Foreign and Defense Policy, Asia

The new China Syndrome: Andy Stern writes one of the worst WSJ op-eds ever

Call it the China Syndrome. An American visits Rising China and is immediately gobsmacked by the place. Giant airport terminals, speedy bullet trains, ubiquitous construction cranes, the Shanghai skyline. Everywhere you look, Stuff is Happening. And it’s all shiny new. Compared to China and its seemingly perpetual 10-percent annual growth rate, New Normal America just doesn’t rate. Then the gobsmacked American comes to a realization: America Must Become More Like China. Free-market capitalism is out, state-managed capitalism in. I have seen the future and it works!

I give you Andy Stern, former president of the Service Employees International Union (via the WSJ):

The conservative-preferred, free-market fundamentalist, shareholder-only model—so successful in the 20th century—is being thrown onto the trash heap of history in the 21st century. In an era when countries need to become economic teams, Team USA’s results—a jobless decade, 30 years of flat median wages, a trade deficit, a shrinking middle class and phenomenal gains in wealth but only for the top 1%—are pathetic. …

While we debate, Team China rolls on. Our delegation witnessed China’s people-oriented development in Chongqing, a city of 32 million in Western China, which is led by an aggressive and popular Communist Party leader—Bo Xilai. A skyline of cranes are building roughly 1.5 million square feet of usable floor space daily—including, our delegation was told, 700,000 units of public housing annually.

Several observations:

1. Last time, I checked, the U.S. is 6-10 times as wealthy as China on a per capita GDP basis. On a purchasing power parity basis, China sits between Bosnia and Herzegovina and Albania.

2. Playing economic catch up from a low level is a lot easier than leading the pack. Indeed, developing nations often never close the gap with advanced economies, especially those with a rapidly aging population, low levels of consumption, and undervalued currency — like China.

3. Building infrastructure is easy and doesn’t take brilliant bureaucrats to do. Innovating is hard, and something government has shown precious little ability to do. How’s industrial policy working for the EU?

4. Stern wants government to intervene more in the market. Yet America’s problem in the 2000s was government interfering in the market and creating incentives that favored a chosen industry, housing. What America needs is more Schumpeterian, creative destruction sans government’s thumb on the scale.

5. As Warren Buffett puts it, “It’s only when the tide goes out that you know who’s been swimming naked.” When China does slow, we’ll see just how efficient a capital allocator Beijing has been. The Chinese Miracle is stuffed to the gill with bad loans. State capitalism is really Crony Capitalism.

6. Maybe we need more “economic teams” like, say, public employee unions and government. American students are sure benefiting from such teamwork.

7. I think what folks like Stern really envy is the lack of democracy and accountability where technocratic elites can make all the decisions without pesky tea parties sticking their nose in.

More to come ….

 

 

7 thoughts on “The new China Syndrome: Andy Stern writes one of the worst WSJ op-eds ever

  1. Good assessment. It is all about GDP in China and growing 30M new jobs yearly to keep the masses in check. The bubble is breaking and it will be ugly… but the difference between USA and China is they are led by engineers not community organizers and they do have some highly demonstrable successes in social engineering. The other underlying issue is the loan default rate is huge and largely not covered by western press; in translation they do a dozen Solyndra type deal daily. They (PRC) pick the winners and the losers. My friends in China are in tears over where the USA is heading they have been running away from Communism for 60 yrs we are running towards it; with the inevitable ultimate results.

    DR. Stephen Porter, CSO
    Dragon Bio-Consultants, Ltd.
    Suite 1802-03, 18/F, Olympia Plaza
    255 King’s Road, Fortress Hill
    North Point, Hong Kong SAR
    HK Registered Company No.: 1429099
    SKYPE: virtualdoc77, virtualdoc08,
    QQ: virtualdoc08
    +86.15021242314 (Cell China)

  2. The praise for a communist economic model speaks to the magnitude of China’s bubble and how far it has to fall, akin to the praise for Japan amid the xenophobia in the ’80s, right before Japan embarked on a two decade slide – a fall that is poised to accelerate in speed as they pay for the decades of money printing and faux stimulus spending.

    The editorial brought to mind an Obama speech where he expressed jealousy over the high speed rail rollout in China, right before the tragic wreck and news the Ministry of Railways was teetering on bankruptcy. There are only 3 intercity rail lines that are profitable in the entire world. New York to Washington was one, and I suspect Amtrak would not be government backed if not for it’s frequent use by politicians and lobbyists.

    It’s not the first time people on the left have expressed envy over the Chinese government’s ability to dictate decisions without debate and approval from people. The Democratic mindset is one of a believe in that the collective intelligence of the people is substandard to the intelligence of the anointed ones found in academia and politics. Communists, Socialists, and Democrats believe people are impervious to incentives. It explains why they feel they should be allocating capital and playing parent to the people, since the people are incapable of making decisions for themselves. They believe the poor do not have the capacity within them to move up.

    Those that advocate economic and political freedom believe in the growth mindset, that people are capable of doing great things with the right incentives, no matter their existing circumstance.

    This belief in fixed intelligence and DNA for the Democrats versus a growth mindset and incentives for the Republicans are core philosophical differences from which all policy emanates.

  3. Seems the Left used to want to emulate Europe and now that the disaster of that approach have appeared they are looking for the next “non-capitalist” example to put forward. Hey the SEIU is part of a corrupt relational system here in the USA so why not emulate the most corrupt of them all?

  4. The United States has not maintained the highest standard of living of any large nation for well over a century because the Federal Government is particularly good at playing venture capitalist. When it fosters an environment that gives start up companies a chance to succeed, Washington D.C. is our friend. When it allows a few large financial institutions to control access to capital, it is not. Consolidating power in a few large corporations, financial institutions and the Federal Government in an attempt to keep up with China would make us throw away our natural advantages to play a game on their terms on their turf. http://bit.ly/rU3xRl

  5. The power that comes with china’s strong central government prove economic advantages with immediate economic advantages forced for the greater China. This may be better if the central government knows everything and is for the people.
    Individual rights and freedoms are aften neglected in Such states. Allowing China to take land, eminent domain, more freely. Are these benefits worth the cost to the individual who is misplaced? I believe the healthiest people are empowered to realize their future. China may be quick to respond to economic crisis (e.g. Stabilizing their currency) but are not encouraging an economy where individuals power. As long as the majority of the individual’s in a country are trying to succeed as contributing citizens. The empowered individual form of government will be more powerful! Until there is a perfect central government, I prefer a democracy.

  6. It is surprising that Andy Stern has an input on economic competitiveness that the WSJ should even consider printing. Until recently the president of the powerful and growing SEIU, Mr. Stern has the temerity to point to the “ superior” Chinese model that we should consider following – disregarding totally that, to a large extent, it is U.S. labor unions, such as the SEIU, IAM, UAW, not to mention a plethora of state and local public service unions, all or most of which do not even exist in China, that are a huge drag on America’s overall competitiveness.

    Here’s a summary of China’s formula for success: Chines authoritarian, but very creative government has essentially, ‘weaponized’ China’s huge population base by culling the best and brightest for advanced degrees (many studying in the West including the U.S.) while tapping a bottomless reservoir of less talented, but very cheap labor we cannot possibly compete with (thank you Andy). This serves the purpose of assuring the continuation of a growing current account imbalance with America (and the West) that sucks up jobs and investment capital while degrading our industrial base and military power. Add to this the flagrant disregard for intellectual property rights plus outright theft of patented Western technology along with unremitting industrial and military espionage, all capped off by what too often is one-way free trade in defiance of WTO rules and you have to come to the conclusion that China has been conducting a remarkably effective trade war with the United States and Europe for many years.

    Is this the model Andy Stern is talking about?

    Andy Logar

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <strike> <strong>