Chinese Government Isn’t God, and Can’t Suspend the Laws of Economics
You know there is a problem when you hear something like this: The Chinese authorities have halted all new listings on the stock market. The reason? They want people to buy shares, not sell them. They think more buying is needed to halt a market that has declined about 30% in the last month
In case you’re not paying attention, a 30% drop is not a correction. It sounds more like a collapse.
According to one report, about one quarter of stocks on the Shanghai and Shenzhen exchanges have been suspended from trading.
What has caused this enormous decline in the market? Selling, is what has caused it. Sellers have dumped stocks as if they were hot potatoes.
The solution? Ban selling (i.e. no more stock listings for a while) and encourage buying.
Duh! I’m afraid to ask: How can you have buying without selling? For every buyer, there must be a seller. Why journalists don’t pick up on this stuff amazes me. It’s one of the most basic economic concepts of all – the concept of exchange.
Attempts by authorities to halt the free fall have not worked. It is a problem beyond government intervention. This should not be surprising, because the problems of the world, according to secular humanism, are insufficient education and insufficient governance. (Thank you to Dr. Voddie Baucham for that insight.)
The solution to the Chinese problem is more governance – more government interference in the market.
But if government manipulation of credit is the cause of the boom-bust cycle, as von Mises understood so well, there can be no expectation that government will fix a problem of its own making. Unless, of course, it got out of the money manipulation game. But then there really would be a massive correction of maybe even greater magnitude than the one under discussion.
People in the world may hate what is going on in the marketplace, the disruption for the goal of personal peace and affluence. But they hate even more, the only alternative. A recognition that this is God’s world and his laws of money and finance are the only true pathway to wealth. This would require a turn-around in the way people view themselves and money, their employment, their purpose on earth, and their hopes for the future. There is a word for such a turn-around. It is the word “repentance.”
But I am of the opinion that repentance is not worth very much on the Chinese Stock market right at this time. Unless you call bailing out of overvalued stocks repentance.
Ian Hodge is an accomplished musician and music teacher, an executive manager and a management consultant to business owners.
Dr. Hodge began his working career as a professional musician. His interest in Christian economic theory, however, led to a move into the investment industry, where he made his way to the ranks of executive management. His first position as a CEO outside of his own company was a turnaround situation, and he found this was “his” place in the business world. For the past 16 years has been a business consultant to help turn around struggling businesses. He has clients in USA, Australia, New Zealand, and Canada.
He actively uses his consulting skills to help train church pastors, elders and deacons in leadership and church growth practices.
As a musician, he worked with several singers around Australia and the South Pacific as their accompanist and music director.
A current project is the development of SonCross Academy, an online school that starts with the Bible, providing lessons in music theory and piano, economics, business, history, philosophy and theology for ages 8+. www.soncrossacademy.org.
Ian Hodge received his Ph.D. degree from Whitefield Seminary in “Christian Intellectual Thought – Economics”. He has written over 500 articles on topics such as business management, economics, education, law, finance, health, philosophy, politics, theology, and music as he explores the application of a biblical world view. He runs his own blog at www.biblicallandmarks.com.
He is the author of:
· Why Would Anyone In Their Right Mind Believe the Bible? An introduction to the Christian Faith.
· Baptized Inflation: A Critique of “Christian” Keynesianism.
· Is This The End of Religious Liberty? The Declaration on the Elimination of All Forms of Discrimination and Intolerance Based on Religion or Belief.
· Making Sense of Your Dollars: A Biblical View of Wealth.
· How To Be Diabetes Free . . . For Life. An analysis of the biology of diabetes, and how this disease can be prevented and even halted.
· Ian Hodge’s Read, Write & Play Music, a self-teaching program that instructs young students on how to write (compose) music.
· Powerhouse Piano, online video and live lessons in classical piano.
· Publisher, editor, William the Baptist. A classic in Christian literature, reissued with an introduction by Dr. Hodge.
In his spare time, Ian can be found actively debating atheists on his city streets and elsewhere (anywhere) whenever the opportunity arises.