Ooh, Snap

Joseph Stiglitz on America's patronizing attitude towards China's economic policies:

The US economy is growing at a third the pace of China’s. Poverty is rising and median household incomes are, in real terms, declining. America’s total net savings are much less than China’s. China produces far more of the engineers and scientists that are necessary to compete in the global economy than the US, while America is cutting its expenditures on basic research as it increases military spending. Meanwhile, as America’s debt continues to balloon, its president wants to make tax cuts for the richest people permanent. With all this in mind, China’s leaders may not feel they need to seek advice from the US on how to manage either the exchange rate or the economy.

Read the whole thing - Stiglitz is a phenomenal author, and incidentally winner of the Nobel Memorial Prize in Economics.

Staying with China, it appears (via Brad Delong) that the AEI is trying to make trouble again. Not being satisfied with having advocated an unwinnable war in Iraq, the AEI is apparently trying to sign the US up for an unwinnable war against China. The funny thing is, as Justin Logan has remarked, that China is doing nothing - absolutely nothing - that you wouldn't expect from any self-respecting nation. But I really had to laugh when I read the actual article. It's simply bizarre. This paragraph near the end made me giggle:

For one thing, as these annual Pentagon reports have repeatedly pointed out, China shrouds its military plans and senior decision-making in secrecy.

What, as opposed to the bastion of openness and accountability that is the Pentagon? Seriously, it's almost three years later and nobody's quite sure what "The Reason" for the war in Iraq was. What does that say about the secrecy of government?

But what we can observe could hardly lead anyone to think that we should be so confident about China's intentions. After all, this is the country that now ranks third in the world in overall defense spending, and the one that has increased its military budget fastest over the past decade, with growth in military expenditures outpacing even China's own remarkable growth in GDP. General Pace had better hope his statement doesn't go down in history alongside George Tenet's now infamous, "It's a slam dunk, Mr. President."

First off: The AEI doesn't get to make fun of George Tenet. Tenet didn't say anything that the AEI wasn't saying for much longer - if Tenet was wrong, than the AEI is super-extra double wrong. Secondly, we all are still hyperventilating over China's military spending, and we all need to calm down. China's military has been shrinking, while it's spending is growing. It's trying to make a smaller, more modern army capable of fighting modern war. While that may scare the US, it's a perfectly reasonable policy - one which, by the way, the US followed at the end of the Vietnam war. And by the way, China's military spending still has a far higher proportion of pensioners to pay from the old days. And while China's military spending is growing quickly, it's still about 10-20% of what the US spends.

I keep trying to figure out what scares the American military-industrial establishment so about China. I mean, hostility to the west isn't new, neither is human rights abuses. Hell, the US has had allies who were both those things. My personal belief is that what scares certain hawks in the US so much is the simple fact of China's growing power - even if China were an America-friendly democracy, the US would be afraid. We're rapidly approaching the point where some new entity is likely to join America as a superpower - India, China, the EU, someone. Maybe several someones. That this is worrying to certain "America uber alles" thinkers isn't surprising. But just because China wants to be powerful, that doesn't make them evil or something. Frankly, if America has the right to intervene in Asian regional politics (which most hawks certainly believe) then China certainly does.

My advice for US policy makers (as Angelica pointed out, I'm mustering all the authority a Canadian blogger can) would be to wait. I don't fundamentally believe the Communist Party is destined to be in power for much longer, relatively speaking. Certainly, by the time China is ready to seriously challenge the US for some kind of regional leadership in Asia, I would be surprised if the Communists are still running the place. Meanwhile, Japan and India (not to mention Russia) continue to surround China with serious opponents if things ever get out of hand. Seeing as continents don't move very quickly at all, I think the US can calm down.