of times and it's emphatically not factual in the time of angry weather. Like any other false axiom, these by themselves produce market distortion.
The Party does not tolerate any means of escaping its control BUT it is also aware that you can have success OR control, you cannot have both. So you get an economy where the Party can effectively set bounds on permitted activity. (This is not true in the North Atlantic; money dissolves all bounds.) This is not conceptually very different from the historical wartime full Keynesianism; you will do these things in these inputs, and you will do them while subject to market constraints. (Also remember; planning works if you can keep the number of entities sufficiently small. There's not any strong reason to suppose that the entities can't be sectoral abstractions.)