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"The Lily" author Daniel Cloud argues that in order for China to return to economic prosperity it would need to start inventing things.
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-- Connell all right they get to China now making news over the weekend by cutting the amount of not cash the banks need to hold in reserve so as one of the things that.
Markets are certainly watching today and it all comes as.
The economy there is at this point on track for its slowest growth in the past decade -- leads our next guest to compare.
The Chinese -- the likes of Japan and the Soviet Union Daniel -- is professor of philosophy actually at Princeton.
The author rob the -- evolution play and the power of a free.
Society and all point it's a free societies no matter what.
We're always better than some of these managed economies -- job what do you think's happening and -- you lived in China he studied it for a long time what do you -- happening in China.
Right now that causes them to do things like they did over the weekend.
Well since 2008 they've been talking about trying to get indigenous innovation going at about trying to increase consumption.
But what they've really been doing is just throwing money at the local governments.
For investment in projects that the basic point of which.
Was for local officials to meet -- there'd GDP targets their quotas.
And being the investment in general hasn't been terribly efficient so.
A lot of -- loans that have been made to those projects.
Aren't gonna end up being paid back and what you're sort of saying now is just smoke coming out of the machine.
They're trying to get back to the growth numbers they had when their exports were still really growing.
But -- right to do that they would have to start inventing things and they're really not so up -- Bigger picture you don't think.
That this can keep going forever in other words you think in your example of Japan and Russia means -- financial markets of one of the known for sometimes -- some sort of a bubble that's gonna burst in China.
And lead to -- -- landing as it's called the economy.
-- -- what you've got to understand is that all of wrangling and arguing that we think of as such a waste of time and free society.
There's actually an evolutionary process that's how we sort through ideas to find the really good ones since sort through new new skills to figure out how the how they should be used.
If you cut that off.
You if you take away things like the right of free speech and -- -- association.
Developmentally you can get a certain way through through the process -- does that mean it ends like it did in the Soviet Union.
-- exactly what would you tend to have is a three phase process.
There's -- first easy phase where you're basically just solving engineering problems and implementing solutions discovered elsewhere.
Then there's a second phase where you try and come up with innovations but you're not really set up correctly for that so where we are now.
-- the Soviets had that in the sixties and Japan had that in the eighties and I think that's where China is now.
And in the third -- similar words -- -- is stagnation and they they realize that they're not gonna make it all the way to Pullman vanity.
With a command economy and -- believe just tries to hold onto what happens if we were having this conversation a timeline how far away are we from stage three -- Well we're well into stage two I mean we're we're about four years into stage two.
So you know stage three is maybe five or ten years away.
But if -- the end of this process can really only be a democratic transition that's the only way for them to get over.
Per capita GDP of about 101000 dollars and -- how long it takes depends on how long it takes.
We Chinese -- -- to figure out that that's what they actually have to do.
Pilots have you back at some point of talk about -- and one of the status but thank you and good luck with the book and everything else to thank you for coming on today -- -- thank.
