Don’t Be Afraid Of China

Technically he is wrong and right. The first thing is regardless of whether we had debt or not, China is growing at a faster rate than we are and so we decline. When you are on top, anyone’s gain means your decline. We could say that Iran gaining nukes would contribute to our decline, but we shouldn’t necessarily be worried about it. International relations is a zero sum game, when someone gains someone else always loses.

He is right that we need to get our economy back in order, but a misleading number is that debt is half of GDP this year. That is significant, but let’s not make it seem worse than it really is (especially when you consider that he compares our debt to 17th century Spain or 20th century England, both of which were embroiled in world wars that bankrupted them. We are nowhere near the position they were in). This is a short-term problem that can be fixed with a decade of tight fiscal policies.

So, although I admit we are declining (and therefore so is all of Europe, Russia, India, Japan…etc. until you include everyone) it is not to say that we have been overtaken, or will be overtaken. People said these same arguments about Japan in the 80′s….and they didn’t take over. Remember that the author says that America’s decline has been wrongly predicted before. His argument is almost identical to the prediction that 1980’s Japan would overtake us. They have the world’s second largest economy, as well as an advanced Navy, the ability to get nukes in a few months, and a well formed officer’s corps that would make for a killer army if they had the draft as well, not to mention F-22 technology and missile defense…and they still are no match for us. What does China have? A ton of people, that’s all.

While economic power can be a strong indicator of military power, or trends and predictions of military power, China’s economy passing ours in size does not mean that they are more powerful than us. As a scholar in Foreign Affairs (which can be found here) magazine pointed out, adding up the combined incomes of a billion and a half poor people does not give you a powerful economy. With per capita GDP low and expected to be low for quite some time, China will continue to lag behind the US. Furthermore, the development of sophisticated weapons systems takes a level of education and technological advancement that can only be found in the West. It will take many years for China to develop these technologies, and by that time who knows how advanced the United States will be. China has the world’s best steel and textile mills but the US has already entered the new era of economy. We have the most engineers per capita than any country by far, we dominate in green tech, nanotech, and biotech…if it’s a twenty-first century tech or service, you name it, we dominate it.

Ultimately, the future of America is not so grim. Let’s focus on eating up some of this budget deficit and most people won’t be so concerned about who owns it.

In Response To: http://finance.yahoo.com/tech-ticker/article/357319/Niall-Ferguson:-U.S.-Empire-in-Decline,-on-Collision-Course-with-China

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