
The Chinese Economic “Death Spiral” - prostoalex
https://dailyreckoning.com/chinese-economic-death-spiral/
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ordu
I have very limited understanding of how economy works, and I have a question.
Author says that train tickets price is not enough to make train profitable.
Ok, I agree, its hard to disagree with such a claim. But then he reasons about
wasted investment, and this seems wrong for me. Such a conclusion would be
true in capitalist's word: investors want their money back. But it is not true
in communism, because central planning and everything is in government
possession. The only reliable way to measure effect of investment is to deduce
how investment affect on global economy. Train passengers are governmental
employees, to raise costs on tickets is to raise costs for other departments.

After I invested time to train my fingers to play on piano, I wouldn't pay
them for playing. I'd like to get payments from others, but my fingers would
get nothing.

Maybe I oversimplified situation? Maybe there are private companies who
profited from new train line, and it would be justified to move some costs on
them. Maybe there are private investors, who invested in new train line along
with government. Maybe I'm wrong. Am I?

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Nomentatus
Think about it as a measure of value - a very high value of inputs went in;
the tickets have a low price because what was built has no great value to the
riders, so you can't charge them more or they won't travel. Now if the
government is subsidizing something of great value fine - child care,
education, research, preventative medicine, all that's fine 'cause that
produces great value over time. On the other hand, if you keep using up a big
pile of inputs to produce a smaller pile of outputs or nearly-useless outputs,
real wealth shrinks even though the economy is churning away producing
apparently good numbers re economic activity. Hiring people to tear down every
structure in China would also produce good economic numbers while reducing
wealth. Roads to nowhere do pretty much the same thing, just more slowly.

