Strange movie about the completely emptiness of the world’s largest shopping mall in Guangzhou, China. It seems like a good example of a credit-fueled boom. It’s not always true that if you build it, they will come.
Source link: http://archive.mises.org/11329/the-worlds-largest-mall-is-a-ghosttown/
The World’s Largest Mall is a Ghosttown
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I think Xanadu, a 4,500,000 square foot mall in the Meadowlands of New Jersey will have a similar result (if they ever finish it).
http://en.wikipedia.org/wiki/Xanadu_Meadowlands
I guess the Chinese still don’t have capitalism completely figured out yet. (Assuming of course that this mall wasn’t simply built by command of some gov’t bureaucrat.)
Wasn’t there a similar story not too long ago about a new Chinese city that was built but still remains almost completely empty?
Andrew–
Here’s the link to a youtube video about the empty city of Ordos:
http://www.youtube.com/watch?v=0h7V3Twb-Qk
There is a Chinese city near Shanghai called Thames town that is an incredibly beautiful Londonesque town that was built by command. It’s completely empty. Sad. Nice church there though. People just get their wedding photos done
Schenzen was ordered to be prosperous. It hasn’t worked out that well, but is doing better than the mall.
At least bureaucrats there build things. Here, in the fine old USA, he’s more likely to be plotting the expansion of “unspoiled” native habitats – while dreaming of the day the whole pesky human race is gone.
HL,
Tearing down is cheaper than building up. Which would you prefer, ghost towns or underutilized forests? As Mises made clear in Human Action, forced underinvestment is less damaging than forced overinvestment.
“I guess the Chinese still don’t have capitalism completely figured out yet. (Assuming of course that this mall wasn’t simply built by command of some gov’t bureaucrat.)”
Saying a successful mall is a good indicator of capitalism shows, I think, a lack of understanding of what capitalism would really entail. Capitalism depends on capital. True capital formation depends on real savings (not government created artificial savings through a printing press). Without government interference savings rates would have to be balanced with consumption rates. If it wasn’t business could not expand and without expanding business and the new employment expanding business creates purchasing power could not increase. Thus consumption would depend on savings and savings would have to remain high to keep the cycle going. A high savings rate would probably mean a huge mall in the middle of a town with no airport would have a low likelihood of success.
The financing of the construction of the world’s largest shopping mall may or may not be a good example of a credit-fueled boom, but I imagine that its emptiness has more to do with Mr. Hu’s having built it in a place without an airport or freeways connecting to the site.
Even if you build it, they won’t come if there isn’t a way to get to it (section of clip with 9:50 – 9:07 remaining).
Wikipedia seems to think that The Dubai Mall is the world’s largest.
The Chinese economy is probably plagued with malinvestments like this everywhere. People who believe China will surpass the U.S. as the world’s leading economy are flat out wrong. China will go down in flames.
I think the problem here is that Chinese economists are sticking to the labor theory of value. Hence they think that increasing GDP alone through internal investment will be soon automatically followed by increased demand. These ghost towns are a perfect counter example to the labor theory, as nobody is finding it worthwhile to live in them. Someone needs to send them a copy of Menger.
EIS
The Chinese economy is probably plagued with malinvestments like this everywhere. People who believe China will surpass the U.S. as the world’s leading economy are flat out wrong. China will go down in flames.
Yes, but not before the US.
The US is already going down in flames. The Chinese will go down, but only after us.
EIS
The Chinese economy is probably plagued with malinvestments like this everywhere. People who believe China will surpass the U.S. as the world’s leading economy are flat out wrong. China will go down in flames.
Yes, but not before the US.
The US is already going down in flames. The Chinese will go down, but only after us.
It’s irrelevant to the overall takeaway from the film, but was anyone else bothered by the false facts that were given? The film claims the mall is “more than twice the size of the previous record holder, The Mall of America in Minnesota.” The MoA was never the world’s largest mall. Even when it was opened in 1992, the West Edmonton Mall in Canada (completed eleven years prior) was larger.
What’s more, the mall manager claims “the South China Mall was the first mall in China” and that “before it, there was no concept of a ‘mall.’ No one in China has the experience to run such a big mall.
The problem with that is, even before the SCM was completed, there were already four shopping malls in China larger than the Mall of America. One being larger than West Edmonton…making Beijing home to the largest mall on the planet. And not only that…those malls don’t seem to be having trouble bringing in customers: “On busy days, one mall in the southern city of Guangzhou [just 65 km away] attracts about 600,000 shoppers.”
It would seem Mr. Huang is attempting to downplay his shortcomings in quite a dishonest way.
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