Tesla shows why China grows quite so quickly

Something we’ve noted more than once before - China is probably the most free market economy in the world at present.

Clearly, this is using free market in a fairly specialist sense - a communist shading into merely authoritarian government isn’t usually thought of as that. However, it is true, in the sense that is being used. People, organisations, are able to start new economic activity there faster than they are anywhere else. Take the example of Tesla. Their China factory:

How Elon Musk Built a Tesla Factory in China in Less Than a Year

Their German factory:

Tesla has been ordered to stop work on its German factory, in a win for environmental campaigners.

A court ruled that the electric car company must stop clearing forest land near Berlin to prepare for the construction of the facility, its first so-called "gigafactory" in Europe.

Planning permission has not yet been granted on the site, and a complaint has been brought by a local environmental group, the Gruene Liga Brandenburg (Green League of Brandenburg).

The German process started in November, thus has 8 months left to match the Chinese experience. And one third of the time into the process they’ve not cleared the land, not cleared the courts and not cleared the planning process.

Something which rather neatly explains the different speeds of growth. Economic growth is, obviously enough, the outcome of doing new things or old things in new ways. The speed of economic growth is determined by how fast you can do new things, old things in new ways. We in the already rich countries place significant barriers in the way of people doing those new things. Therefore our economic growth is slower than it could be, slower than it might be in other places.

Note what we’re not saying, that there should be no such controls. Well, not here, not now, we’re not. Instead we just want to make, again, the point that everything has costs whatever the benefits that may also flow from the same thing.

Regulation slows economic growth simply because it slows down the rate at which people are able to do new things. This is a cost that has to be kept in mind when considering any proposal for regulation. It might even be true that proper consideration of all those costs, when set against the benefits, will lead us to putting fewer regulatory constraints on our children getting richer.