Regarding the cost of things

An interesting discovery that emerged from my research into alternative systems of economic governance is that most investments seem to go at bargain prices in places like China, Russia, or Azerbaijan while the same, or similar things go at extortionate prices in most Western economies.

For example, last November I pointed out my friend Matt Smith’s extraordinary report from Azerbaijan in which he described that nation’s major infrastructure development over the last five years:

By far, the most impressive thing I saw during our visit was the level of construction occurring in the country… the scale of which is almost beyond imagination. … occasionally I could glimpse below in the valley a brand new highway system which included dozens of tunnels. Now this is probably the most difficult terrain possible to do major construction.

And yet what I glimpsed from above was shocking in scale. … along the roads that we traveled, there were endless streams of heavy equipment, hard at work, reshaping the landscape to expand the highway system we were on. There were cement factories everywhere built bespoke to support this ambitious effort.

The scale was so massive, so inorganic, and so out of place, we had a hard time making sense of it. To do something like this in America would be utterly impossible. It would cost trillions of dollars. The thinking required, too big, the manpower, unavailable, the will, long gone. … seeing this scale of construction, the costs I imagined seemed utterly impossible. And so, at my earliest opportunity, I did some research. What I found was shocking.

And what Smith shared next was truly astonishing:

“Azerbaijan had built 4,000 kilometers of highway, 45 tunnels, including the second longest in the world, 447 bridges, 16 viaducts. Much of this over very, very difficult terrain. The project was mostly complete. And the total project time was less than five years. All this they’re doing for approximately $5 billion.

To put that in perspective, on March 26, 2024, the Francis Scott Key Bridge in Baltimore was damaged when a container ship collided into it. Currently, the bridge is expected to be rebuilt by late 2030 (more than six years from its collapse) at a cost that’s estimated at between $4.3 and $5.2 billion. In a recent report I highlighted how China built a high-speed railway hub in Chongqing at a scale of Egyptian pyramids and removed an entire mountain to build it. The whole project took only 38 months and cost $7.8 billion.

Consider again the cost and pace of high speed railroad construction. In May of 2024, California High-Speed Rail Authority proudly announced completion of the Fresno River Viaduct in Madera County. Although the viaduct measured only 1,600 feet in length, it took 9 years to complete. Sadly, this was a rather typical example. In the 29 years since its establishment, the California High-Speed Rail Authority built 38 structures, totaling 39 miles at a cost $13.6 billion, nearly $350 million per mile of high-speed railroads that are still not remotely operational.

Across the entire US, in 2024 there were some 30 high speed rail structures under “active construction” totaling 119 miles. Meanwhile, in less than 20 years, China built over 50,000 kilometers (over 31,000 miles) at a cost of between $17 and $21 million per kilometer, or $27 to $34 million per mile. That’s less than 1/10^th of the cost per mile of American high speed rail which might never even become operational.

Then there’s the AI industry. Some sum nearing $3 trillion was invested in the creation of the leading American AI models and their associated infrastructure. China’s DeepSeek AI spent a total only $6 million to develop a very credible rival offering, the DeepSeek R1 model.

On 23 April this year, OpenAI launched their most advanced model, the GPT 5.5. DeepSeek responded the very next day with their own challenger, the V4 model which nearly matched OpenAI’s model in terms of performance. But again, the real, gaping difference between “Made in USA,” and “Made in China” popped up in terms of cost: DeepSeek is up to 107 times cheaper than GPT 5.5. For heavy users, that difference could add up to tens of thousands of dollars a year, a make-or-break issue in the AI wars, which is driving most American startups to adopt Chinese AI platforms.

Then there’s the costs of weapons systems, where Western systems cost 10x or more what the Russian, Chinese or Iranian systems cost. A particularly egregious case is the cost of health care. American people pay by far the world’s most expensive health care system, but they get some of the worst health outcomes of any advanced economy in the world, on almost any metric:

• Health care is the 3rd leading cause of death in the US

• 50% of U.S. adults and 30% of teens have pre-diabetes or type II diabetes

• 40% of 18-year olds have a mental health diagnosis

• U.S. has the highest infant and mother mortality rate in the developed world in spite of spending more than twice as much on infant and maternal care

• 25% of American women are on antidepressants

• One in 36 children have autism (in California, it’s one in 32)

• Rates of myocarditis, pericarditis and cancers among young people are exploding

• Since 2019 life expectancy in the US has been shrinking and is now 7.65% lower than in other developed nations (82.4 years vs. 76.1 years, based on 2021 data)

A stark contrast with Chinese health care was offered recently by an American young woman named Jennifer who posted a short video of her own experience on X. She had no health insurance of any kind in China, but she needed to see a doctor in order to obtain a prescription for some medicines. So, she walked into a public hospital and 19 minutes and $12 later, she walked out with everything she needed. Here is her video:

Dominic Lee 李梓敬@dominictsz

An American woman went to a public hospital in China with just her passport—no appointment, no insurance, and spent only $12 total! She walked in, took a number, scanned a QR code, paid quickly, and saw a doctor right away. The doctor visit cost $7 and the prescription was $5.

10:49 PM · Jun 30, 2026 · 111K Views

282 Replies · 1.52K Reposts · 4.02K Likes

I could go on enumerating case after case after case exemplifying the value-for-money disproportion between Western economies and those of the unfree world. The picture that emerges is that in Western democracies, the people are consistently and radically short-changed and robbed of their health, their wealth, their freedom and their future, almost as though the whole system was built as an industrial-scale wealth extraction pump that loots the wealth created by the people in a thousand subtle ways, each of which can somehow be denied, or at least justified with some convenient narrative.

On top of that, we have a thick layer of ideology masquerading as economic theory, which insulates us from common sense, inducing a form of Stockholm Syndrome where can convince ourselves that being robbed blind is just glorious because bootstraps, hard work, free market capitalism, Murray Rothbard, Friedrich Hayek, “libertad, carajo,” and similar slogans prevent us from reaching sensible conclusions based on a simple observation of facts.

Instead, discussions often gravitate towards blowing up nations that fail to conform to liberal democracy and free market capitalism. But we really should be asking questions and demanding very concrete answers: why does nearly everything in the West cost double, triple or 10x what it costs elsewhere and what would our lives be like if everything cost 1/10th what it costs now?

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With yesterday’s closing prices we have the following changes for the Key Markets portfolio: