By Kevin Meyer
And here I thought large-scale central planning was thrown out with the remnants of the old Soviet Union. Lean folks know that effective capacity is tied to demand, not to whatever the man behind the magic curtain (uh… running SAP?) believes it should be. Apparently the Chinese haven't learned that lesson.
Business Insider has a fascinating peek at the ghost cities of China. City after city – very modern and looking quite livable… sitting empty. Even a university built to hold over two million students (yes you read that right)… with eleven thousand enrolled.
Some of the photos are downright spooky… big buildings looking very well kept, but empty streets.
The cost must be incredible.
Demand-based construction, anyone?
John Hunter says
It does seem amazingly crazy. In fact so crazy it seems like these stories are in the internet about these ghost cities must be missing something or misrepresenting things somehow? It is true demand based construction is a good idea – and one of the things that works fairly well in capitalism (though not perfectly). It is one of the things that makes capitalism so effectively that even if in crude ways those that match supply to demand are rewarded with more capital and those that create supply for which there is not good demand lose capital.
If these stories are really true that is going to be a big burden for China. Of course every country has plenty of burdens. The huge amount of waste in the financial sector in the USA probably puts to shame the waste of empty cities. Even if empty cities are an amazingly visible sign of waste.
Jim Fernandez says
I believe China has an income tax rate that is a little higher than in the U.S.. With no wars to finance and all those people, the government must have more money than they know what to do with.
On second thought, they know exactly what to do with all that money; they are buying America…….
Tommaso says
If they paid decent wages to their workers, maybe all those building would be full, and people had the time to walk around!!