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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