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Is the US Moving Toward a Chinese Model With Its Nationalization of Industry?

One would hope not. But the coming government takeover of the American auto companies, following the de facto and de jure takeovers of some of the country's largest, and most important financial insitutions, seem to be steps in that direction. And it may be no accident that Hummer, a part of GM, is being sold to a Chinese company.

The Chinese model is for its heaviest, most strategic industries to be state owned enterprises (SOEs). Think autos, steel, mining, and utilities. There is a private sector, but this is largely in areas requiring large amounts of intellectual capital such as technology and health care.

The problem is that "heavy" and strategic industries need intellectual capital too, but are less lilkely to get it. And this process is hampered, rather than helped, by government who operates on a "non-profit" basis, but one laden with social objectives such as maximizing employ... or wages.

Once down that slippery slope, it will be hard to get off it. That's because politlcal, as opposed to economic interests, dictate policy, and ultimately become "vested."  That's true even when the economic weaknesses are exposed, until they are too glaring. Even now, the Chinese economy runs on a teeter-totter with cutting edge world class industrial operations held back by an archaic infrastructure.

Perhaps the closest model that the United States is likely to follow is the model of Britain, who nationalized key industries inthe 1960s and 1970s,  before denationalizing. themin the 1980s and 1990s.  But the latter process took about two decades, mostly under Margaret Thatcher, to accomplish.

We might not be so lucky. That's why we should not have gone down this path (although it might now be too late to do otherwise).