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.