Wednesday, October 28, 2009

Forget China

Tom Barnett, like FLG, doubts that China will rule the world. Barnett has roughly the same logic -- China will get old before it gets rich.

FLG was thinking, however, that this debate about the rise of China distracts from a more important point -- the seemingly innate human assumption to view everything as zero-sum. This assumption often distracts from the real issues.

From an economic policy perspective, we should have free trade and largely ignore what the rest of the world is doing. The most important factor in our long-term economic growth are our domestic policy decisions. Yes, in the short-run things like currency fluctuations can spur or inhibit imports or exports. Likewise, foreign policies can affect us. But overall the key issues, the ones that really, really matter are our domestic choices.

The United States, for all this rather questionable talk of decline, has a number of huge advantages over the rest of the world. First, despite the lamentations about cost, liberal bias, grade inflation, and all the rest, our higher education system is still the best in the world. Second, we have one of the most flexible labor markets in the world. The only major issue that adversely affects our labor flexibility is health care tied to employment. This is one point that the health care reformers do have right. FLG just wonders if their cure won't be worse than the disease, but continuing on. Third, and again despite lamentations, we have a damn good infrastructure base upon which to continue or economic growth. Fourth, we have a political system that is flexible and adaptive. Sure, it moves too slowly for progressives, and, as conservatives like to point out, it can screw some stuff up. But it's not a rigid single-party system. The messy, inefficient, trial and error nature of our system is actually the best for adapting to economic and social change. Fifth, the United States has a culture of risk-taking. Many cultures emphasize hard work, particularly the Asian ones, but the American culture emphasizes risk-taking and hard-work. This is due in no small part to the self-selection as a nation of immigrants. Immigrants are hard working, risk-takers. Lastly, and probably most important, the American culture has proven itself effective at assimilating new immigrants. This is in stark contrast to China with its Han Chinese dominance and ethnic self-perceive superiority. This also means the United States will never grow old as long as it continues its traditions.

FLG has actually gotten into some disagreements over the last two points. The question posed to FLG, is Does a large amount of immigrants lead to increased risk-taking? Does the US actually assimilate people well? Aren't these national myths?

He thinks this misses the point. Let's say the answer to the first two questions is No. The answer to the third question is certainly Yes. And to the extent that the myths represent what we want our country to be, it also leads us to act in ways that pursues that myth. The myth, in this case but not all cases, works to manifest itself.

Anyway, we shouldn't forget the very real and tangible advantages our country has. Yes, we have problems that we must fix. The important part is that we need to exclude these zero-sum, international competition arguments that seem to appeal to something in our DNA (or maybe something in American culture), but distract from what's important. For example, we need to fix K-12 education in this country, not to compete in a globalized economy for the 21st century, but because it is in the best interests of our country politically, culturally, socially, and economically. When we decide to invest in our national infrastructure, we should debate about the benefits and costs it will bring our nation. Not relative to what other people are doing.

This isn't to say that we shouldn't learn lessons from what other countries are doing. America doesn't have the monopoly on good ideas. What FLG is saying is that we need not make economic decisions based on fear of losing out to the rest of the world. We need to make economic decisions on what is best for our country and what will likely lead to economic benefits irrespective of what other countries are doing. They're policies aren't as important as our own domestic ones.


Withywindle said...

There are more children in China than the official statistics say. It could be more than 100 million - who knows? But many peasants have illegal children. And as the Party control decays/relaxes, there will be ever more.

George Pal said...

All fine points (1-6), materially, but what of the points to be made against.

We need to fix K-12 but we won’t. It’s not an entrenched bureaucracy that has hold of it but a parasitic colony almost as large, and certainly more powerful than the host. You could sooner renege on Social Security than dislodge what has attached itself to K-12. This is a fundamental problem with long-term consequences.

Effectively assimilating immigrants historically is no guarantee of future success. The immigrant population, leaving the problem of illegals aside, is no longer of the same quality as it has been in the past. With no shared Western, Christian, or cultural heritage the problem is exasperated by immigrants who have little experience with basic amenities such as running water, electricity, and sanitation. Add to that an admixture of immigrants with long held tribal and sectarian animosities for each other and top it off with revanchist Mexicans and so much for the melting pot. Importing even more foreign nationals under worker visas also strains the native population – not only in immediate jobs lost but also in putting K-12 education forever on the back burner.

The last point to be made is the collusion of government with the corporate world. There is increasing evidence that the corporate economy opposes the private economy (small business, entrepreneurial) and will make deals with the government (increased environmental, safety, health, and labor costs) to expand their advantages beyond those they enjoy naturally. Two recent examples of such collusion are Wal-Mart and Mattel.

FLG said...


On K-12, I think the Democrats are starting to realize that their pact with the unions is in direct opposition to their own ideological goals of opportunity and the health of the nation generally.

An example:

On the immigrants, the biggest group of them, Latinos, do share a common Western and Christian cultural heritage -- the Catholic Church.

However, I think too much is often made about the first generation not assimilating. The big assimilation comes when the second generation grows up.

What nationalities are you thinking about here? "Add to that an admixture of immigrants with long held tribal and sectarian animosities for each other" Iraqis, Somalis, others?

Your last point, the collusion between big corporate interests and the government is well-taken. Big business is slow to change and so is all for barriers to entry for little guys. But this has been going on since forever. To the extent that it is worse than before I think various technological advances (Internet, etc) make these barriers less cumbersome. Google didn't even exist 15 years ago.

George Pal said...


I’ll read the USA Today link when I get the chance.

Those immigrants without the shared Western values I mentioned are indeed those from outside Europe, Iraqi and Afghan refugees, Somalis, Ethiopians, et al (yes, basically Muslim but others (Sikhs) as well).

Mexicans do have a shared heritage to some degree but the problem remains they are not here to become Americans (just as I doubt the others are).

President Felipe Calderon vowed to protect the rights of Mexicans in the U.S: “Mexico does not end at its borders.”

More Calderon: “We strongly protest the unilateral measures taken by the U.S. Congress and government that have only persecuted and exacerbated the mistreatment of Mexican undocumented workers…”

Yet more Calderon to the illegal Mexicans in the U.S.: “Where there is a Mexican, there is Mexico.”
It would surprise me if most Mexicans did not share these attitudes, i.e. Mexicans in the U.S. are Mexicans not Americans or wannabees.

You may be right in depending on second and third generations not only coming to terms but also enthusiastically adapting to this country – it’s what has happened repeatedly in the past. But I’m not convinced this will continue. The attitude of an immigrant must be pretty much the attitude of someone who is leaving the old ways for the new - all in. I’m reminded of Ruth’s (the Moabite woman) attitude – your ways are my ways your laws are my laws. I’m just not getting that sense anymore.

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