So What Would I Do About China?
Here were some responses to my post defending Niall Ferguson's arguments about China:
Most of the issue people take with the chart is that it clearly shows that China is on track to eclipse the US not because of what the US has done or is doing, but because China's growing tremendously fast. Indeed, if we basically groundhog-day'd 2005-2007 over and over (clearly impossible), that graph would still show China eclipsing us in 2020 or so instead of 2017. It's ludicrous to blame Obama for China's speedy growth, unless you believe Obama should have gone to war with a nuclear power to cut it off from trade and natural resources.
Ahem. The issue Ferguson raises is not if and when China's economy will outweigh that of the U.S., but rather why China's rise is a specific, pertinent reason to vote against Barack Obama. In that case, how can China's development be laid at Obama's door, and on what grounds does Ferguson suppose that the Republicans, who have historically been very optimistic about gaining access to Chinese markets and very willing to bankroll China's industrial base, present a better option?
Fair enough, David. I get the gist of the argument. And one could say that Obama hasn't done much to halt the slide to Number 2, and as such this can certainly be construed as a legitimate conservative gripe.
But what's the solution? Today's GOP - especially as it pertains Mitt Romney - seems to be content with chest-beating and increased military expenditures (and who knows, maybe another war to boot). This is neither going to halt China's rise, nor will it butress our fortunes. Curious what your thoughts are.
A lot of reader feedback today, best summed up with the single question: so what would you do about it? On present trends, China will overtake the U.S. as the world's largest economy sometime in the next two-three decades. If I am right that this potentiality matters, what can Americans do to retain their historic leadership?
The general answer to that question are almost boring, they are so familiar. The US economy must grow faster, and to achieve that end, Americans must consume less and invest more. The specifics are also familiar, they are all the old good-government list: reduce healthcare costs, raise education standards, import fewer unskilled and more skilled workers, balance the federal budget over the medium term, etc. etc. etc.
In this debate, we always end up repackaging policy basics, just as health and fitness experts constantly invent new ways to dispense the same advice.
The challenge is not to know what to do, but to know how to do it. Here is where I differ from Niall Ferguson. From my perspective, the obstacle to getting things done is the obstacle described by Mancur Olson in his work on the decline of nations: the accretion of special interest groups, each with their deadweight. Each party is in thrall to certain of these interest groups. And the kind of furious partisanship that Ferguson sees as the solution seems to me much more a big part of the problem, because it tends to strengthen the power of interest groups within each party.
The accretion of interest groups is not a uniquely American problem. China has them too. Foremost among them is the Chinese communist oligarchy, with its determination to monopolize political power in China. As Minxin Pei argues in China's Trapped Transition, the dictates of this interest group may slow Chinese economic growth well before the time China overtakes the United States.
Perhaps so, perhaps not. Americans must act as if their fate will be decided by their own decisions. Good decision-making begins by recognizing that neither party can load all the necessary sacrifices and costs upon the voters of the other.