From George W. Bush to Barack Obama to Donald Trump to Joe Biden, there’s a long-standing bipartisan pathology of wanting the U.S. to be more like China.
When George W. Bush rolled out his version of a Green New Deal in 2006, his motivation was simple, as one observer noted. “Bush's move can be explained in one word,” wrote science journalist Peter Aldhous, “China.”
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“The boost for physical sciences follows lobbying by industrialists, who fear that the US will lose its economic lead if it fails to invest in innovation. China tops their worry list. … Welcome to the 21st century, George W. - China's century.” Thus, George W. Bush’s energy policy (including, somehow, banning regular lightbulbs) was motivated by a desire to emulate China’s “investment in green energy.”
Obama, in his bottomless pursuit of corporate welfare, constantly compared us unfavorably to China. Donald Trump’s Commerce Secretary Wilbur Ross openly admired China’s economic system. Biden has similarly told America that China is out-subsidizing us.
"Last night, I was in the phone for two straight hours with Xi Jinping,” President Biden told reporters of his call with the Chinese president.
— Matt Viser (@mviser) February 11, 2021
"We don't get moving, they're going to eat our lunch.” Via pooler @hunterw
Leading U.S. capitalists have likewise called on the U.S. to behave more like China.
Berkshire Hathaway vice chairman Charlie Munger praised the Chinese government for silencing Alibaba's Jack Ma in a recent interview, adding that he wishes US financial regulators were more like those in China. https://t.co/Pc0TGtz9XT
— CNN (@CNN) June 30, 2021
One big problem with all this China envy is that being China hasn’t worked for China.
China has gotten massively wealthier over the past generation because it had a massive population and it shifted away from centrally planned communism. The shift to state-directed industrial policy was a liberalization that enriched the country. The more we adopt China-style planning, the poorer we will get.
There’s a good treatment of China’s policy and its likely impacts in the Asia Times this week by China scholar Guangwei Li.
China subsidizes the heck out of many companies, and Li concludes that this makes those firms less innovative.
What’s more, every “winner” that China picks creates at least one loser. He suggests that “Government subsidies in China have a positive direct effect on the productivity of subsidized firms but exert a negative indirect effect on non-subsidized firms operating within the same cluster.”
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There are noneconomic reasons to subsidize or protect certain companies. The U.S. is trying to keep microchip manufacturers in the U.S. because microchips are necessary for national defense, for instance.
But China's industrial policy makes China poorer than it otherwise would. Now China's population is shrinking, and its economy is stumbling. We shouldn’t emulate them, unless we’re also willing to make ourselves poorer.