As I have previously mentioned (see: here and here), China and the United States are locked in an economic battle that has enormous consequences for world leadership, national security and economic pride. This face-off may be the ultimate test of the American way. Will China achieve its goal to become the largest world economy by 2025? Or will they overextend key elements of their economy and falter in this race?
Clearly, with three times the population of America, with authortative central planning, with a very large balance of payments and resultant sovereign wealth, with am industrious and intelligent workforce, with the ability to manipulate its currency ... and with a willingness to cut ethical corners; China mas some clear natural advantages. But is this enough?
But the U.S. also has some advantages -- with a superior (but deteriorating) higher education system, with more natural resources (particularly energy), with a stronger military, with a natural geographic advantage (spanning two oceans), with superior technical innovation, with a governance based on checks and balances ... and with a larger set of historic allies (such as they are). But is THIS enough?
It seems that the two critical advantages that the U.S. has are the geographic and governance edges ... the former, China cannot change ... and the latter, it can change but is unlikely too. Why is central planned capitalism inferior to America's when many pundits (Tom Freedman, Paul Krugman) advocate just the opposite?
Yes, strong centralized capitalistic planning (as in China) can do better in some situations ... in trade wars for instance ... but, without the push and pull of free-market capitalism (as in the U.S.) mistakes can be made that are bigger and not self-correcting. This us likely the most critical difference between China and America ... and the one most likely to spell the winning margin in this battle of the Titans.
It also would be nice to have Russia on our side in this joust!
It seems that the two critical advantages that the U.S. has are the geographic and governance edges ... the former, China cannot change ... and the latter, it can change but is unlikely too. Why is central planned capitalism inferior to America's when many pundits (Tom Freedman, Paul Krugman) advocate just the opposite?
Yes, strong centralized capitalistic planning (as in China) can do better in some situations ... in trade wars for instance ... but, without the push and pull of free-market capitalism (as in the U.S.) mistakes can be made that are bigger and not self-correcting. This us likely the most critical difference between China and America ... and the one most likely to spell the winning margin in this battle of the Titans.
It also would be nice to have Russia on our side in this joust!
3 comments:
Let’s keep those “checks and balances” checking and balancing.
Putin has been setting up a weakened European Union and an unstable USA to build his power base. Russia has been on our side for at least two years. Watch !
Russia has 1/3 the population as the US ... Mostly because of its WWII losses and Stalin's heavy hand. Russia's main advantage in this strategic chess game is geographic.
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