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December 13, 2012

The Super Simple Plan to Keep the US Economy Larger Than China’s

Posted in: Uncategorized

When reading stories about the growth of the Chinese economy, I often run into two extremely weird narratives. One is claims that the Chinese leadership has somehow magically found a formula for growth our feeble democracy could never match. The other is fear mongering that China is now an unstoppable economic powerhouse which is destined to be a larger economic superpower than the United States. The new National Intelligence Council report projecting the Chinese economy will surpass the US economy by 2030 seems to have triggered a new round of the latter. That is why I feel it important to point out China will only become a largest economy if we choose to let them.

There is no secret to China’s growth. China sits on a large fertile piece of land with a decent climate and is full of people. China’s problem was for a long time its government adopted insanely terrible and destructive policies. Now the government has adopted less insane policies. The whole secret of China’s growth is that the government is using some basic ideas to turn millions of very poor Chinese into slightly better off Chinese. Since there are so many poor Chinese, this produces a lot of growth.

There is zero reason, though, that the United States can’t do the same thing. We are a big fertile country with a decent climate but with relatively few people. We also have a great track record of cultural assimilation and improving the lives of immigrants.  We could choose to copy China by deciding to try to turn millions of poor Chinese into better off Americans.

I suspect if we greatly relaxed our immigration laws regarding people from China and made a serious effort to empower the new immigrants, we would see a flood of applicants. It also doesn’t need to be Chinese. I’m just as confident we could turn tens of millions of poor Indians, Africans, etc… into comparatively much better off Americans if we really wanted to.

The reason the Chinese economy is projected to eventually surpass the American economy is simply because they have more people; but if we really wanted to, we could easily help rectify the problem by just producing a bunch of new Americans via immigration. Of course, there are many other reasons why allowing a 100 million new immigrants might not be the best policy, but it can be done. The point is, this fear-mongering about a Chinese economy larger than an Americans is misplaced. If it were actually some serious concern, there is a straight non-destructive way to address it.


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