Tuesday, February 9, 2010

FLG Getting Fucking Pissed Off

At the endless slew of buffoons who are so enamored with China. There are two types, broadly, who are enamored with China. First, the hubristic, technocratic elite-types who are fucking in love with the ability of China to plan things and make "progress." See half the NY Times Op-ed pages, along with countless business leaders. Second, those who long for a viable alternative to the Washington Consensus. This could be naive Europeans or Americans who long for a post-American multipolar world or leaders of authoritarian regimes. Not that these two groups are mutually exclusive.

There's also a third category of people who aren't enamored of China, but who are overly short on the US. Apparently, Alpheus is in this category.

Let's get some things straight.
US per capita GDP: $46,900
China per capita GDP: $6,500

Ergo, the US is 7x richer per person.

Geo-politically, the overall economic output matters a bit more. And since China has roughly 4x the amount of people to get to the same size as the US means a per capita GDP of only $11k and some change. But this is, again, from an international perspective. From the domestic one the per capita matters more.

And this leads me to one of my larger points. China has huge domestic problems that it is trying to paper over with 8-10% economic growth. 8-10% growth can paper over a lot of problems. However, it can't last forever.

Chinese growth is to due a one-time shift from rural to urban. From relatively labor intensive work to relatively more capital intensive work. This type of growth cannot continue forever. Command economies are, however, very good at this type of thing. This creates impressive looking buildings in the cities, but it is not a sustainable economic growth pattern.

Going back to my oft used Marines analogy. This type of shift is for a limited time, although when you are dealing with the scale in China this limited time means decades. It uses existing technology. China isn't inventing many new things. They are just applying economies-of-scale with cheap labor. But at some point this shift will run out. Indeed, as it is completed, wages will go up. Growth will slow.

On the other side of the command economy equation is that they tend to simply make up economic statistics. We really have very little idea what's going on over there. And worse, the people in charge don't really either. Command economies and the political systems that come with them lie to themselves.

China's concerns over the next few decades aren't really international. They are domestic. Economic theory says that their growth rate will have to slow. They have a command economy that has some advantages for development, but will become a burden once a certain level of development is reached.

The only concern I have is whether when China's profound flaws come to light whether they will try to repaper over the problems that 8-10% growth covered up with a nationalist, belligerent, and bellicose foreign policy.

The US on the other hand is the richest country in the world. It has the best universities. Some of the best infrastructure. (Yes, I hear that our infrastructure is crumbling. But remember China is building super-cool, but expensive maglev trains because they have very little. They have a long, long way to go to get up to our level of infrastructure.) We have Silicon Valley and some of the most innovative companies in the world. We have a proven track record of incorporating immigrants. China is aging and isn't an appealing destination unless you are Han Chinese.

Yes, we have problems. But I'd far rather be the United States than China over the next few decades. All these American naysayers and China cheerleaders will look like the idiots who thought the USSR was unstoppable back in the 1950s and 60s.

4 comments:

George Pal said...

It’s old but this article is cause for alarm (imagine what the yellow supermen have managed in the intervening 18 months). Is Mandarin like really, really hard to learn, or just hard?

arethusa said...

See half the NY Times Op-ed pages

Please tell me MoDo isn't one of them. Even she can't be that stupid.

The Ancient said...

FLG --

Every now and then, I think ought to buy you and Gary Jefferson (who was quite like you, thirty years ago) a drink.

This makes no sense at all right now.

FLG said...

"This makes no sense at all right now."

Frankly, nothing is making sense to me after being trapped in the house for a week.

 
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