During the mid 1800’s, we eclipsed the UK economically because of population growth and dynamism. We encouraged business, a strong working ethic, and innovation (some stolen from the UK). During this century, China may eclipse the US as the world’s biggest economy. While some might point to the unsustainability of China’s political system, it is very different than it was 50 years ago or 20 years ago. China may have more issues to deal with (corruption, wealth disparity, state owned enterprises, pollution, and ghost cities to name a few), but they have shown tremendous capability to evolve their system and address their issues. We are standing still.
This is not a case of is China “good” or is China “bad,” rather it’s a case of China “is.” At current growth rates, in about 25 years China will be the world’s largest economy and will still have a lower GDP per capita, meaning more growth is possible. This is not to say China’s growth will continue uninterrupted. Something could go awry. It also doesn’t mean we should stop objecting to issues like cyber security, territorial disputes and intellectual property issues.
We need to accomplish two goals. The first is to develop a strong commercial relationship with China similar to what we’ve been able to do with the UK in the 200 years since we last fought them in a war and the 150 years since we worked to keep them neutral during the U.S. Civil War. It’s never easy. The second (which supports the first) is to have our own American competitiveness agenda. Economic size represents population times productivity (defined as GDP per capita). We will never have more people than China so we need to focus on always being the most innovative and productive country on Earth. There is an Economic Olympics going on now and we can’t just focus on beating the other Americans on our team. We need Republicans and Democrats working together. There is truth to arguments on both sides of each issue. We need to find that common ground and act.
Government doesn’t just regulate business, it enables it. Business is the source of productivity and our standard of living. We have a lot of strengths to build upon. Good, smart regulation is important to set minimum standards and enabling is important to foster that dynamism essential to a growing economy that provides the jobs and opportunities we all want to see.
There are eight areas the U.S. government should enable now. First is resolving our debt. We can’t successfully compete with a bad balance sheet. We have a bad balance sheet that is getting worse, not better. The estimates don’t forecast any recessions, which will of course make them worse. Using current forecasts, at about the same time China’s GDP eclipses the U.S., our debt will exceed 100% of our GDP. Is that the legacy we want to leave our kids and grandkids? Second is rebuilding our crumbling infrastructure. Third is more math and science education at all levels. We need more engineers, not more lawyers and financial engineers. Fourth is immigration reform.
Fifth is tort reform. The tort system is important to address social inequities, but it also needs to be fair to the companies that provide investment and jobs. Sixth is a well-funded, patent system with faster acknowledgment of patents and resolution of disputes. Seventh is an energy policy that encourages efficiency and production of more energy (traditional and economically viable renewables). Eighth is Free and Fair Trade. The President needs Trade Promotion Authority (TPA) to foster trade agreements that support U.S. jobs. Trade agreements are unlikely to move forward without it, and both opponents and proponents of trade know that.
