By Alan
Caruba
“Doom is one of the oldest stories of
mankind,” says Josef Joffe in his excellent new book, “The Myth of America’s
Decline: Politics, Economics, and a Half Century of False
Prophesies.”
As long as I can remember I have read
and heard that America is in decline beginning when Sputnik was launched in the
1950s. We were all told that the Soviet Union was to be the next great
superpower. It collapsed in 1991. The Federation that replaced it was the
shrunken loss of many of its former captive satellite states. Throughout the
1960s and 1970s, we were told a resurgent Europe would overtake the U.S. and in
the 1980s that Japan would become an economic superpower.
Now we are being told that the future
belongs to China and the emerging economies there and in India. Joffe, a
Fellow at Stanford University’s Hoover Institution, publisher-editor of Die Ziet, and frequent contributor to Foreign Affairs and Foreign Affairs, has gathered together
the facts of America’s economic ups and downs to present a realistic and
optimistic view of the future.
The news is filled with reports on
China’s 18th Central
Committee’s Third Plenum, citing promises of expanded property rights,
transparent market regulation, and prices set by the market. The Wall Street
Journal, however, noted that “China’s new leaders are tightening political
repression”, the mark of every Communist state. There was also news of China’s
loosening of its “one-child” policy that restricted couples from adding too much
to its population of 1.3 billion.
Joffe demonstrates why China has many
problems that will keep it from overtaking America’s economic dynamism and
before you fall the latest version of America’s decline, you should definitely
read his book. He asks, “Who would actually want to live in a world dominated by
China, India, Japan, Russia, or even Europe, which for all its enormous appeal,
cannot take care of its own backyard? Not even those who have been trading in
glee and gloom decade after decade would prefer…to take over as housekeeper of
the world.”
As for China, Joffe notes that it “has
the largest population on earth, half of which is still living in the
countryside.” Half the population “remains poised to go urban and sell its labor
at low wages”, but he also points out that, in terms of its demographics, “China
is getting older and America is getting younger.” Its fertility rate has dropped
and “Aging is not good for growth and so China will inevitably slow down, with
rapid aging adding pressure to all the other growth brakes embedded in an
economy that remains resolutely statist.”
And that is China’s problem. While
introducing reforms, China is still a nation where the state owns and operates
much of its economy. This is an object lesson and warning to Americans who are
now rising up to demand that Obamacare, the takeover of one sixth of the U.S.
economy, be repealed. Governments cannot and should not run various elements of
a nation’s economy because decisions are based in politics, not the
marketplace.
“China’s working-age population will
reach its peak at the end of this decade and decades before the People’s
Republic is supposed to overtake the United States.” Meanwhile, thanks to our
fertility rates and immigration, the U.S. will have a population of younger
workers. It has not escaped the attention of observers that, by 2025, China
would account for less than a fifth of the world’s population, but almost a
fourth of the world’s senior citizens.”
“A burgeoning army of pensioners and
infirm will eat up investment funds as a fire will consume oxygen,” says Joffe.
Aging populations worldwide, including our own, put enormous strains on growth
and, as we have seen here, social programs such as Social Security and Medicare
are threatened with insolvency unless reformed. Nothing scares the political
class more as the aging citizens who represent a major voting
bloc.
“Economic growth could soar or falter
tomorrow, but populations change slowly because they are rooted in long-term
trends and culture,’ says Joffe.
Joffe also cited China’s educational
system that places its emphasis on learning the answers to tests as opposed to
the ability to think creatively and question government dictates. This reflects
in part our own educational system that has been tending toward “teaching to the
test” and a national curriculum such as is being imposed in the current “Common
Core” program that the Obama administration has introduced.
“In a one-party state that is China,
the government is the ultimate guardian over what students and scholars may
read, say, and even write, in schools for the elite.”
Education is the basis of “human
capital” because an educated population is a major contributor to economic
growth. “One quick, but effective, way is to look at education expenditures as a
share of GDP, where the United States beats China and India hands down.” They
spend around 3.5 percent while the U.S. spends 7 percent. And this on a
population one-quarter the size of China’s and one-third the size of India’s,
and with a GDP that dwarf the economies of China and India by factors of 2.5 and
10, respectfully.
Militarily China may pose a problem
for Asian nations; it is unlikely to pose a threat to the United States
whose military power, though being reduced by expenditures and other factors, is
still the greatest in the world.
“In his Rise and Decline of Nations, Mancur
Olson argues that closed societies freeze up-victims of rent-seeking elites who
capture political power to cement economic privilege and stifle the competition
that fuels rejuvenation.”
America’s problem is not so much China
as it our out-of-control spending and the dangerous increase in our
indebtedness. Until this is gotten under control we will be borrowing too much
and, China, that purchases much of our debt will do its best to compete
economically with a system that does little for its own and which depends on our
financial stability.
All of this argues for an America, for
all its current problems from an administration trying to “transform” America
into a Communist worker’s paradise, that will replace the backward steps that
have been taken and make the changes necessary to remain the world’s only true
superpower.
That is the payoff of capitalism and freedom.
That is the payoff of capitalism and freedom.
© Alan Caruba,
2013
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