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To: Snowshoe who wrote (70981)	1/7/2009 4:40:40 PM
From: Maurice Winn	1 Recommendation Respond to of 74559

That's rubbish Snowy. Superficially, it forms sentences and seems logical, but look at the meaning: <But China is not exempt from a basic economic principle: A cost to one person is an income to another. The fact that factory owners and developers in China incur lower costs means that the income to some other economic participant is low. Those who derive low income in China happen to be the majority of the population, especially the rural Chinese who have little political power to protect themselves. Thus one sure mechanism of private wealth creation -- urbanization achieved when small landholders sell out to developers at market prices -- is almost completely missing in China despite the fact that the country is urbanizing at a dizzying rate on the surface. > What it means is before the development, there were some dirty hutongs with people living in penury with low incomes. After development, they are living in better conditions or maybe the same, having been moved off the land, but there is also a big commercial development which will earn income. That means the area gets a net economic benefit. To compare it with the market economy of NZ, say I own 100 rental units in an area, from which I get almost no money because the tenants are not economically valuable, then I sell the lot to a developer who builds something worthwhile, such as a car factory, ASIC design premises, software development centre, Disneyland centre. That is the situation in China. Bad luck for the tenants who have to get somewhere else to rent. They thought Chairman Mao was a Gung Ho bloke and were all in favour of communism. Communism means they are tenants and don't own the houses. So when the owner needs to do something better with the land, they have to move out. It's the same in NZ. The owner moves the tenants out if they want to. Even our own land and house is not strictly owned by us. We are tenants in common in fee simple, but the owner is actually The Crown aka the government. They can boot us out and build a road instead though because we nominally own it, the law is that we get market compensation. Paying the tenants in China for "their" hutong properties doesn't create wealth. It just shifts it from somebody else, making the proposed project less economically desirable. The local yokels can improve their wealth by working for the new project [construction and then production]. Mqurice