China’s Growing Economy: a Value or a Threat?

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China has reportedly overtaken Japan as the world’s second largest economy. Many react to China’s ascendance by warning that America is in “danger” of being “overtaken”. On this view, the fact that some people gain more means that others necessarily have less.

This question was raised in a recent discussion on NPR:

JOFFE-WALT: And I think, economically, our instinct is to think that global economics works like a Monopoly game: More money for you means less money for me.
KESTENBAUM: Okay. Wing Thye Woo says that’s a natural feeling, but it’s wrong. What actually happens is the whole pie gets bigger.
Prof. WOO: No, it’s not a zero-sum game. In fact, we want the Chinese to be rich, educated and prosperous, so that they become innovative like us. Then they can contribute to the global stock of knowledge. That would make us all better off.

We agree – Professor Woo is exactly right. He identifies a form of what Ayn Rand called the “trader principle”, which explains why, when people act productively for their own benefit, there is no conflict of interest:

The symbol of all relationships among [rational] men, the moral symbol of respect for human beings, is the trader. We, who live by values, not by loot, are traders, both in matter and in spirit. […]

Although China still suffers under a misguided and authoritarian government that restricts individual freedom in many ways, the economic freedoms and consequent productivity of the Chinese people are considerable and ever-increasing. The actions taken by individual Chinese to produce goods and services sold on a global scale are undertaken in the same spirit as any American who pursues a better, more comfortable life. That the rest of the world can benefit from the inexpensive and increasingly high quality products the Chinese create is a natural co-product of that process. Therefore, we should cheer the Chinese for their progress and encourage them to achieve even more freedom and prosperity – not only because they’re improving their own lives, but for the self-interested reason that we have much to gain therefrom.

Posted by on September 13, 2010. Filed under Business & Economics, Fall 2010. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry
  • Sunny Vercett

    I don’t think China’s economy increacing is good for people, neither Chinese nor others. Because those Chinese people think that they create values not for themselves, but for the whole nation and others. They are proud of being strong because it can prove that public ownership is better than capitalism. They will probably get the opinion that it is the mark of the government and it is right to scrifice individuals for the country or the government. So that the government could control the nation more and more, in policy, ecomony, education and media. And the ‘misguided and authoritarian’ government will certainly happy about this. But obviously it is harmful for individuals.

    • Michael

      China has no “communist” system today. It’s Communist Party is that in name only. Hardly anyone that is a member of it, including its leadership, really adheres to Marxist/Maoist ideology anymore. The name is just a keepsake. The “party” and rulership today mainly consists of anti-democratic authoritarians who favor a market economy, which is hardly distinguishable from a right wing fascist government, like say, the Pinochet dictatorship had. Present-day Russia has a similar system.

  • Sunny Vercett

    I don’t think China’s economy increacing is good for people, neither Chinese nor others. Because those Chinese people think that they create values not for themselves, but for the whole nation and others. They are proud of being strong because it can prove that public ownership is better than capitalism. They will probably get the opinion that it is the mark of the government and it is right to scrifice individuals for the country or the government. So that the government could control the nation more and more, in policy, ecomony, education and media. And the ‘misguided and authoritarian’ government will certainly happy about this. But obviously it is harmful for individuals.

  • Michael

    China has no “communist” system today. It’s Communist Party is that in name only. Hardly anyone that is a member of it, including its leadership, really adheres to Marxist/Maoist ideology anymore. The name is just a keepsake. The “party” and rulership today mainly consists of anti-democratic authoritarians who favor a market economy, which is hardly distinguishable from a right wing fascist government, like say, the Pinochet dictatorship had. Present-day Russia has a similar system.

  • Grant

    China’s prosperity is not the result of a positive change in that country. It is simply a byproduct of America’s desire to have it’s cake and eat it too. America no longer has the unfettered market structure which made it the most prosperous, and internationally most respected, nation on the planet. That economic freedom left it’s people with no other choice but to produce for themselves the material goods they need for their high standard of living. Such is no longer the case. Instead, in a grand display of “kicking the can down the street”, America uses it’s international credibility to have other nations produce for us, thereby avoiding the logical consequences that befall all other nations who strangle their own markets with regulations. In exchange for undefined rewards to be delivered at some unspecified time in the future, the Chinese continue to produce for America. America’s standard of living today is almost entirely dependent upon the positive outlook countries like China have in regards to our ability to make good on our promises. Or worse: on their cynical plan to create a financial pretext for conflict with us. In either case, in recent years, this is becoming increasingly impossible to ignore.

    While it is true that increasing “trade” with China has raised the standard of living there, by far and away the major result has been America’s increasing need to placate the whims of a dictatorial Chinese political class; lest they call in their loans and expose the American economy for the charade that it is. It is only through an out-of-context, rose-colored view of the situation – through a desperate wish to label anything as capitalism which superficially resembles that system – that one can regard a situation where a culture of low-skilled American workers can go from (by today’s standards) a lower class existence, burdened by work, to a middle or high class existence where work is on the periphery of life, in a mere generation. This is not the result of some breakthrough in productive efficiency. A discovery of some previously overlooked source of labor in a far off land, in love with freedom, and eager to work below their betters in the hopes of one day equaling them. It is the result of a culture of peasants in China, simultaneously, going from being completely unskilled and impoverished to being low-skilled and, by American standards, low class in a mere generation as well. The moment the mutual delusion runs it’s course, reality will set back in. The millions of Americans who’s lack of ability in anything substantially valuable will force them to return to the reopened factories, and the Chinese peasantry’s lack of a real understanding or commitment to political freedom will allow their rulers to force them back to the farm, being no longer useful to the abandoned ambition of placing America at China’s feet through economic entrapment. Also, as bad as this situation will be, hopefully there will not also be a major, destructive war to accompany it.

  • Grant

    China’s prosperity is not the result of a positive change in that country. It is simply a byproduct of America’s desire to have it’s cake and eat it too. America no longer has the unfettered market structure which made it the most prosperous, and internationally most respected, nation on the planet. That economic freedom left it’s people with no other choice but to produce for themselves the material goods they need for their high standard of living. Such is no longer the case. Instead, in a grand display of “kicking the can down the street”, America uses it’s international credibility to have other nations produce for us, thereby avoiding the logical consequences that befall all other nations who strangle their own markets with regulations. In exchange for undefined rewards to be delivered at some unspecified time in the future, the Chinese continue to produce for America. America’s standard of living today is almost entirely dependent upon the positive outlook countries like China have in regards to our ability to make good on our promises. Or worse: on their cynical plan to create a financial pretext for conflict with us. In either case, in recent years, this is becoming increasingly impossible to ignore.

    While it is true that increasing “trade” with China has raised the standard of living there, by far and away the major result has been America’s increasing need to placate the whims of a dictatorial Chinese political class; lest they call in their loans and expose the American economy for the charade that it is. It is only through an out-of-context, rose-colored view of the situation – through a desperate wish to label anything as capitalism which superficially resembles that system – that one can regard a situation where a culture of low-skilled American workers can go from (by today’s standards) a lower class existence, burdened by work, to a middle or high class existence where work is on the periphery of life, in a mere generation. This is not the result of some breakthrough in productive efficiency. A discovery of some previously overlooked source of labor in a far off land, in love with freedom, and eager to work below their betters in the hopes of one day equaling them. It is the result of a culture of peasants in China, simultaneously, going from being completely unskilled and impoverished to being low-skilled and, by American standards, low class in a mere generation as well. The moment the mutual delusion runs it’s course, reality will set back in. The millions of Americans who’s lack of ability in anything substantially valuable will force them to return to the reopened factories, and the Chinese peasantry’s lack of a real understanding or commitment to political freedom will allow their rulers to force them back to the farm, being no longer useful to the abandoned ambition of placing America at China’s feet through economic entrapment. Also, as bad as this situation will be, hopefully there will not also be a major, destructive war to accompany it.