Our Real Competition

Two decades ago, the Antiplanner predicted that the big battle for world supremacy in the twenty-first century would be between authoritarian capitalism — as then represented by Singapore but being emulated on an experimental basis by China — and democratic capitalism. Someone said to me, “No, it is going to be between radical Islams and the West.” But I never worried about radical Islamic countries because they had no ability to create wealth. “A society that cannot accept interest rates cannot grow and compete,” I answered.

The attacks on September 11, 2001, seemed to cast my hypothesis into doubt. But the real loss of 9/11 was not the World Trade Center, but our own good sense. Instead of saying, “This was the act of a few radical nuts,” we decided to start two costly wars against two countries, at least one of which had nothing to do with 9/11. If the terrorists’ agenda was to get us to waste resources and weaken our economy on an overreaction against them, they succeeded brilliantly.

I was reminded of this when Robert Reich made a similar statement about authoritarian vs. democratic capitalism on Sunday’s This Week with David Stephanopoulos — and George Will more-or-less agreed. This came out of President Obama’s recent trip to China, which has focused attention on the real competition we face. China is not necessarily our enemy, but those who want to preserve what they regard as the benefits of democracy — such as free speech, individual rights, and protection for minorities — need to understand that we are likely to lose all of those benefits if we cannot compete against China.

China’s economy has grown rapidly, and while the recession has slowed that growth, it has virtually shut us down. While China’s economy is currently less than a third the size of the U.S.’s (though more than half as large considering purchasing power parity), China has a key advantage over us: it is not throwing obstacles in the road to economic growth.

In 2006, China-watcher James McGregor related a story of Henry Kissinger meeting with Chinese entrepreneurs. Kissinger “looked around the table and asked: ‘Now that we have such impressive economic progress in China when and how do you envision democracy developing?’ They looked at him, aghast. Finally, one answered for the group: ‘Do we want to destroy all the progress China has made?’”

“When the Chinese look at America,” McGregor commented, “they see a media-driven political system with election campaigns featuring crass manipulation of wedge issues that divide the population, while failing to focus on America’s real problems.” If we use democracy to destroy our economy by demanding such things as government-guaranteed universal health care, trillion-dollar trains that hardly anyone rides, and a wildly expensive and ineffective approach to greenhouse gas emissions, we — and the individual rights we cherish — will not be able to compete with China.

Advocates of health-care reform, smart growth, and rail transit inevitably point to Europe as the example we should emulate. Maybe they should look at China instead.

Share

22 thoughts on “Our Real Competition

  1. Dan

    Except for that last unhinged paragraph, I agree here. Many years ago I worked with a guy just breaking into China for their manufacturing capacity. After man hours of discussion, I came roughly to the same conclusion as Randal. Except for the conspiracy theory parts.

    DS

  2. Aarne H. Frobom

    Here’s a question to ponder:

    By 2025, which nation will have the freer market economy: China or the U.S.?

    I don’t think we can say with any confidence that it will be the U.S.

  3. prk166

    I don’t quite get the whole point of this. We can slap whatever labels we want on China, the US, Germany, South Korea, et al. but the differences aren’t great. In the case of China, you still have a central government not just trying to enforce laws but trying to control and dictate how the economy will run. Both have large, central institutions that attempt to control and manipulate the economy. Both believe that without this central intervention, everything will fall apart.

  4. couchrock

    John Locke identified two sources of government legitimacy: the will of the people (democracy) and the protection of individual rights (liberty). Tension between these two is inevitable. Although authoritarian regimes may appear to be more efficient than democracies at implementing reform in the short run, in the longer run political repression necessarily blocks innovation and the release of creative energies that challenge the status quo power arrangements.

    The Antiplanner and his faithful allies are quite right to be disgusted by the self-serving demogogues who hold positions of power in democracy. But exposing these charlatans and their false solutions is far preferable than hoping for enlightened dictatorship.

  5. Mike

    Worker bees do a pretty effective job of producing for the hive. The difference is that they are animals, not rational beings, and thus have no concept of the liberty that they will never experience. We should be able to do better than that. It is unfortunate that China continues to trend in the other direction… but that doesn’t mean it isn’t working for them.

  6. C. P. Zilliacus

    European nations spend less of their GNP on health care in percentage terms than the U.S. does, and care is provided to their entire populations, often with better outcomes than the U.S. I tend to think those are desirable attributes of many EU national health care systems.

    On rail transit, there is one thing that many European nations are doing that is rare in the U.S. – that would be turning the operation and maintenance of such systems, where they exist, over to the private sector through competitive tendering. In London, England, even though the London Underground (subway) remains in public operation, all transit bus operations are provided by private-sector contractors.

    Some major EU nations (notably France, Italy, Greece and Spain) generally rely on the private sector to build, operate and maintain their inter-regional tolled motorway networks – and when the system is to be expanded, it seems much more difficult for legal objections to be raised than it is in the U.S.

  7. prk166

    CP, you touched on one of the things I enjoy about “Europe”. There’s the aspect of what is meant by Europe. Are we talking about Belorus< Hungary, France or Portugal? And, as you touched on, are we talking about privatizing our air traffic control system? Or maybe we should privatize education like Sweden? Maybe we should look to them for a few ideas. :)

  8. Andy Stahl

    Once China assured western investors that capital investment would not be nationalized, manufacturers throughout the world rushed to China for its cheap, non-union labor. Here are some of the consequences.

    China’s centralized planners suffer from the same narrow-minded, self-interest as those the Antiplanner rails against — China’s empty city.

  9. Hugh Jardonn

    “The attacks on September 11, 2001, seemed to cast my hypothesis into doubt. But the real loss of 9/11 was not the World Trade Center, but our own good sense. Instead of saying, “This was the act of a few radical nuts,” we decided to start two costly wars against two countries, at least one of which had nothing to do with 9/11. If the terrorists’ agenda was to get us to waste resources and weaken our economy on an overreaction against them, they succeeded brilliantly.”

    We’ve been at war with radical Islam for 30 years, but our stupid politicians refuse to admit it. With Iran getting nukes, watch for a major attack that will make 9/11 look like chilf’s play.

  10. Mike

    CPZ –

    “European nations spend less of their GNP on health care in percentage terms than the U.S. does, and care is provided to their entire populations, often with better outcomes than the U.S. I tend to think those are desirable attributes of many EU national health care systems.”

    However, virtually all medical innovation takes place in the United States. The other countries are free riders on this. A parasite can last a long time on a fat, productive host — but what happens when the host turns into just another parasite, and there is no new host available?

  11. couchrock

    Europe, Japan, South Korea, and others free ride off America in at least one other major way: they rely on the U.S. to protect them. South Korea spends 2.5% of GDP on defense, Japan 0.9%, and European countries mostly in between despite having significantly more hostile threat environments than the United States does.

  12. bennett

    Mike said: “virtually all medical innovation takes place in the United States.”

    In the midst of all of the health care debate I often find myself wondering what good is the best innovation, the best equipment, the best technicians, and the best doctors if I can’t use them? If we have the best everything why do 36 countries do a better job of providing medical care to their people? Do i need the latest x-ray technology to know if I broke my arm? Honestly I don’t know, but somehow the medical grass seems greener from the patient perspective. Sure, if I were a doctor or in any other part of the medical sector, I would want to be in America, but as a patient, I’ll take France.

  13. Mike

    bennett,

    If the doctors who have a choice in the matter would rather be in America where the profit motive drives the industry, what does that tell you about the doctors in France where it, presumably, does not?

  14. bennett

    Mike,

    What the data tells me is that we have the highest paid and most talented doctors in the world, but somehow France, with less talented doctors does a better job. I understand they’re freeloading off our innovation, so I guess it just sucks for us. I’ll keep paying $200 a month for a $7,000 deductible and hope I don’t ever need any medical attention, because I can’t afford American health care.

  15. Mike

    Bennett,

    I would argue that the doctors in France do not, in fact, “do a better job,” but that the French health care system does cover everybody (albeit with rationing) at a lower total cost than the American piecemeal system. That is really the only metric by which it can be measured to be better. Any physician in the world will tell you that the top medical schools, hospitals, and practicing individuals in the world are in the United States, cost and demand issues notwithstanding.

    So the next question must be: WHY is the American system so much more expensive despite not covering everybody? The reason is because it is a mixed system that gives us all the negatives of both ends of the spectrum between free market and socialized NHS-style control. We get to enjoy the runaway price and demand increases that come with collectivization of payment, and on the flip side we create a “notch” of people who are too rich to get free “poor care,” but too poor to pay for “rich care.”

    There is a great deal more to be said on this issue, so much so that it would amount to a tremendous threadjack (and probably accomplish little) — but I can point you to a rational evaluation of the American health care market that was written by economist George Reisman around the time of HillaryCare and that is still, as far as I can see, pretty unassailable in its logic. It addresses the contributions to the problem by private insurance companies, licensing legislation, tax policy, and other factors, and traces a pretty clear roadmap of how the American health care market got to where it is now and what can be done about it without compounding the problem with wholesale violation of individual rights.

    Here is the link, in case you’re interested.

  16. the highwayman

    couchrock said: The Antiplanner(sic) and his faithful allies(sic) are quite right to be disgusted by the self-serving demogogues who hold positions of power in democracy. But exposing these charlatans and their false solutions is far preferable than hoping for enlightened dictatorship.

    THWM: Who do you think is paying O’Toole?

    Why do you think Cox, O’Toole, Rubin, Polzin & etc. should be meddling with the “market”?

  17. Scott

    Food is good.

    Anyway, when you have 4x the pop on the same amount of land (w/even less coast), transportation patterns will be different.

    Now account for income.

    Among many other difs….

    Why does the left continue to make faulty comparisons?

    HSR? Ridiculous.
    How often do you visit a place 100-500 miles away?
    Consider, continuous US, 100 ppl,sq.mi.; most other nations over 300/sq.mi.
    Those stats alone, but altogether….
    Example: Paris to London….
    Las Vegas to Los Angeles….

  18. Scott

    Highman, about comment at #19,
    The people you mention are not trying to “meddle” in the market, but trying to limit the destructive gov intervention.

    Realize: that does not mean anarchy. The public sector does not need to be over 40% of the GDP. Less than 20% would be sufficient.

  19. Pingback: High-Speed Rail: Planning Disaster of the Teens? » The Antiplanner

Leave a Reply