
U.S. Is No. 1, China Is So Yesterday  - jamesbritt
http://www.bloombergview.com/articles/2014-05-12/u-s-is-no-1-china-is-so-yesterday
======
refurb
I'm old enough to remember the threat of the Japanese economy during the
1980s. Joe six-packs smashing Japanese electronics in front of the Whitehouse.
Calls of "Americas glory days are over" were heard over and over. And yet here
we are today.

The current way I interpret news articles that proclaim huge shifts in the
world is this: if the article takes any short-term trend and applies it over a
future time period I immediately discount it.

I'm waiting for the next new article "American teenagers grew an average of 10
inches in 3 years, if this trend continues, American will be an average of 13
ft tall in 2050!!!"

~~~
melling
Yeah, I remember too. Detroit was having a tough time.

[http://en.wikipedia.org/wiki/Roger_%26_Me](http://en.wikipedia.org/wiki/Roger_%26_Me)

Middle class jobs were leaving America and Reagan pushed the national debt
over $1 trillion dollars. And college tuitions were skyrocketing. Tufts
students were complaining about an $8,000 a year tuition.

[http://www.thecrimson.com/article/1980/2/25/students-at-
tuft...](http://www.thecrimson.com/article/1980/2/25/students-at-tufts-
protest-1980-81-tuition/)

...Fortunately, everything has turned out swell.

[http://admissions.tufts.edu/tuition-and-aid/tuition-and-
fees...](http://admissions.tufts.edu/tuition-and-aid/tuition-and-fees/)

[http://en.wikipedia.org/wiki/Detroit_bankruptcy](http://en.wikipedia.org/wiki/Detroit_bankruptcy)

[http://useconomy.about.com/od/usdebtanddeficit/a/National-
De...](http://useconomy.about.com/od/usdebtanddeficit/a/National-Debt-by-
Year.htm)

~~~
andyl
Yeah - I went to a rust-belt high school in the 80's, and remember all the
excessive pessimism. On my return visit this spring, I got to see how the
story unfolded.

Burned out buildings. Unpaved streets. City reverting to wildland.

Things truly fell apart. The center could not hold.

------
blisterpeanuts
Foreign Affairs[1] published a similar article by the political scientist
Samuel Huntington some 25 years ago that makes many similar points, the major
difference being that China has replaced Japan as the rising power. Perhaps in
10-15 years, there will be predictions of India as the new number one.

China's demographic time bomb has been predicted for some time. The one-child
policy combined with factors like de-ruralization and widespread female
infanticide and abortion will make China's population implode dramatically by
about 2060 to less than a billion and continue declining through the end of
the century[2].

Meanwhile, the U.S. is projected[3] to grow to 400 million by that time [EDIT:
by 2060]. With a relatively young population in the industrial world, and a
uniquely high immigration population, the U.S. is more like a developing
nation than the other industrial powers, demographically speaking. Youth
brings new ideas and energy, something that is an essential factor in economic
growth.

China's elderly population is growing and will become a huge burden by the
middle of the century, which will sap its wealth and probably prevent it from
achieving the "number one" status that some are predicting.

Declinism is a cyclical phenomenon in the U.S. that is not without merit given
our social and financial problems, but it must be viewed in perspective. The
debts are possibly the biggest problem facing the country, but new trends are
going to counter that debt and possibly ameliorate it: a coming boom in
domestic energy production, a return of manufacturing to the U.S. driven by
robotics and 3-D printing technologies, continued software dominance, and a
culture of risk taking and open mindedness. I think there's still a lot of
upside to the U.S. as a predominant power in the world.

1\. [http://www.foreignaffairs.com/articles/43988/samuel-p-
huntin...](http://www.foreignaffairs.com/articles/43988/samuel-p-
huntington/the-us-decline-or-renewal)

2\. [http://www.china-
profile.com/data/fig_WPP2010_TotPop_Prob.ht...](http://www.china-
profile.com/data/fig_WPP2010_TotPop_Prob.htm)

3\.
[https://www.census.gov/population/projections/data/national/...](https://www.census.gov/population/projections/data/national/2012/summarytables.html)

~~~
alexeisadeski3
>>Perhaps in 10-15 years, there will be predictions of India as the new number
one.

Already happening...
[http://www.themoneyillusion.com/?p=7402](http://www.themoneyillusion.com/?p=7402)

------
jqm
This seems like just another case of "mine is bigger than yours is"....

Of course the US's economy is still bigger. A large part of this economy is
also nonsense (see... legal fees). A large part of China's economy is nonsense
also. Empty structures, excessive stimulation etc.

I look forward to the day when the realization that the planet is really small
and all of us are in this together is common wisdom. Until then I guess it's
foolish cock waving which occasionally turns into shooting and wanton
squandering of non-renewable resources.

------
brwnll
Step back to look at this story not as "Who's #1" (who cares), but instead "Is
the US moving in the right direction to keep pace with the developed world?"

Here is the real key quote: "This serendipitous story will continue, but it
comes with a warning: The U.S. has to remain open and welcoming."

~~~
grecy
> "Is the US moving in the right direction to keep pace with the developed
> world?"

Given The US is at or very near the worst among OECD countries in a whole
bunch of measures, I would say no.

------
rayiner
About the author:
[http://en.wikipedia.org/wiki/Josef_Joffe](http://en.wikipedia.org/wiki/Josef_Joffe).

~~~
sonofsam
After I read through Edward Bernay's Propaganda, I can't take this writing
seriously. It seems to be some overly patriotic horn tooting, meant for
pushing academics even further from the real problems we are facing.

No where does he explain why America became a large economy or why it should
even stay that way.

As far as I'm concern, America is contributing less and less to the world.
There is no reason for the world to give such high value to the dollar and
continually send goods to America (things that have no reason to, will not
continue for long).

And if you want to talk about dollars (or lack there of). Please refer to the
public and private debt of America and its citizens.

Some things are just plain wrong: "home to the U.S. ... in tandem with
plentiful cheap energy from fracking."

[http://www.theguardian.com/environment/earth-
insight/2014/ma...](http://www.theguardian.com/environment/earth-
insight/2014/may/22/two-thirds-write-down-us-shale-oil-gas-explodes-fracking-
myth)

This guy reminds me of other infamous propagandists, such:
[https://en.wikipedia.org/wiki/Daniel_Pipes](https://en.wikipedia.org/wiki/Daniel_Pipes)
and his equality notorious father:
[https://en.wikipedia.org/wiki/Richard_Pipes](https://en.wikipedia.org/wiki/Richard_Pipes)

~~~
rayiner
What are the factual parts of his position that you actually disagree with? I
think he makes some very good points that commentators tend to ignore the
inevitable diminishing growth curves and China's impending demographic crisis
when talking about China overtaking the U.S.

These are facts:

1) China's population of 20-24 year olds started declining, in absolute
numbers, at the beginning of this decade. In order to avert demographic
crisis, China will have to do something almost unprecedented at scale:
increase population growth rate during a period of increasing living standards
and education.

2) The U.S. has double the domestic oil production of China, and that figure
is trending up thanks to utilization of shale oil:
[http://www.bloomberg.com/news/2013-11-12/u-s-nears-energy-
in...](http://www.bloomberg.com/news/2013-11-12/u-s-nears-energy-independence-
by-2035-on-shale-boom-iea-says.html). Both are net oil importers, but China
has to figure out how to accommodate explosive growth in demand, while demand
in the U.S. is steady.

3) The U.S. still has an overwhelming advantage when it comes to R&D and
production of IP. The top universities that engage in cutting-edge fundamental
research are still mostly in the U.S.

There is a shade of patriotism to his writings, but it seems to me to be
mostly a response to an overly pessimistic narrative on the other side.

~~~
sonofsam
1) This is a Legitimate problem for China, but how can we assume that the USA
will be the world's superpower, when China does encounter this problem? 2050
is a long way from now. It is likely that another nation will take the role of
the #1 economy.

Beyond that, how do we know the environmental impact caused by the
industrialization of China will not reduce the average life expectancy
(cancer, etc.)?

2) Much of the shale oil extraction has been financed through low interest
rates and debt. The cost of extracting many of these oil reserves is more than
the worth of the oil itself.

"Just a few of the roadblocks: Independent producers will spend $1.50 drilling
this year for every dollar they get back."

[http://www.bloomberg.com/news/2014-02-27/dream-of-u-s-oil-
in...](http://www.bloomberg.com/news/2014-02-27/dream-of-u-s-oil-independence-
slams-against-shale-costs.html)

[http://oilprice.com/Energy/Natural-Gas/Shells-American-
Woes-...](http://oilprice.com/Energy/Natural-Gas/Shells-American-Woes-
Highlight-Difficulty-of-Cracking-Shale.html)

3) This is hard to argue against. I have a few concerns: a) The profits from
the R&D and IP are usually concentrated in the hands of large corporations
with large patent portfolios. These corporations are global and not beholden
to the USA (they can move work aboard). The profits of these corporations are
increasing being moved towards the hands of the few.

b) The education system in the USA for the majority, has been far from
stellar. There is an opening for another country to surpass the USA in
education and academic institutions.

c) As China moves away from an export driven economy, they can take the role
of R&D and IP. China is working towards this. I'm not sure if they can
succeed.

[http://www.nytimes.com/2013/01/17/business/chinas-
ambitious-...](http://www.nytimes.com/2013/01/17/business/chinas-ambitious-
goal-for-boom-in-college-graduates.html?pagewanted=all&_r=0)

------
ufmace
What's interesting about this is the trend of developing countries that
initially have massive economic growth looking for a while like they might
overtake the US, but never actually making it. I'd contend that it's the role
of the fundamental openness and liberalness of US and European society that
fuels the level of innovation needed to really make it to first-world level.

Developing countries are often saddled with terribly oppressive, corrupt, and
inefficient governments and societies. They can develop a strong manufacturing
economy without really changing that, but getting beyond that to a modern
innovation/knowledge economy seems to require deep societal changes that are
difficult, time-consuming, and often involve the downfall of the people
currently in power there.

------
higherpurpose
Both methods seem pretty far from ideal, however, if US has more "economic
power", but that economic power is largely because of a few (hundred) rich
people getting ever wealthier, while everyone else in the country feels
increasingly poorer, is it really "better"? I think this gap will only widen
in the future, thanks to technology, with few "stars" becoming billionaires
overnight, while millions lose their jobs to automation.

There is however another factor that should be counted, and that is living
conditions, which obviously favors US. So maybe something close to an ideal
index for how rich a country is should include total economic power + price
purchasing parity + living conditions level.

~~~
byerley
It's interesting to note that people always leave off the other end of the
wealth inequality figures. -
[http://en.wikipedia.org/wiki/File:Share_top_1_percent.jpg](http://en.wikipedia.org/wiki/File:Share_top_1_percent.jpg)

The top 1% share is roughly the same now as it was in the 1930's. The "Great
Compression" afterwards was largely fueled by government regulation (as best
as I can understand it - not being an economics guy) so I'm not convinced that
the gap will continue to grow.

~~~
waps
Keep in mind that the wealth inequality in historical norms is spectacularly
low. Yes, it was lower for a while due to WWI and, especially, WWII. The
situation, in relative terms, is still much better (20-30% more equal compared
to the beginning of the 20th century, hundreds of percents compared to before)
for the poor than it ever was before. In absolute terms the situation for the
poor is so much better it's not funny.

Not saying we can't do better, but we're actually not doing all that bad at
all. Of course, it's moving in the wrong direction.

I disagree with the government regulation thing. It's true, yet it's so wrong
as to mislead. The government did institute draconian regulation on businesses
which lead to decades of limited profits or even losses, but it did so because
of the wars. So the government is responsible for inequality reduction in the
same way that an engine is responsible for a car's acceleration. The decision
for the acceleration was made by the driver, and the driver for these policies
was war. Without a doubt, no sane person, poor or rich, wants a return of
these policies, no matter how much they'll reduce inequality.

~~~
byerley
I think you'd have trouble arguing that US involvement in WWII wasn't dictated
by government regulation (Lend-Lease and the Japanese Oil Embargo), but the
point was more that it's not an irreversible trend.

Presumably if there's some optimal wealth inequality based on our technology
level/social structure/ect. we'll naturally trend towards it on a long enough
timeline.

------
yvsong
The most influential Chinese entrepreneur Jack Ma (founder of Alibaba)
commented recently in China that his primary impression of USA was the ability
of strategic thinking. Being very familiar with both countries, I have the
same impression. I used to call it rational thinking. In my observation, the
best strategic thinkers will win the long term races of the countries, as well
as businesses.

------
alexeisadeski3
"China’s demography is a disaster. About 2015, the seemingly boundless labor
pool will begin to shrink. One reason is rapid aging, which presages that
China will become old before it becomes rich. By 2050, China will have lost
one-third of its working-age population. Meanwhile, the U.S. will bestride the
earth as the youngest industrialized nation after India."

~~~
astrodust
It's 2014. China could produce a lot of young talent between now and then if
it changed policies to pursue that goal.

~~~
guard-of-terra
It's very hard to affect demographics to produce more babies after demographic
transition is complete. Or are you talking about investing in education?

------
bane
China's struggle is going to be the same one we see from other export driven
economies, shifting from "fast follower" manufacturing centers to more R&D
focused economic leaders. This is not an easy shift to make.

Right now, the big East Asian countries, China/South Korea/Japan are
struggling with adapting their education systems to a model that encourages
risk taking and creativity, things required to carve new niches and drive
economic leadership.

It's happening, but slowly, Japan is _very_ close/already there in many cases
but struggles understanding foreign consumer preferences and it's not across
the board. Korea seems to have identified it as a necessary growth area and is
making massive investments in design centers and other "creative capital"
investments -- something like $100 billion so far already invested into making
Seoul a global destination regional design city.

------
austinz
I think there's more to demographic destiny than constantly growing
populations. For example, the 'demographic dividend' is a double-edged sword,
resulting in economic growth if enough jobs can be created or the potential
for massive unrest otherwise. (This is one problem which India and much of
Africa is grappling with.)

At the same time productivity per worker has gone up dramatically in many
industrialized and industrializing countries, even as (and in some cases
because) of automation becoming more and more widely adopted. On one hand
we're having discussions about how to handle large numbers of workers rendered
redundant because of automation destroying jobs (e.g. guaranteed minimum
income); on the other hand we're predicting that an economy won't have enough
workers to fill all the jobs that will be created because of demographic
trends. These things are contradictory.

------
vorg
Comparing "the US" and "China" is comparing apples and oranges. China, like
the rest of East Asia and most of Europe, is an ethnic-based country, whereas
the US, like Australia, Brazil, and even the UK and France, is an immigration-
based country. Generally, Americans don't become Chinese, nor would they want
to. That's the key for why the US will remain tog dog. Of course, there's
other factors: the US military control of the world's oceans, and the under-
utilization of the Mississippi compared to the Yangtze or Ganges. Talking
about China's skewed population distribution or lack of innovative freedom are
effects, not causes, of the ethnic- or immigration-based nature of the two
countries.

~~~
blisterpeanuts
China is actually quite diverse, both linguistically and ethnically speaking.
Also, as regards immigration, China is beginning to able to attract foreigners
to their research institutions. Money wins. The U.S. would be wise to re-learn
this lesson.

------
tn13
U.S. is number one but the kind of welfare path it has chosen it remains to be
seen when the real sinking of US starts.

The case with China is slightly different. They are not a democracy and hence
can afford to spend lot more money on tanks and nuclear warheads while
millions rot in poverty. This is not possible for a country like India. So as
Chinese economy grows its global influence is going to grow more exponentially
than say that of India. Countries who become global powers try to impose their
worldview on others for example US has pushed democracy everywhere and I am
reasonably sure China is going to put "state knows the best" attitude
everywhere they go.

------
mmanfrin
> By 2050, China will have lost one-third of its working-age population.
> Meanwhile, the U.S. will bestride the earth as the youngest industrialized
> nation after India.

How are we divining the mating habits of people born in 2020 to 2030's US?

~~~
waps
By assuming they evolve in the same way they've been evolving since WWII.
While it may not look like it in San Francisco, but there are huge groups in
the country, white and non-white that are having quite a few kids. Not enough
to make population rise, but enough to keep it stable. It seems a vast number
of people prefers a small city or medium city lifestyle with 3 kids. The weird
thing is that this will make the experience of so many San Franciscans today a
feature of the first half of the 21st century too. A hell of a lot of new
immigrants will come from a pretty strict religious background and feel like
releasing some steam in their early twenties. The influx of people like that
should continue for another 20 years at least.

So the assumption is that the population of the US will continue to climb
slowly due to natural growth, accelerated a little bit, but not much, by
immigration.

Now if you look at the EU or China, they have a very different story. The EU
has been stuck in a massive population drop rate (roughly approaching next
generations being 50-70% of the previous generation for all of Western Europe,
coupled with massive immigration numbers that make the numbers barely stable).
That means that in a lot of countries in Western Europe, approaching 50% of
the <20 population is of foreign origin, first or second generation, mostly
from Northern Africa and the middle east. These numbers look scary, yet in the
major cities, Paris, London, ... they look a lot scarier still. If the
"unemployed youths that don't fit into society leads to revolution" crowd is
correct, Europe has maybe 5-10 years left before that happens. There may be a
further delay because of the simple fact that European mistreatment of the
poor is still a lot better treatment than islamic nations' treatment of the
middle class and the rich. So the immediate immigrants are actually quite
content to be abused. Their children, however, are not.

China is in a pickle. They need, absolutely need, a lot of population growth
to avoid disaster, but in absolute numbers everything they built is filled to
the brim. They are trying to use the "one child policy" to spread out the
population by relaxing it for ethnic Chinese in the outer regions, like
Xinjang or Tibet. So if you are Chinese and want kids, if you move there and
get a job there (Chinese control most businesses and employers are at least
somewhat racist, so it's not impossibly hard), the government will let you do
that, up to 5 kids in some places. The purpose is, of course, slow ethnic
cleansing, but given that it's China, the UN will never even mention it.

~~~
antientropic
I call [citation needed] on your EU demographics. The EU has not been "stuck
in a massive population drop rate": the EU population actually grew by 3.7%
between 2002 and 2001, with only 6.3% born outside of the EU. And Eurostat
forecasts the population to grow very modestly between now and 2060. (Source:
[http://en.wikipedia.org/wiki/Demographics_of_the_European_Un...](http://en.wikipedia.org/wiki/Demographics_of_the_European_Union#Demographic_future))
Of course, those predictions don't mean all that much, since "demography is
destiny" only in retrospect: growth trends can and do change. (E.g. the French
birth rate has gone up in recent years.)

To be honest, I think you may have read too much Mark Steyn. There is little
cause for demographic apocalyptics, including the tired "Muslims are going to
revolt/take over" kind. In fact, a flat or slightly declining population is
probably a blessing (e.g. from an environmental perspective).

~~~
tormeh
The oroblem with non-whites not quite fitting in is real, though, and much
worse than in the US. Besides color, muslims are pretty hard to assimilate, so
there will be not only color-based racism but also cultural ethnocentrism.

Imagine you have the problems of economic class and then add another dimension
of cultural class. Society becomes much more fragmented. The new dimension is
not really worse than economic class, but class alone is already unpleasant.
It will turn out all right, I guess, but there will be minor persistent
problems for a long time.

------
LiweiZ
The real challenge for us Chinese is education system.

------
jusben1369
There's much focus on the economic statistics here but I do think the most
important component is the political one. China is a one party state run in a
totalitarian manner. No totalitarian state has ever lasted for an extended
period of time. So China either becomes the 1st to pull that off or has the
mother of all lost decades as it transitions to a Western like democracy.

~~~
alexeisadeski3
>>No totalitarian state has ever lasted for an extended period of time.

?

~~~
jusben1369
Compared say to democracies in the US/UK/France etc that are 100 or more years
old. Trying to think of totalitarian equivalents that have lasted into a
country achieving 1st World status?

~~~
alexeisadeski3
Every single first world country was either already a democracy before
industrialization ("the west"+Turkey), was totalitarian until it was invaded
by the US and forced to become democratic (Japan, Germany, Korea, Austria), or
is comprised of people who fled a totalitarian nation to found their own
democratic nation next door (Taiwan).

Did I leave anyone out?

------
danmaz74
PPP makes a lot of sense if you compare GDP per capita. If you compare total
GDP, using PPP makes no sense.

------
coldtea
Yes, keep telling yourselves that.

------
Dewie
US is #1 at caring about being #1. (we'll see if this shifts to whatever next
country becomes #1)

> U.S. education is always said to be in crisis. But 17 of the world’s top 20
> universities are in the U.S., and 34 of the top 50.

Yes, we all know that the smart and/or rich/connected have ample opportunity
in the US. But that says nothing about the median.

~~~
lomnakkus
> US is #1 at caring about being #1

That seems like a bit of an overstatement[0] considering all the categories
that the US isn't #1, e.g. Life expectancy (#49) [1]. Granted, these rankings
are quite old, but you can pretty easily find others, for example Hans
Rosling's presentations on health care.

EDIT: This is not a dig at the US as such. I just think it's time for a
reality check for many people.

[0] Or, rather, the US doesn't seem to be very effectual at improving the
situation.

[1]
[http://en.wikipedia.org/wiki/International_rankings_of_the_U...](http://en.wikipedia.org/wiki/International_rankings_of_the_United_States)

~~~
alexeisadeski3
Actually, the US probably does lead in life expectancy... As usual, you can
make the data do anything you like, but this methodology makes a lot of sense.

[http://blogs.wsj.com/numbersguy/does-the-us-lead-in-life-
exp...](http://blogs.wsj.com/numbersguy/does-the-us-lead-in-life-
expectancy-223/)

~~~
lomnakkus
I may be off my rocker, but it seems kind of weird to specifically discount
murders and such when calculating life expectancy. I mean, I get that the
health care system probably can't have much effect on murder as a cause of
death, but life expectancy is life expectancy no matter what eventually ends
up killing you.

(My reference to Hans Rosling was more of an aside, I didn't mean to conflate
average life expectancy with the standard of health care. I apologize if that
wasn't clear.)

~~~
alexeisadeski3
You're totally correct, but so is the paper discussed in the WSJ link.

Different measures of life expectancy for different purposes.

It's a bit like the inequality data "showing" that the US has higher post-
tax&transfer inequality than does France. -News flash- nations with stronger
social safety nets have stronger social safety nets!

It seems that the pertinent measure would be pre-tax&transfer income
inequality... a measure which just so happens to show the US and France have
identical GINIs. But you won't read that in the NYT...

------
strebler
This article is poorly written and researched, full of grandiose language &
hyperbole with little to no justification. For example:

"China’s demography is a disaster ... by 2050, China will have lost one-third
of its working-age population"

Grandiose hyperbole substantiated by the fact that in 35 years, people will be
older!

"China’s politics are wrong"

"jobs will come home to the U.S...(due to) plentiful cheap energy from
fracking"

No need to pander.

~~~
dataminer
Loss of 1/3 working-age population is due to central family planning by
chinese government.

~~~
strebler
Exactly what I'm talking about! Their one child policy has already been eased:
[http://online.wsj.com/news/articles/SB1000142405270230328990...](http://online.wsj.com/news/articles/SB10001424052702303289904579199431427590394)

Either a) the author knew this and didn't think such a major policy shift was
worth addressing or b) was ignorant.

This is what I mean - the article was poorly written / researched. China has
many problems, the article doesn't have any substance. It's divisive, and
inaccurate in several key "facts".

