Should We Be More Like China?
I'm continually shocked when demonstrably bright and accomplished people fall in love with authoritarian states.
I’m continually shocked when demonstrably bright and accomplished people (I’m looking at you, Tom Friedman) come back from posh meetings in authoritarian states gushing about what they saw and exhorting their fellow citizens that we need to emulate those societies. The latest victim of this is former Microsoft CEO Robert Herbold who has a WSJ op-ed titled “China vs. America: Which Is the Developing Country?”
Infrastructure: Let’s face it, Los Angeles is decaying. Its airport is cramped and dirty, too small for the volume it tries to handle and in a state of disrepair. In contrast, the airports in Beijing and Shanghai are brand new, clean and incredibly spacious, with friendly, courteous staff galore. They are extremely well-designed to handle the large volume of air traffic needed to carry out global business these days.
In traveling the highways around Los Angeles to get to the airport, you are struck by the state of disrepair there, too. Of course, everyone knows California is bankrupt and that is probably the reason why. In contrast, the infrastructure in the major Chinese cities such as Shanghai and Beijing is absolute state-of-the-art and relatively new.
So, we’re comparing an airport that’s been in operation since 1930 and is the 6th busiest in the world to one that opened in 1999 and is the 20th busiest in the world? And highways which have been among the world’s most traveled since roughly the invention of the automobile to those in a society where ordinary citizens have only recently begun to be able to afford cars?
If we’re going to do that then, surely, we have to factor in the enormous good delivered by the older airports and roads during those intervening decades. Los Angelenos had those advantages for three quarters of a century of enormous prosperity. That’s three generations of people whose lives were improved by a standard of living the residents of Shanghai are just now starting to enjoy.
It’s true that America has an infrastructure problem. The price of early development is that our airports, roads, and bridges are old. We can and do build new airports and expand and renovate old ones. But doing so comes at the cost of major inconvenience for those using existing facilities.
Furthermore, it is indeed easier to manage an infrastructure system when the people have no voice. There’s no environmental impact studies or NIMBY lobbying about noise, traffic, or other negative externalities. But getting rid of those inconveniences comes at an enormous price in liberty.
Government Leadership: Here the differences are staggering. In every meeting we attended, with four different customers of our company as well as representatives from four different arms of the Chinese government, our hosts began their presentation with a brief discussion of China’s new five-year-plan. This is the 12th five-year plan and it was announced in March 2011. Each of these groups reminded us that the new five-year plan is primarily focused on three things: 1) improving innovation in the country; 2) making significant improvements in the environmental footprint of China; and 3) continuing to create jobs to employ large numbers of people moving from rural to urban areas. Can you imagine the U.S. Congress and president emerging with a unified five-year plan that they actually achieve (like China typically does)?
Thankfully, no. We have an electoral system in which the president is elected every four years, and the entire House and a third of the Senate gets elected every two years. Each represents a different constituency. And, of course, there are two major political parties that are increasingly polarized and ideological. That’s messy and frustrating. Would I trade it for unelected oligarchs who all answer to the same party apparatus? No.
Unlike Herbert, I find it hard to read the phrase “five-year plan,” especially in the context of the Chinese Communist Party, with a straight face. For decades, those plans took China (and the Soviet Union) down the path of ruin. Occasionally, as with Mao’s Great Leap Forward, the results of central planning were even more tragic. So, no, I don’t yearn for a central state with that amount of power and cohesion.
Given how far they’ve come some Mao’s death in 1976, the Chinese are obviously doing something–indeed, a lot of things–right. Given the massive improvement in the living conditions of China’s 1.3 billion people this has meant, I’m thrilled. But it’s a lot easier to transition an economy that’s decades behind the curve into something approaching a modern economy than it is to sustain an advanced economy.
Government Finances: This topic is, frankly, embarrassing. China manages its economy with incredible care and is sitting on trillions of dollars of reserves. In contrast, the U.S. government has managed its financials very poorly over the years and is flirting with a Greece-like catastrophe.
It’s true that elected leaders giving the people what they want–in America’s case, ever lower taxes with ever-increasing social spending–has put the country up against an arbitrary “debt ceiling” that no other country on the planet imposes on itself. But no “Greek-like catastrophe” is coming.
Human Rights/Free Speech: In this area, our American view is that China has a ton of work to do. Their view is that we are nuts for not blocking pornography and antigovernment points-of-view from our youth and citizens.
So, it’s really a matter of opinion as to whether the United States or China is doing better in the areas of Human Rights and Free Speech? I believe I’d have left that one out, Mr. Herbold.
Technology and Innovation: To give you a feel for China’s determination to become globally competitive in technology innovation, let me cite some statistics from two facilities we visited. Over the last 10 years, the Institute of Biophysics, an arm of the Chinese Academy of Science, has received very significant investment by the Chinese government. Today it consists of more than 3,000 talented scientists focused on doing world-class research in areas such as protein science, and brain and cognitive sciences.
And, yet, shockingly, the United States and other Western societies continue to produce almost all technological breakthroughs while China leverages the fact that it has a gigantic population of incredibly low paid workers.
All of the various institutes being run by the Chinese Academy of Science are going to be significantly increased in size, and staffing will be aided by a new recruiting program called “Ten Thousand Talents.” This is an effort by the Chinese government to reach out to Chinese individuals who have been trained, and currently reside, outside China. They are focusing on those who are world-class in their technical abilities, primarily at the Ph.D. level, at work in various universities and science institutes abroad. In each year of this new five-year plan, the goal is to recruit 2,000 of these individuals to return to China.
This is a great idea. Indeed, the United States should follow suit and reach out to all of our PhDs and technical experts who have immigrated to China and try to lure them back home. Oh, wait.
Reasons and Cure: Given all of the above, I think you can see why I pose the fundamental question: Which is the developing country and which is the developed country? The next questions are: Why is this occurring and what should the U.S. do?
Let’s face it—we are getting beaten because the U.S. government can’t seem to make big improvements. Issues quickly get polarized, and then further polarized by the media, which needs extreme viewpoints to draw attention and increase audience size. The autocratic Chinese leadership gets things done fast (currently the autocrats seem to be highly effective).
What is the cure? Washington politicians and American voters need to snap to and realize they are getting beaten—and make big changes that put the U.S. back on track: Fix the budget and the burden of entitlements; implement an aggressive five-year debt-reduction plan, and start approving some winning plans. Wake up, America!
It’s not at all clear in what sense the United States is being “beaten” by the Chinese. Despite having a quarter China’s population, America’s GDP is nearly three times bigger. And the United States remains the dominant political, military, and cultural power on the planet.
Now, I happen to agree with the fixes Herbold proposes. Then again, few Americans–including those in Washington–disagree. The question is how to reach consensus on the budget when one side gets elected on the promise of low taxes and the other side gets elected on the basis of generous social spending and they meet in the middle by doing both. That’s a problem. Autocratic efficiency, however, is not the solution.
Heh, this is very behind the times. Pundits are looking for a Chinese crash now, and have moved on from hero worship.
Tom Friedman is going to be very unhappy that someone is plagiarizing him.
A nation like China appeals to people like Friedman because they are technocrats, and they believe that things in the US would be so, so much better if only they were in charge and able to do whatever they wanted.
The biggest obstacle to major infrastructure project in this country is that Republicans will always choose to redistribute money to economic elites through tax cuts and corporate welfare rather than invest in infrastructure. For example, Chris Christie cancelled the biggest infrastructure project in this country (the ARC tunnel from NJ to NYC) because he claimed the state could not afford it. He did this while cutting taxes on people making over $400K at the cost of several hundred million dollars of revenue, and bailing out a casino and a mall at the cost several hundred millions dollars.
It’s completely insane to believe it’s more worthwhile to have wealthier rich people today, a casino, and a mall, rather than building another major point of connection to the largest city in this country and increasing system-wide capacity for NJ transit commuter trains and the Amtrak Northeast Corridor.
But, then again, Republicans repeatedly have shown that they would rather have wealthier rich people than invest in the future of this country’s infrastructure.
Well we should be investing in our outdated infrastructure while interest rates are at rock bottom, construction costs are extremely competitive, and people need jobs. That’s only sensible.
@Doug Mataconis: I think you are referring to the enigmatic “third party” we purportedly need that reflects only the views of Tom Friedman and David Brooks. People like Bloomberg are acceptable as well.
There’s also a big difference between technocrats that believe their decision-making should be limited by the democratic process, and those who believe that technocrats are good because then policy would only reflect the views of Washington elites.
If China’s finances weren’t mostly bullshit figures and full of hidden debt, I’d say we should be more like them. They’re headed for a giant crash.
Such support for the kind of authority mania we se in the Chian worship is exactly the kind of thing one would expect from someone… or several someones… who thinks that government is the answer to everything, that creating a law solves problems, andt that unintended consequences never happen from laws and government.
And of course who also don’t give a damn about the rights of the individual.
@James:
My reaction as well.
@ lunaticllama:
I don’t know how many ways this has been debunked or explained in general, but here it is presented just for you.
Tax cuts are not a redistribution of wealth to the wealthy. Allowing people to retain their own money is not redistribution. For you to state that it is implies that you don’t actually believe in property rights, and that all wealth is the property of the United States, to dole out as it sees fit.
Here’s the quickest way to demonstrate this:
If you go to the store and pay for a service, let’s say buying meat. You do this every week and spend $10.00 on ground beef. If the store changes the prices, and you now only pay $9, has the store “redistributed” wealth? Has the store GIVEN you a dollar?
We all know that this isn’t the case. You’ve simply retained more of your own property. Nobody has given you or redistributed anything. Taxes are the same.
Income is property, which is the right of every American to accumulate and own. To state that it is “re-distrbution” to allow people to keep their own property is utterly false.
Here, let me recommend a fix on that for you — “demonstrably bright compartmentalized thinkers.” There you go.
Hey, the federal agencies do 5-yr plans every year.
I love the money and bodies means innovation? Well, it is a Microsoft CEO. This might cause a problem: How China Kills Creativity
Call us back when China invents something new and innovative. Until then, we’ll lament and fight the central control that dampens innovation in the US by inhibiting entrepreneurship, punishes with taxes risky investments and has turned education into rote learning of droning irrelevant PC agendas.
@Jon: There are expenses involved in keeping this country afloat. They have to be paid. It is the policy of the Republican party that the vast majority of those expenses be paid by those who have the least, while those who own 99% of the nation’s wealth are asked to contribute less and less.
Jon…
The wealthiest benefit more, as a function of being wealthier, and thus should pay more as a percentage. The seller of ground beef is making a higher margin as a result of being able to transport his goods across good quality highways. The buyer of the ground beef benefits from lower prices, but the difference is significant in the direction of the seller. Therefore the seller should pay more, as a percentage, to build and maintain those roads.
Your position is easily debunked by looking at the growth of income inequality since the beginning of the republican attack on the middle class that began with Reagan in the 80’s.
For goodness sakes, Doug. I think you are woefully overreading what these two people are saying. Try to put to faux outrage aside and stop accusing them of being pro-commies wishing that Amurkins would allow an authoritarian Daddy to solve all our problems.
I think what they are getting at is that the US, and Los Angeles, ought to be able to fix up our infrastructure and do big things as we have done in the past, except for the paralysis of national politics. They are using China as a *bad* example of how that gets done in this day and age.
Instead, we are paralyzed by people who piss and moan over the cost of repairing every pot hole. This is what “small government” looks like. No money to repair potholes, no money to build bridges, no money for modern transportation. There is no reason whatsoever why we can’t have functioning 50-year-old highways and bridges and airport expansion when needed. Don’t blame the NIMBYs for that. It’s the down-government-in-the-bathtub types that command the Can’t Do mentality we see here these days.
Sorry, I meant James not Doug. Forgive me.
@James: While Doug’s being slightly hyperbolic, I think he’s right. I don’t think Friedman actually wants dictatorship but he thinks that people like him ought to run things and is frustrated by the system.
Additionally, these people remind me of the journalists who go on VIP tours of war zones and come back effusive about how great things are going, somehow not understanding that they’ve gotten only the view the generals wanted them to have. People who travel in jet set circles see only the shiniest aspects of China, Singapore, and the like and come back enthusiastic about how spectacular things are compared to everyday America.
Really?
Why?
Seems to me the exact opposite is true.
The next few years will be interesting, maybe hair-raising for China. The country has signiticant problems: poverty, pollution, authoritarian government, and so on. It also has significant strengths that have served it well for the last 30 years.
The new factor is demographic. China’s working age population will peak quite soon and that will inevitably present some challenges.
I’m pulling for China. I don’t believe that a prosperous, successful China will be a threat to us. Contrariwise, I think that a struggling, fracturing China can pose significant dangers.
@ponce: Because an advanced economy has a tremendous investment in old infrastructure and is built up around it. Making LAX a truly modern airport is almost impossible, since it’s not only extremely hard to replace during construction but everything is built up around it.
Additionally, it’s much easier to copy–or, in the Chinese case, simply steal–the technology developed at great cost by others. Or, in the case of some technologies, simply skip ahead several generations.
It’s like drafting in auto racing: The car in the rear doesn’t need to expend as much energy to run the same speed as the car in front.
Friedman is one of those things I’m moderate about. I think he’s often half-right, or failing that, right half the time. Critics tend to want to make him fully-wrong. Going for that absolute makes them less right than Friedman, IMO.
I’d guess he’d be happy with better bills out of congress, and a little more integrity at the various Departments Of.
Remember that the “best” airports are overbuilt, too large for their venue, and built as objects of national pride. They are not built for ROI.
Comparing a terminal to a monument will always make the terminal look a little shoddy.
There is far more to creating a modern economy than building infrastructure.
Just ask Stalin.
I think you are being an apologist for the current generation of Americans who are pissing away their inheritance.
@ WR
That’s demonstrably false:
Here’s the breakdown on taxes and brackets, with the data provided by the IRS.
http://www.taxfoundation.org/taxdata/show/250.html#Data
Take a look at Table 6, “Total Income Tax Shares, 1980-2008 (Percent of federal income tax paid by each group)”.
As of the last data date, 2008:
The top .1% paid 18.47% of all the income tax raised
The top 1% paid 38.02% of all the income tax raised
The top 5% paid 58.72% of all the income tax raised
Between the top 5% and 10% paid 11.22% of all the income tax raised
The top 10% paid 69.94% of all the income tax raised
The top 25% paid 86.34% of all the income tax raised
The top 50% paid 97.30% of all the income tax raised
The bottom 50% paid…….. 2.7%
How much more should the wealthy pay, according to your perverted socialist logic? They are already covering the tab for everyone else.
@ Hey Norm
Who cares about wealth inequality? Why should you? Since when does one man’s wealth reduce your own, as wealth is NOT a zero sum game? It’s like complaining that someone else is TOO good looking; their looks don’t have anything to do with yours.
If you take a look at the wealthiest individuals and families, and compare the names that show up over time (say… 150 years), you quickly notice that there are always new people at the top from generation to generation, and that they typically generated their wealth through servicing the needs of the time they lived in.
Even if we ignore the top 5%, the HUGE earners, there are more millionaires in the United States than ever before. The freedom in the United States to form a business, accumulate wealth, and build upon that wealth has resulted in a higher standard of living that ever before in ALL of human history.
And that bugs you because it’s not equal…. Here’s a wakeup call: Everyone’s work and/or contribution to the world isn’t equal. Those that create value have a right to be compensated, not punished for their success. They already pay the bills for everyone else anyhow.
They already pay more as a percentage, but is still not enough for you. If a man makes 15x more than his neighbor, why shouldn’t both men pay the same tax rate %? The rich neighbor will still pay 15x more than the lesser, which would be fair. The small business owner that employs his neighbor and makes 15x more currently pays MUCH more than he benefits.
Also, let’s examine WR’s statement that
Here’s the spending by the Federal Government. here is a graph of the US National Debt.
http://www.die.net/musings/national_debt/
This graph only covers through the start of the Obama administration. He’s managed to add an astonishing 6 trillion in additional debt to an inherited balance of 8 trillion. In other words, Obama’s administration has debt spent 3 times as much as the Bush administration did in less than half the time.
Ever since the creation of the Federal Reserve and the monetization of debt as currency, (which was kicked in overdrive with the creation of the ESF, Emergency Stablization Fund), the debt has gone up. And it’s never gone away, and only grown exponentially since 1950, under Republican and Democrat presidencies and congresses alike.
The Federal Government has been on a path of unrelenting deficit spending for the over 80 years. Regardless of taxation rates. Regardless of how much income it brought it. Regardless of how much money it prints.
To place class warfare blame on the wealthy ignores the fundamental reality of our economic situation, it’s systemic causes, and its inevitable collapse. Every single fiat currency in the recorded history of mankind has collapsed. We will be no different. We’re in the beginning of the ship sinking and instead of asking “why /howdid we get here?”, you spend your time squabbling over who gets access to the buffet.
Idiots.
One more thing, even if you decided to confiscate ALL of the wealth of America’s 412 billionaires, you would only get $1.3 trillion dollars.
I’m going to be generous and guess that if we decided to confiscate ALL of the wealth of EVERY American, rich and poor, you might get as much as 2 trillion dollars….. if that.
We’re $14.2 trillion in the hole, which means that even if we decided to tax everyone at 100% rates, and confiscate all of the private property of every American…… we still would never pay down the debt.
That’s why WR’s and Norm’s arguments are so ridiculous and don’t see the broader picture.
Jon,
It’s not real rational to call “socialist” as a defense for the lowest tax rates in our lives. Indeed, we could partially regress toward Reagan’s rates and do much for our deficit.
And while I am not a redistributionist, I do recognize that high income inequality is correlated with all kinds of ills. Here’s one:
Inequality Dampening Economic Recovery
@James Joyner:
I’m no fan of Friedman and I certainly agree with you about the kind of fevered cheerleading that you describe.
But, put that dislike aside for a moment. There certainly is a constructive discussion to be had about whether we as Americans are content to allow our exisiting infrastructure to deteriorate in the name of small government. It doesn’t have to be that way. If we could put the LIBRUL! SOCIALIST! claptrap aside, much of the “social spending” that many normal Democrats advocate is just such an investment in good roads, sturdy bridges, modern transportation systems.
I mean, don’t you use the highways? Don’t your small-government fanatic readers use the roads? Why do they piss and moan about the cost of filling every pothole in the street? What’s the better, more efficient alternative to the government building and maintaining the public roads and thoroughfares?
Before you answer, walk through in your mind what it takes to maintain city streets or public thoroughfares, and use your imagination to play out how else that may be paid for other than taxes. I’m very interested in anyone’s rational thoughts.
@ John Personna:
http://online.wsj.com/article/SB10001424052748703514904575602943209741952.html?KEYWORDS=hauser
jp: You are an eminently reasonable (former?) Republican. Would you run for office? We just have a bunch of jons in there now.
Also @ John personna
I don’t give a shit about wealth inequality. What I do care about is the fundamental inalienable concept of property rights, which gave birth to our nation. It’s the most fundamental concept upon which our country was founded, and provides the moral and conceptual foundation for the majority of freedoms in this country.
You have a moral right to own and accumulate property. I am not going to equivocate or debate that fundamental position, as its been affirmed through the creation and amazing success of our country.
http://www.fff.org/freedom/fd0811e.asp
jon: How one-dimensional. You certainly sound uncompromising and sure of yourself, though. You’re not already an R in congress, are you?
Jon,
I’m not going to delve to deeply into your treatise here, just two questions.
One)
If inequality has no bearing on individual performance in a competitive system, how much would you pay to see your high school football team play the New England Patriots? How much would you pay to see the Indianapolis Colts play the Patriots? Would the relative imbalances between competitors in these hypotheticals have any effect on your willingness to pay?
Two)
Is the market perfectly efficient in awarding incomes to ability? In other words, what value does Paris Hilton create?
@Jon: First, “income” is NOT property. Earned income entails the attachment of property rights. Future income, however, is not something you have an unalterable property right to, although many in the corporate america feel the way you do. To be more general, one has no property right to earn a specific income even if you earned that income last year. This is, in fact, a great problem with the government’s support for corporations today. Government is openly using their power to ensure that corporations do not lose any income stream, because corporations assert a property right to that income. Quite simply, this is corporatism, and does not reflect a competitive market.
To the larger point.
If you are a corporate elite in an industry characterized by a de facto cartel or oligopoly that is supported by the state through both legal protection and financial support through the tax code (the most common way), then it is clear a redistribution of wealth. The reason is simple: the general tax base is supporting the transfer of wealth from the middle and lower classes to the wealthy.
For example, how is subsidizing the lifestyles of corporate elites through, for example, the now infamous private jet tax write-off, not a redistribution of wealth? The government is voluntarily running a government deficit to increase the luxury consumption of wealthy people. That is directly taking money from future taxpayers through the use of debt and giving it to corporate leaders today. That’s fairly textbook redistribution, although, I admit, they are purposefully trying to hide the ball by laying claims against future taxpayers.
Finally, another wrinkle, why should people who work hard and are solidly middle class pay a higher effective tax rate than corporate elites solely because the majority of their income is classified as wages and not as the myriad of categories that get more favorable treatment (e.g. capital gains, real estate, etc.)?
@James: One more thing:
Why should one have a unalterable property right to property one has gained through state interference in the market? Increasingly today, industry is dominated by oligarchies that have the implicit blessing of the state. This occurs over a wide range of industries. I don’t think that’s necessarily a bad thing (in some cases, it might be desirable), but it cuts against the notion that these people deserve a 100% of that income and that the state should have no claim on such income, because the state is playing a role in generating that exact same income.
@lunaticllama: I meant @Jon. Unthreaded replies get confusing.
@Jon: It must be nice to be sixteen. Enjoy these times while you have them, Jon.
@Jon
Psst…taxes involve far more than just those for income, and many of those other taxes are quite regressive…meanwhile, wealth inequality is a little different than looks inequality, as wealth, or lack thereof, can be connected between individuals…finally, no one is arguing that all that the wealthy have should be confiscated, but if anyone thinks that our budget mess will be fixed with spending cuts alone and without additional revenues, especially from that group that you seem so sympathetic too, well, that line of thinking is the real idiocy…
I’m not 16 asshole. I’m just shy of 40 years old, own my own business, and support my family.
I find it disgusting that you reject the basic principles upon which our country was founded, then decide it’s better to simply name call rather than address ANY of the facts and salient points that I provided you with.
Your posts show why it’s simply not worth debating socialists to begin with.
@ An Interested Party:
you are missing my point completely. My point is that the debt can not ever be paid off. So arguing about raising taxes on wealthy people (who already pay more than their fair share and carry the bottom 50%) is ridiculous. It’s class envy, pure and simply.
Here’s the basic premise that can’t be disputed- A nation can never have a true surplus, and will always run a deficit, when it’s very concept of money is debt based to begin with. We are looking at the end result of nearly 100 years of monetized debt. To try to dance around or ignore that issue is either ignorant, or deliberate obfuscation and/or denial.
@Jon: If your dubious assumptions about reality are correct, then there is no reason for anyone to pay taxes. I, however, believe citizens should contribue to the general welfare of their state, and therefore believe citizens should pay their taxes as the law does or does not require.
One other point that just bothers me: the idea that wealthy people “carry” the bottom 50% is also propaganda. Everyone who works pays payroll taxes, which are capped so that moderately well-off to wealthy people are all protected from paying significant amounts. The effective federal tax rate (counting payroll and income taxes) is not 0% for anyone who works. In fact, payroll taxes are effectively a higher tax rate on poor people than for wealthy people due to these taxes being capped and the differences in income.
Are you talking about slavery, Jon?
Slow to respond but what Jon doesn’t get, and never will because of his ideological blinders, is that income inequality is a symptom of the collapse of the middle class. The collapse of the middle class leads to the collapse of demand. The collapse of demand leads to the collapse of the economy. Henry Ford knew that his employees had to be able to afford his product. That’s lost on folks like Jon.
@reid, heh. I’ve got the face for radio, not politics.
hey norm, at least we’ll go down in ideologically pure flames.
jp: Well, Limbaugh could use some competition then!
Says the guy who was cheering at the top of his lungs as the Bush admin rolled back civil rights in America.
It’s ok bit, we know you were like, really scared at the time…
@anjin-san: Well, there were Muslims.
@James: I don’t think any of us disagree that we have some problems with our infrastructure. Certainly, none of us in the Washington DC metro area, with its clogged roads and bridges.
The problem with Friedman and Herbold on this is when they make their arguments in terms of how wonderful things are in China, Singapore, and the like–especially while seemingly ignoring the very real problems in those societies.
In addition to noting that there are many important ways in which we’re indeed more developed than China–which is to say, by virtually every meaningful measure– I point out is that it’s considerably harder to address that problem in an advanced democracy than in an authoritarian state, particularly one that has the luxury of transforming a giant, rural country into an industrialized one in relatively short order.
But James, sometimes Friedman foes merely flip his argument. “China is stupid in these other ways” they say, “so we have a right to be stupid in our own.”
I’m not sure that really washes, when Friedman is identifying where they are smart.
@john personna: Sure. But it’s about framing. If you assert that China is a developed country and we’re a developing country, I’m going to think you’re an idiot or a fool and attack that central thesis.
On the other hand, while I disagree with Herbold’s assertion that China is beating us, I’m very amenable to arguments along the line, “China and several other developing countries will soon be more competitive because they are making the following investments in their infrastructure. We need to put aside partisan gamesmanship and address these problems soon before they eat our lunch.”
Its just that Republicans don’t agree that we should do something about it.
There you go again.
Does this really pass for serious right wing China analysis?
They got it easy?
Or is it just a rationalization to ease “conservative” minds about the fact that that Communist China has outperformed Capitalist America economically for going on 35 years now?
@ponce: It’s just not true. “Rate of growth” is a silly metric for comparing a developing and a developed country. What China has done post-Mao is spectacular. But they started two centuries behind the US in terms of development and haven’t caught up. We’ve got three times their GDP and 12 times their GDP/capita. It’ll be decades before they catch up in raw GDP even at current rates, which are likely unsustainable.
@Jon: It’s clear that you believe in some of the principles our country was founded on. Unfortunately, they’re the ones that were changed by amendment some time later — like the idea that only white land owners should be allowed to have a voice in the way the country runs. And I was actually being generous to you by assuming that anyone who could spout such drivel about wealth accumulating only to those who work hard and earn it by their superior talents — especially after seeing the looting going on by the top one percent in the last few years — must be sixteen. Most people begin to understand the complexities of the world by the time they graduate high school and realize Atlas Shrugged is useful only as a doorstop.
@anjin-san: It’s not true that Republicans don’t want to do anything about our crumbling infrastructure. They want to give tax breaks to billionaires.
@Jon:
Exactly and well put.
Actually, they want them to pay their fair share, as opposed to the Democrats who figure to redistribute the wealth to the less well off, so as to buy votes. After all, as James has often said… when you rob peter to pay paul, you can always count on Paul’s support.
China’s GDP should surpass America’s GDP in about 5 years.
https://www.cia.gov/library/publications/the-world-factbook/rankorder/2001rank.html
China’s GDP has been growing steadily at a rate of around 10% a year for the past 35 years.
What makes you think that is ” unsustainable?”
And again, I have to ask: Is this kind of thinking considered serious, or is it just your own personal bias, James?
@ponce: Ponce, The World Bank, IMF, and CIA Factbook all have the US GDP in the neighborhood of $14.6 trillion and China’s in the neighborhood of $5.8 trillion. I’m not a math major but it’ll take a helluva lot longer than 5 years for them to close the gap at a 10 percent rate.
And, yes, as many people have noted upthread, many if not most serious analysts see major trouble ahead for China demographically that will make sustaining recent growth trends next to impossible. Just a quick Google search for China bubble returns:
Hedge funds bet China is a bubble close to bursting – Telegraph
Is This the China Bubble Bursting? – WSJ
Is China’s bubble close to popping? – CSM
5 Reasons China’s Bubble Will Burst – International Business Times
@ponce: And I’m certainly not arguing that “we’re better in every way than China because they’re a buncha commies.” Authoritarian systems have certain advantages. Ditto Japan and some of the European states with much more central planning and government picking of winners and losers than here. But those approaches also have substantial downside, not only in freedom but in innovation.
You’re more likely to have a successful mousetrap if government mandates that it’s the only type of mousetrap one can legally sell. But you’re more likely to see more innovation in mousetrap design under our model. There are tradeoffs.
Interesting, but the investors (which you exclusively cite) aren’t concerned about China’s sustained economic growth, but slowing investment opportunities for themselves.
These are two separate issues.
China’s economy is expected to grow by over $1 trillion this coming year, America’s, maybe $200 billion.
Microsoft’s stock has been flat for 10 years now even as it continues to have record quarters in sales and profits.
Microsoft’s “bubble” collapsed over a decade ago according to the people you are getting advice on China’s economic future.from.
You are using the “official exchange rate” estimate, not PPP.
Using that method, Cjina could devalue its currency (like the rest of the world wants it to) and instantly have its GDP surpass America’s today.
I’m not. Freedom is pretty scary to most people. Freedom means responsibility, and that means you have to clean up your own messes and most people find that quite challenging and frightening. So a regime where they are told pretty much what to do can be quite comforting to some.
Funny how these types forget this part of the equation. China is not nice to people who oppose the regime, and I don’t doubt that is what makes things seem so efficient. Anybody raises a significant enough raucous is shipped off to re-education camp.
Ponce,
Regarding economic growth and such, early on in most economies you see very high growth rates because you are starting off with so little that even small improvements in economic inputs will result in fairly dramatic increases in output. Imagine a country that is largely agrarian and has a low level of technology. Improving farming techniques, additions of farming equipment and such will allow for large productivity increases. This will free up labor that is used in agriculture and allow it to be used in other areas such a producing consumer goods. Of course, there will be a period of transition so you might not see much of an increase right away, but there will be a big payoff. In other words, the rewards are greater than the costs.
As an economy matures and it accumulates capital then you’ll see output improvements drop off. The productivity improvements are smaller and you aren’t going to be investing as much into capital. You’ll replace what is wearing out and such, but you’ll be approaching a point where the returns are matching the costs.
Basically it is an issue of returns to scale. Early on in an economies development you might see increasing returns to scale. That is a 2x increase in inputs to production will yield more than a 2x increase in output. As you move along in the process the returns to increasing the scale of production drop, eventually you increase inputs by 2x and you get a 2x increase in output. Keep going and you may end up with even less than 2x in output (decreasing returns to scale).
If you had a production technology where returns to scale were everywhere increasing we could, quite literally, grow the world’s food supply in a flower pot.
Of course, there might be other factors than can create externalities that can change things. A sudden improvement in technology might allow even a mature economy to enter a period of increasing returns again…for a time.
The problem with people like Jon is their utter faith in their own limited understanding. If property rights are truly the most important, then one must logically view rent-seeking activities as theft, which means it is the responsibility of government to seize those stolen “goods”.
Instead we have the Jons of the world who advocate a half-assed private property scheme which inherently rewards theft of both capital and labor.
Steve,
The fastest recorded growth in the American economy came during FDR’s administration.
And not just during WWII, but during the 1930s.
Is it a coincidence that that was also the period when America’s economic policies most closely matched the current economic policies of the Chinese government?
@ponce: When I was a kid schools would give out “Most Improved” rewards in any sort of competition. One thing I learned quickly was that the best performers never won it.
Why? Well, they were already at the top; any improvements were marginal, meaning they had reached the point of diminishing returns. They could still get better, but it required an exponential increase in resources to do it.
The lowest performing kids, however had yet to hit that diminishing curve. They had lots of room to improve so a modest investment could have significant results. This is China. The country is still in the “low hanging fruit” period of growth, where they have the tremendous benefit of technologies other countries invested in massively to develop. They have the option of looking at the successes and mistakes more advanced countries have made and tailoring policies to fit their needs.
Assuming China remains politically stable and doesn’t exhaust the resources it has access to, its economic performance will eventually fall into line with the single digit growth the developed world now expects.
Ben,
China’s economy has been growing at a 10+% clip for over 35 years now.
Time to come up with a new rationalization.
@ponce: While China’s GDP growth has been impressive for some time, I think you are exaggerating a bit there.
Also, you are ignoring the uneven nature of Chinese growth as well as their GDP per capita ranking.
In 2009, China’s GDP per capita was $6,600 (rank in the world #128) and the US’s was $46,400 (rank in the world #11). And that’s PPP.
That number shows the real gap between the two economies.
(From an older post of mine).
True, but imagine if every American had the ability to return to the family farm to live if things went bad for them economically in the big city.
A safety net of a different sort.
Few Americans have the choice to participate in capitalism or not, while many Chinese still do.
This might be a reason why mature capitalist societies slow down, their economic systems have no competition.
@ponce:
Well, no. We are not talking about a bunch of family farms, we are talking about peasant lifestyles. I suspect that if the US economy collapsed utterly we, too, could revert to an 18th century economy as well, but I would not consider that a “safety net” or any kind.
China’s GDP per capita still puts in firmly in the “developing state” category. There is still a substantial amount of poverty and underdevelopment in China.
Based on the UNDP’s Human Development Index, China is the 89th most developed country in the world, just behind the Dominican Republic and just ahead of El Salvador. And yes, I do understand that China is far more significant and powerful than either of those states, but the ranking does help put into perspective the overall state of development in the country.
Aah, a different kind of blindness.
I think capitalism works best when it has to compete for workers, it loses its edge when the entire population are basically indentured servants.
@ponce:
How very cryptic… (and evasive).
BTW, my position is not ideological. It is grounded in basic comparative development. See my most recent post.
Ponce,
Perhaps you missed this part,
During the Great Depression the U.S. Economy was performing at well below optimum. As such, having great increases in GDP is not that surprising (relatively speaking). It is like you have been running a races only going at 50% your top speed, then you ratchet it up to 75% your top speed. Yeah, relatively it looks great, but you are still under performing and could do much better.
On a side note, doesn’t speak well of FDR’s policies either.
This National Science Foundation report says, “Yes, ponce is exaggerating.”
Now their growth has been pretty good, but I’d still say they still have quite a ways to go till they catch up to the US on a per capita basis. After all, that is really the most important measure. Given differences in population size, of course, if China caught to the US on a per capita basis they’d have more GDP.
And this report says I’m not…
http://web.cenet.org.cn/upfile/69598.pdf
9.5% real GDP growth since 1978.
Chinese motorway collapses after just two days
A Chinese motorway has collapsed just two days after it opened, causing the deaths of two people, after builders were ordered to rush the project so it could be unveiled for the 90th birthday of the Communist party.
The 820-mile Beijing-to-Shanghai high-speed railway, open to the public for only eleven days, yesterday (SUN) saw trains stalled for two hours after an electrical failure.