Reporting from: Ho Chi Minh City, Vietnam
Shortly after the 9/11 terrorist attacks, US President George W. Bush had a stroke of genius.
No, it wasn’t going in and bombing a sovereign nation that had won ever war a major superpower threw at them. No, it wasn’t going in and bombing the OTHER sovereign nation that had weapons of mass destruction.
Bush’s brilliant idea was to… wait for… go shopping.
Yes, this staple of conservatism and economic freedom’s advice to American citizens was to run up their credit cards. Even more. If you didn’t know any better, you’d think this guy was a died-in-the-wool liberal with all of the spending he both advocated across his land, and that he rubber-stamped from his government.
You could really called in Keynesian economics. Bush loved running up the debt handing out “stimulus” checks to eager-to-spend Americans who would blow the money at the Home Depot (or maybe on booze).
And his lackeys were no better.
In 2005, US Treasury Secretary John Snow jetted off to Sichuan province, China to encourage leaders there to spread a message. That message is that the Chinese need to be more like Americans: spending more, borrowing more, and saving less.
Citing “global imbalances”, Snow prattled on about how The Land of the Free was still the envy of the world. China, among the world’s fastest growing economies at the time, should forget its own culture, its own policies, and its own successes, and heed all advice from the sinking ship that is the United States.
Need I remind you what happened two years later thanks to all of that spending, borrowing, and not saving?
The big-spending ways of Keynesian economics don’t play too well among the people here in Vietnam, either. Vietnam has one of the highest savings rates in the world. They love gold and they love real estate, even though gold has sold at huge premiums (think 15%) over spot since the government threatened confiscation, and real estate prices are ridiculous when compared with rental yields.
Credit is not much of a thing here. Even many nice restaurants will wave off your attempt to pay with Mastercard. Only high-income consumers even dream of having a credit card.
It’s common to pay cash for real estate – even though a big city condo could cost more than a suburban home in much of the US. Banks are paying 7-8% annual yield on basic savings accounts as fear of the Vietnamese dong rises.
Here, people don’t keep much of their money locked up in their banks. Savings rates in parts of Vietnam are as low as 5% when you only consider “official savings”. But when you include cash, jewelry, and gold kept at home, it can be many, many times higher.
Contrast that with the USSA, where the savings rate recently clocked in at a whopping 2.6%. People in one of the ten wealthiest countries on earth can’t hold a candle to savers in a country whose official per capita GDP is $3,500.
Vietnamese people don’t put much faith in their government. They’ve been screwed before and they know what the government is capable of. In that regard, they’re much more financially savvy than their American counterparts, who buy anything the government shovels their way.
What Vietnam and China do have, however, is a shadow economy. One western governments have been bemoaning for some time. Statists don’t like anyone cutting into their racket or their control.
And that shadow economy is home to a vast amount of wealth. What John Snow was desperate to avoid on his trip to western China was the fact that Chinese and many other Asian cultures are far happier investing money in their friends and families in search of higher returns and less government snooping.
Call it a “third world” practice all you want, the fact is that Asia loves to save money. If the government told them to “go shopping” to boost the economy, they wouldn’t listen. If the government said “who needs gold?”, they’d buy more. The Vietnamese people and others across this region like keeping their capital close and in tangible assets.
They don’t buy the Keynesian economics lie that spending all their money is the path to prosperity. You shouldn’t, either.
Statist stooges like John Snow NEED the Vietnamese and others to stop saving their money so the rest of the world can fall into a government-dependent sinking ship, just like the USSA. In a moment of irony, Snow’s undersecretary had mentioned that China’s “precautionary savings” were due to a lack of a healthcare and education safety net.
As much as their boss, the President, wanted to claim the title of “tax cutter”, guys like John Snow need savings to sink in order to create new social programs that spur dependence on the state. Oh, and they’re all too happy to claim credit for any economic growth that may (or may not) occur.
The Keynesian economics position that squirreling money away will tank an economy hasn’t played out too well in the United States. When your “free country” can learn a lesson on economic security and growth from countries that fly a communist flag, you know you’re in trouble.
It’s just a matter of time.