Should We Be More Like China?
I'm continually shocked when demonstrably bright and accomplished people fall in love with authoritarian states.
I’m continually shocked when demonstrably bright and accomplished people (I’m looking at you, Tom Friedman) come back from posh meetings in authoritarian states gushing about what they saw and exhorting their fellow citizens that we need to emulate those societies. The latest victim of this is former Microsoft CEO Robert Herbold who has a WSJ op-ed titled “China vs. America: Which Is the Developing Country?”
Infrastructure: Let’s face it, Los Angeles is decaying. Its airport is cramped and dirty, too small for the volume it tries to handle and in a state of disrepair. In contrast, the airports in Beijing and Shanghai are brand new, clean and incredibly spacious, with friendly, courteous staff galore. They are extremely well-designed to handle the large volume of air traffic needed to carry out global business these days.
In traveling the highways around Los Angeles to get to the airport, you are struck by the state of disrepair there, too. Of course, everyone knows California is bankrupt and that is probably the reason why. In contrast, the infrastructure in the major Chinese cities such as Shanghai and Beijing is absolute state-of-the-art and relatively new.
So, we’re comparing an airport that’s been in operation since 1930 and is the 6th busiest in the world to one that opened in 1999 and is the 20th busiest in the world? And highways which have been among the world’s most traveled since roughly the invention of the automobile to those in a society where ordinary citizens have only recently begun to be able to afford cars?
If we’re going to do that then, surely, we have to factor in the enormous good delivered by the older airports and roads during those intervening decades. Los Angelenos had those advantages for three quarters of a century of enormous prosperity. That’s three generations of people whose lives were improved by a standard of living the residents of Shanghai are just now starting to enjoy.
It’s true that America has an infrastructure problem. The price of early development is that our airports, roads, and bridges are old. We can and do build new airports and expand and renovate old ones. But doing so comes at the cost of major inconvenience for those using existing facilities.
Furthermore, it is indeed easier to manage an infrastructure system when the people have no voice. There’s no environmental impact studies or NIMBY lobbying about noise, traffic, or other negative externalities. But getting rid of those inconveniences comes at an enormous price in liberty.
Government Leadership: Here the differences are staggering. In every meeting we attended, with four different customers of our company as well as representatives from four different arms of the Chinese government, our hosts began their presentation with a brief discussion of China’s new five-year-plan. This is the 12th five-year plan and it was announced in March 2011. Each of these groups reminded us that the new five-year plan is primarily focused on three things: 1) improving innovation in the country; 2) making significant improvements in the environmental footprint of China; and 3) continuing to create jobs to employ large numbers of people moving from rural to urban areas. Can you imagine the U.S. Congress and president emerging with a unified five-year plan that they actually achieve (like China typically does)?
Thankfully, no. We have an electoral system in which the president is elected every four years, and the entire House and a third of the Senate gets elected every two years. Each represents a different constituency. And, of course, there are two major political parties that are increasingly polarized and ideological. That’s messy and frustrating. Would I trade it for unelected oligarchs who all answer to the same party apparatus? No.
Unlike Herbert, I find it hard to read the phrase “five-year plan,” especially in the context of the Chinese Communist Party, with a straight face. For decades, those plans took China (and the Soviet Union) down the path of ruin. Occasionally, as with Mao’s Great Leap Forward, the results of central planning were even more tragic. So, no, I don’t yearn for a central state with that amount of power and cohesion.
Given how far they’ve come some Mao’s death in 1976, the Chinese are obviously doing something–indeed, a lot of things–right. Given the massive improvement in the living conditions of China’s 1.3 billion people this has meant, I’m thrilled. But it’s a lot easier to transition an economy that’s decades behind the curve into something approaching a modern economy than it is to sustain an advanced economy.
Government Finances: This topic is, frankly, embarrassing. China manages its economy with incredible care and is sitting on trillions of dollars of reserves. In contrast, the U.S. government has managed its financials very poorly over the years and is flirting with a Greece-like catastrophe.
It’s true that elected leaders giving the people what they want–in America’s case, ever lower taxes with ever-increasing social spending–has put the country up against an arbitrary “debt ceiling” that no other country on the planet imposes on itself. But no “Greek-like catastrophe” is coming.
Human Rights/Free Speech: In this area, our American view is that China has a ton of work to do. Their view is that we are nuts for not blocking pornography and antigovernment points-of-view from our youth and citizens.
So, it’s really a matter of opinion as to whether the United States or China is doing better in the areas of Human Rights and Free Speech? I believe I’d have left that one out, Mr. Herbold.
Technology and Innovation: To give you a feel for China’s determination to become globally competitive in technology innovation, let me cite some statistics from two facilities we visited. Over the last 10 years, the Institute of Biophysics, an arm of the Chinese Academy of Science, has received very significant investment by the Chinese government. Today it consists of more than 3,000 talented scientists focused on doing world-class research in areas such as protein science, and brain and cognitive sciences.
And, yet, shockingly, the United States and other Western societies continue to produce almost all technological breakthroughs while China leverages the fact that it has a gigantic population of incredibly low paid workers.
All of the various institutes being run by the Chinese Academy of Science are going to be significantly increased in size, and staffing will be aided by a new recruiting program called “Ten Thousand Talents.” This is an effort by the Chinese government to reach out to Chinese individuals who have been trained, and currently reside, outside China. They are focusing on those who are world-class in their technical abilities, primarily at the Ph.D. level, at work in various universities and science institutes abroad. In each year of this new five-year plan, the goal is to recruit 2,000 of these individuals to return to China.
This is a great idea. Indeed, the United States should follow suit and reach out to all of our PhDs and technical experts who have immigrated to China and try to lure them back home. Oh, wait.
Reasons and Cure: Given all of the above, I think you can see why I pose the fundamental question: Which is the developing country and which is the developed country? The next questions are: Why is this occurring and what should the U.S. do?
Let’s face it—we are getting beaten because the U.S. government can’t seem to make big improvements. Issues quickly get polarized, and then further polarized by the media, which needs extreme viewpoints to draw attention and increase audience size. The autocratic Chinese leadership gets things done fast (currently the autocrats seem to be highly effective).
What is the cure? Washington politicians and American voters need to snap to and realize they are getting beaten—and make big changes that put the U.S. back on track: Fix the budget and the burden of entitlements; implement an aggressive five-year debt-reduction plan, and start approving some winning plans. Wake up, America!
It’s not at all clear in what sense the United States is being “beaten” by the Chinese. Despite having a quarter China’s population, America’s GDP is nearly three times bigger. And the United States remains the dominant political, military, and cultural power on the planet.
Now, I happen to agree with the fixes Herbold proposes. Then again, few Americans–including those in Washington–disagree. The question is how to reach consensus on the budget when one side gets elected on the promise of low taxes and the other side gets elected on the basis of generous social spending and they meet in the middle by doing both. That’s a problem. Autocratic efficiency, however, is not the solution.