Appeasing the Dragon

Article excerpt

ITEM: The Associated Press reported on November 30: "America's strengthened military pact with Australia is a figment of 'Cold War thinking' that will destabilize the Asia-Pacific region, China's Defense Ministry said Wednesday, in Beijing's strongest criticism yet of a move widely seen as intended to counter China's rising assertiveness."

ITEM: In an article entitled "Playing the anti-China card," in China Daily for December 7, Li Wei of the Chinese Academy of International Trade and Economic Cooperation charged that "President Obama has pinned his re-election hopes on a change of policy that threatens trade ties between" China and the United States.

Barack Obama, said the China Daily piece, was "once viewed by Beijing as a pragmatic U.S. leader." However, recent foreign and economic policy developments "are an indication that there has been a change in the Obama administration's policy toward China in the face of the [United States'] stubbornly high unemployment rate and weak economic growth. An escalation in tensions ... is by no means wise at a time when China is the biggest holder of U.S. national debt and its fastest-growing export market."

ITEM: Andy Stern, former president of the Service Employees International Union (SEIU), gushed over Beijing's economic planning in an oped in the Wall Street Journal for December 1. Stern's feature, entitled "China's Superior Economic Model," stressed:

  The conservative-preferred, free-market fundamentalist,
  shareholder-only model--so successful in the 20th century--is
  being thrown onto the trash heap of history in the 21st
  century. In an era when countries need to become economic
  teams. Team USA's results--a jobless decade, 30 years of
  flat median wages, a trade deficit, a shrinking middle class
  and phenomenal gains in wealth but only for the top 1%--
  are pathetic.

  This should motivate leaders to rethink, rather than double
  down on an empirically failing free-market extremism. As
  painful and humbling as it may be, America needs to do what
  a once-dominant business or sports team would do when the tide
  turns: study the ingredients of its competitors' success.

Correction: No, a few feeble feints notwithstanding, President Obama has not suddenly become tough on the rulers in Beijing. Nor has the market system in the United States failed in comparison to the alleged wonders of Communist China's five-year plans. To believe those claims you'd have to have a mighty mind--mighty empty.

It is the truth, sadly, that the United States has been honoring free-market principles more in the breach than in the observance. Nevertheless, China's economy is downright emaciated compared to that found in this country. Even Albania and Panama have higher per-capita gross domestic products than China. The Chinese living in Singapore have more than five times the per-capita GDP of those on the communist mainland of China, according to World Bank statistics.

In 2009, as borne out by figures compiled by Derek Scissors, Ph.D., a research fellow in Asia economic policy in the Asian Studies Center at the Heritage Foundation in Washington, D.C., the GDP in the United States was almost $15 trillion, while China's was $5 trillion, despite China's having a population more than four times as large. The average American had an average income of $48,000, compared to the average Chinese with under $4,000. "Those gaps have narrowed some, acknowledged Scissors, "as they have almost every year in the past 30, but they remained huge."

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Emulating a statist economic system such as found in China, even in its modified form, would prove only that we have not learned from history. Planned economies have a miserable record even when enforced by the threat of death. Consider Diocletian, the Roman emperor from 284 to 305, who sought to "overcome depression and prevent revolution" by substituting "a managed economy for the law of supply and demand," as recounted by historian Will Durant (Caesar and Christ, 1944). …