Countries Don’t Compete

There are some worthy points in today’s Thomas Friedman column, but his concept of international economic competition is dead wrong. He thinks this is a partial explanation for high US unemployment:

Global competition is stiffer. Just think about two of our most elite colleges. When Harvard and Yale were all male, applicants had to compete only against a pool of white males to get in. But when Harvard and Yale admitted women and more minorities, white males had to step up their game. But when the cold war ended, globalization took hold. As Harvard and Yale started to admit more Chinese, Indians, Singaporeans, Poles and Vietnamese, both American men and women had to step up their games to get in. And as the education systems of China, India, Singapore, Poland and Vietnam continue to improve, and more of their cream rises to the top and more of their young people apply to Ivy League schools, it is only going to get more competitive for American men and women at every school.

To stand up for the old New England WASP establishment for a moment, let’s note that Harvard’s first African-American student graduated in 1870 and Yale’s graduated in 1874. But it’s of course true that if the quantity of people in the world capable of getting high SAT scores goes up faster than the number of spaces at Harvard and Yale then it will get harder to get into Harvard and Yale. This is a problem that’s historically been solved by founding Stanford, but if the rich people of the world collective refuse to launch new institutions of higher education then there’s going to be a problem here.

But this has nothing to do with unemployment in the United States. If you look at countries that are doing well economically right now — Germany, Australia, Norway — what you’ll see is that these places haven’t “out-competed” China, they sell stuff that China imports. Specifically Chinese growth is increasing global demand for natural resources and for Germany’s heavy industrial equipment. The competition paradigm implies that if China were struck tomorrow by a horrifying disease that led to its rapid economic collapse, that we’d somehow benefit. In fact, there’d be a global economic disaster.


It would of course be better for America to have a healthier, better-educated population and better infrastructure. But this is true no matter what happens in China or any other country.