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July 31, 2005
Fear, Personal Responsibility, and Assessing China’s Rise
"Don't waste life in doubts and fears; spend yourself on the work before you, well assured that the right performance of this hour's duties will be the best preparation for the hours and ages that will follow it." (Ralph Waldo Emerson)
Ben Stein, in an excellent commentary in Sunday’s New York Times, helps put some Americans’ fears of China in perspective, and offers the opportunity to learn from them.
By even the most optimistic CIA data about China, Stein notes, the country’s purchasing power parity GDP is two-thirds of the United States. At the same time, China’s population is five times that of the United States. Per capita GDP in China, therefore, is a fraction of what the United States enjoys.
Even if China’s 9 to 10% growth and the 3% growth of the U.S. continue uninterrupted for another quarter of a century, Chinese per capita GDP would still be less than 80% of that in the United States by that time. Again, that’s using the CIA’s most optimistic estimate of Chinese per capita GDP.
Who wants to bet that China’s growth will be an uninterrupted 9-10% for 25 years? If nothing else, the law of large numbers will start to kick in, just as was the case with the United States and other now developed economies. Remember, China’s path is not without pitfalls similar to what the United States must navigate, such as an aging population.
Stein writes:
But suppose that it does happen. Suppose that China becomes a larger economic power than the United States. Suppose, in our great-great-grandchildren's day, that the average Chinese citizen is about as rich as the average American. How would it hurt us? Why would we be worse off? If the Chinese were richer, they could buy more from us and employ more of our workers. They could buy more of our stocks. They could tour our beautiful nation more.
The fact that our neighbors are worse off does not make us richer, and the fact that they are better off does not make us poorer.
But another factor is even more important: personal responsibility. Americans who want to make sure they stay well off accomplish nothing by worrying about China. But we can certainly learn something from China. Individuals and nations become rich by investing in human capital - getting a good education, learning good work habits, saving and investing prudently and living healthy lives. Any young Americans who want to keep up with the Chinese can get a good education, work hard, save as much as possible, invest prudently - and they will be just fine now, in 25 years and in 50 years.
The moral here is simple: learning from our friends, the Chinese, means something. Fearing and envying them means nothing.
Even more to the point, fear and envy accomplishes nothing. Not for China, India, CAFTA countries, or any other boogeyman which might be blamed for U.S. ills.
Fear and envy achieves nothing. Putting your Emerson into action will.
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