A billion souls in a sex-imbalanced society

Kevin D. Williams provides outstanding analysis of China’s economic strategy in Red Scapegoat, from the November 9, 2010 issue of National Review.  Among other items, he points out that one could double China’s per capita GDP and it would still be lower than Mexico’s.  At the end of the day, what ails the American economy is not Chinese policies but American policies.

The issue is complicated enough to accommodate the intellectual vanity of the president and his coterie while consigning most voters to a state of rational ignorance, and the narrative is flexible enough to be used to explain away a great many varieties of bad economic news

Furthermore, “to put it bluntly…”

China keeps its people artificially poor, their wages artificially low, and their savings diminished in value, in order to increase the profits flowing into the state enterprises run by Beijing’s power elite, a good deal of the returns being captured by the thriving entrepreneurs who make up the officers’ corps of the People’s Liberation Army. When one considers that China’s economic strategy is predicated on creating needless poverty for its people, it all seems a lot less clever, and Tom Friedman’s occasional orgasmic moans in the New York Times sound a bit nefarious, to say nothing of embarrassing…

More from Kevin below the jump.  Others from NR have also chimed in on China’s future –  emphasizing demographics, gender imbalance, ecological nightmares and nationalism:

Mark Steyn, self-styled “demography scold,” has argued that China will “grow old before it grows rich” as a result of its one-child policy.

John Derbyshire thinks China more closely resembles a crime syndicate in a stage of “bumptious nationalism” (like Britain circa 1800 or the US circa 1900) with a “naïve, passionate, and uncritical” patriotism.  He further opines:

An unelected and fundamentally lawless dictatorship rules China, and the Chinese people, by and large, are fine with it.

Why should they not be, if they have movies to watch, food in their bellies, gadgets to play with? Which they have, aplenty. If the phase of history we are entering is to be one of amoral, ahistorical hedonism, why should we suppose that constitutional government can manage that kind of world better than the soft despotism of modern China? After all, the most agreeable and hedonistic society anyone has ever been able to imagine, the one described in Aldous Huxley’s Brave New World, was not the least bit democratic. As in Huxley’s utopia, bioengineering and pharmacology–both hot growth areas in Chinese science, with no Judeo-Christian ethical reservations or eagle-eyed tort lawyers to slow down research–can take care of the social problems. It is hard to push away the thought that what we are seeing over there is the future.

UPDATE:  from a November Radio Derb:

Cameron defies the ChiComs. It was Veterans Day this past Thursday, known as Armistice Day in Britain, where it evokes much feeling.

Every nation has a special place in its heart for its bloodiest war. For the U.S.A. that would be the Civil War; for the Brits, it is World War One. Still today, 92 years after the guns fell silent, there’s a steady market in Britain for books and TV shows about that war — “the Great War,” as people of the older generation still call it. Kids in school read the poems of Wilfred Owen and Siegfried Sassoon; and on Armistice Day every patriotic Brit wears a poppy in his lapel, a custom inspired by John McCrae’s poem, opening lines: “In Flanders Fields the poppies blow / Between the crosses row on row, / That mark our place …”

Now as it happens, British Prime Minister David Cameron spent Armistice Day on an official visit to Peking, the capital of communist China. He insisted on wearing his Armistice Day poppy, and this caused a diplomatic embarrassment of the minor sort. Poppy; opium poppy; opium wars; humiliation of China by Britain; you see?

The ChiComs told him to be a good barbarian and remove the poppy out of respect for Chinese feelings, which as we all know are exquisitely sensitive about things that happened 150 years ago. Far worse things that happened fifty years ago, like the great Mao famine, or forty years ago, like the Cultural Revolution, have been flushed down the memory hole.

I would have expected Cameron to cave, since he hasn’t shown much evidence of possessing a spine up to now, but to the man’s credit he held on to his poppy. Cameron just went up a few ticks in my estimation.

Mind you, if that had been me, I would have said: “OK, I’ll drop the poppy, provided you let me wear a necklace of skulls to commemorate the sixty million or so Chinese people murdered by the Chinese Communist Party.” I wonder how that would have gone over.

I would also have pointed out some historical facts the ChiComs leave out when using the Opium Wars to whip up nationalism among their people. The fact, for example, that opium was grown and consumed in China from as far back as the first century a.d., when Buddhist monks brought it in from India; that emperors of the Ming dynasty in the 16th and 17th centuries received an annual tribute of 300 pounds of opium from Thailand; that a great many Chinese merchants and officials got very rich helping the 19th-century British to bring in opium; and that Britain’s objective in the Opium Wars was to open China to normal trade on a lawful basis instead of being stuck in opium trafficking, which was widely disapproved of by the increasingly moralistic British of the Reform era.

Well, a nod of appreciation here from Radio Derb to Dave Cameron for standing up to the mobsters of Peking.

Kevin D. Williams writes in Red Scapegoat, from the November 9, 2010 issue of National Review, that “to put it bluntly…”

China keeps its people artificially poor, their wages artificially low, and their savings diminished in value, in order to increase the profits flowing into the state enterprises run by Beijing’s power elite, a good deal of the returns being captured by the thriving entrepreneurs who make up the officers’ corps of the People’s Liberation Army. When one considers that China’s economic strategy is predicated on creating needless poverty for its people, it all seems a lot less clever, and Tom Friedman’s occasional orgasmic moans in the New York Times sound a bit nefarious, to say nothing of embarrassing…

Obama and the Sinophobe wing of the Democratic party have seized upon what is for them a nearly perfect issue: the valuation of China’s currency, the renminbi. The issue is complicated enough to accommodate the intellectual vanity of the president and his coterie while consigning most voters to a state of rational ignorance, and the narrative is flexible enough to be used to explain away a great many varieties of bad economic news…

It is undeniable that Beijing plays games with China’s currency in order to bolster exports. To put it bluntly, China keeps its people artificially poor, their wages artificially low, and their savings diminished in value, in order to increase the profits flowing into the state enterprises run by Beijing’s power elite, a good deal of the returns being captured by the thriving entrepreneurs who make up the officers’ corps of the People’s Liberation Army. When one considers that China’s economic strategy is predicated on creating needless poverty for its people, it all seems a lot less clever, and Tom Friedman’s occasional orgasmic moans in the New York Times sound a bit nefarious, to say nothing of embarrassing…

The People’s Republic of China is a for-profit police state, and we should not be under any illusions about the chances of its reforming its ways and further liberalizing its economy and politics, or the possibility of its chauvinistic rulers’ acting with regard to anything other than the ruthless pursuit of their national interest, in whatever distorted way they define that. While Deng Xiaoping’s much-vaunted economic-liberalization program worked undeniable wonders, the thawing of the Chinese economy came to a halt years ago, and if there is any political progress in sight, it is not obvious. All of which really ought to be of interest only to full-on Sinologists, because, the Obama administration’s populist fist-shaking notwithstanding, China’s economic policy is not what ails America — any more than Japan’s economic policy was what ailed America during the Carter years, that awful interlude during which Honda and Toyota viciously conspired to dump affordable, reliable, fuel-efficient automobiles on unsuspecting Americans who really wanted to buy an AMC Gremlin but were duped into an upgrade by those inscrutable Orientals and their long-game industrial policies. China’s economic policy is what ails China. Fortunately, today as in the 1970s, most of what is troubling the U.S. economy is the result of decisions taken in the United States, not in faraway Asian capitals. The American problem is in Washington, not in Beijing.

What gets people all hot and bothered about the China story is not really China’s rapid economic expansion, but its rapid industrialization. One of the benefits of running a jackbooted totalitarian regime high on nationalism is that you can do things like enforce a substantial rate of saving and a low level of consumption, or conscript large armies of industrial workers out of the agricultural classes. This sort of transformation is hardly unprecedented in the Communist world: It is precisely what the Soviets accomplished in the decades after their revolution, and a lot of American nincompoops thought they were geniuses. Modern China, having the benefit of a highly globalized economy and sophisticated modern finance, did a decidedly better job of its transformation than did the U.S.S.R. — a lot more carrot, a lot less stick, post-Mao anyway — but, for its day, Soviet industrialization was every bit as impressive a show of force — which is precisely what it was and what China’s transformation is. For all the rhetoric about liberalization, China remains a hierarchical, centralized, command-and-control economy, one in which the military takes a very strong hand in many industrial enterprises. China is not the future model of capitalism, but the contemporary model of socialism. And like all socialist enterprises, it is hamstrung by the misallocation of economic resources, a fact that is ameliorated, but only in part, by its willingness to incorporate itself into the global economy and avail itself of the benefits of efficient capital markets

China’s currency games make those imports significantly more expensive, and its trade barriers produce strange little bubbles of hyperinflation: Chinese housewives were shocked when the price of garlic increased 1,000 percent in the course of about two years. More serious bubbles exist in its real-estate and financial markets, the inevitable deflation of which probably will send waves of disruption through the global economy that will make the Wall Street debt tsunami of 2008 look like an afternoon splash in the kiddie pool. Beijing isn’t any better at economic central management than Washington is.

And worse for Beijing, China does not have much to fall back on: more than a billion restive souls in a sex-imbalanced society, one with an economy that is barely one-third the size of the U.S. economy and a per capita GDP that puts it right between Albania and Angola in the rankings — and well below such non-powerhouse economies as those of Jamaica, Tonga, and Kazakhstan…

Which means that China is not bankrupting the West with cheap goods and services, it is not America’s banker, and it is not positioning itself to overtake the United States as the world’s economic superpower. Nor is it even within spitting distance of securing for its people a standard of living comparable to the typical Latin American’s. If China doubled its per capita GDP tomorrow, it wouldn’t even catch up with Mexico. So what in the heck is China trying to do? We can get closer to the answer by asking: What is it that China is trying not to do? And the answer to that is: Become Japan.

If that $5 plastic toy at Wal-Mart goes up to $6, is that suddenly going to make California, Ohio, or New Jersey more attractive to low-end manufacturers than China, India, or Bangladesh? Doubtful. In all likelihood, the result would simply be that the United States would pay more for its imports than it does today — meaning that our trade deficit would get worse, not better. Paying more money for the same amount of stuff would not make us any richer, nor would replacing Chinese imports with imports from Vietnam, Mexico, or Honduras

As a matter of pure economic calculation, the costs of trying to force Beijing to act in accordance with Washington’s desires almost certainly are greater than the value we would derive from whatever marginal success we might have in the endeavor. For all the talk about our “competitiveness” vis-à-vis China, the complexities of the relationship, the differences in comparative advantage, and the fundamental unknowability of the future all make it difficult even to define “competitiveness” in this context, and more difficult to cultivate it intelligently — and much more difficult to cultivate it intelligently by pressuring Beijing to act in ways Beijing is not inclined to act.

Washington probably cannot get Beijing to change its ways, but Washington can change its own ways, which would be considerably more productive and a heck of a lot less likely to lead to a trade war — or a war war. But taking the necessary steps would put President Obama at odds with his fellow Democrats and cause Professor Krugman and Robert Reich to keen like veiled women at a Levantine funeral procession. Obama would still rather be at odds with the Chinese, who don’t get to vote in 2012 and haven’t been big campaign donors since the Clinton administration.

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