On Monday I said I was surprised there was so much hue-and-cry over Jack Conway’s campaign advertising when to my mind the ugly advertising story of this campaign is the endless parade of anti-Chinese demagoguery I’ve seen. The largest quantity of these ads seem to be from Democrats complaining about tax treatment of foreign corporate earnings, but the American right loves it some nationalism and has devised a whole range of its own China-bashing ads.
This one from Citizens Against Government Waste is both the best-produced and the most ridiculous:
There are a whole range of absurd things here. For starters, how likely is it that China’s living standards will surpass America’s by 2030? Well, if you assume China manages to grow faster in the future and achieve 10% per capita GDP growth every year for the next twenty years, and America experiences no per capita GDP growth whatsoever during this period, they’ll end up slightly ahead of us.
But perhaps the Chinese haven’t actually surpassed us. After all, though the touchpad device that one student is using looks pretty cool, its features are only very slightly more advanced than what’s available in today’s iPad. If you consider what counted as a state-of-the-art portable electronics wonder 20 years ago (back when we were paranoid about Japanese catch-up growth), the lack of progress being forecast for the Chinese middle class is actually pretty bleak.
Further as James Fallows says “if you know anything about the Chinese economy, the actual analytical content here is hilariously wrong.”
The ad has the Chinese official saying that America collapsed because, in the midst of a recession, it relied on (a) government stimulus spending, (b) big changes in its health care systems, and (c) public intervention in major industries — all of which of course, have been crucial parts of China’s (successful) anti-recession policy.
I actually think the message of this ad is something they could stand to hear in China where they really could use a bit more emphasis on market-driven consumer demand for products and a bit less central planning of megaprojects aimed at impressive foreigners.
Finally, it’s worth noting that this portrayal of Chinese purchases of US government debt as part of some kind of long-term plot to enslave Americans is promoting a frightening level of ignorance as to what’s happening. The policy of the Chinese government is, in effect, to tax Chinese consumers and use the revenue to provide subsidies to politically powerful exporters and their customers. This is bad policy and it violates WTO rules to boot. So the PRC has decided that it’s discovered a loophole in WTO rules that allow it to in effect tax Chinese consumers to subsidize exporters and their foreign customers by buying US government debt to artificially boost the purchasing power of the dollar and artificially depress the purchasing power of the RMB. Rather than this being a reason for us to reduce borrowing it is, if anything, a reason for us to temporarily increase our borrowing in order to finance useful ventures since the Chinese government has committed itself to lending us the funds at sub-market rates.