Thinking outside the box

20 years ago China’s GDP was $1 trillion, and the 2018 estimate is $13 trillion. By comparison US GDP 20 years ago was $9 trillion, and the 2018 estimate is $20 trillion. So the US GDP more than doubled in 20 years, but China’s has increased 13x. Amazing. Here’s a NYT piece that looks at some of the factors. Looking at countries like the USSR or Venezuela would never get you to anything but stagnant or negative growth, but China really has thought outside the box, with incredible results.

In another story, we’re advising a group that wants to do mature aircraft leasing, and it is quite difficult to get the proper equity financing. Almost all lessors focus on new equipment. The Venture Capital and Private Equity worlds don’t overlap much. So even though we can point to two examples of such companies that have achieved over 100% ROI to equity, the gap between the VC and PE worlds makes such a thing a long slog. One of the challenges facing the US and Western Europe is to incentivize thinking outside the box when it comes to mature and often sedentary economies. China’s example serves as a reminder that incredible results can be achieved by such thinking.

One Response to “Thinking outside the box”

  1. Neil Says:

    “Outside the box” is helped along greatly by the ability to make a profit from fixed capital. Seems to me the recent tax reforms should help a great deal to make investments other than apps viable.

    On other questions, perhaps your RSS feed is faster than you realize. C. S. Lewis makes an awful lot of sense when he discusses some very hard questions.

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