Ryan Avent throws some much-needed cold water on the idea that China’s recent economic growth shows that we ought to be emulating Chinese public policy. There’s a lot to his argument, but I think this sarcastic aside actually captures the key point:
There is certainly a possibility that China has stumbled onto a striking new growth formula, and that Chinese citizens will ultimately grow every bit as wealthy as Americans and then some. That would be something! To move 1.3 billion people from grinding poverty to American income levels would represent a monumental step for human welfare. Who knows; it could happen.
There’s often a tendency to get distracted by rates of change when levels are in many ways more relevant. China is a dynamo and Greece is a basket case, but Greece is much richer than China. Rapid Chinese progress does in part reflects the skill and wisdom of Chinese policymakers. But in large part it merely reflects the madness of a previous generation of Chinese policymakers—the people who left the country at such a low level in 1980 from which it’s so rapidly been growing. If you look at the economic success of Chinese people in Taiwan or Hong Kong or Singapore or diaspora communities around the world, the striking thing about the PRC is how poor it still is.
The United States of America, meanwhile, is one of the richest countries on earth. A poor country can get richer by learning to do things that they already do in other countries. And a small country like Norway can get rich by managing natural resources well. But a large rich country like the United States actually needs to push the frontiers of the possible forward. Google and iPads aside, we haven’t really done that over the past 10 years on the scale necessary to raise American living standards at a reasonable pace. That’s a big problem, but there’s not really any reason to think the Chinese have figured it out.