Monday, November 23, 2009

China's Empty City

One interesting thing happens during recessions---government officials have a perverse incentive to "save or create" jobs---even if those jobs don't result anything economical (i.e. Dig a Ditch and then fill it up).

Well the Chinese did this on a grand scale. They built a city for 1 million people in inner mongolia that sits empty---because the existing city (30 miles away) is still vibrant and affordable. Essentially, they wasted capital and jobs on an asset that won't be viable for years to come.

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