Immense changes have happened in the global economy in the last 20 years.
America’s economy is still the largest in nominal dollars, but the effective size of an economy depends on a currency’s local purchasing power. The posh term for this is Gross Domestic Product (GDP) at Purchasing Power Parity (PPP). China is the world’s largest economy by this measure. It surpassed America in 2015 (World Bank), and it has the largest share of global exports, valued around $2.3 trillion. America’s are around $1.5 trillion. What happened?
In 1991, the Soviet Union collapsed. In 1997, Britain gave Hong Kong back to China after securing guarantees for its freedom. There was talk that it would become a “Trojan horse” bringing democracy to China. America bet heavily on China.
Everyone believed that giving it membership in the World Trade Organization (WTO) would let it see the benefits of global economic integration. Certainly, it would develop a prosperous free market economy. Inevitably, it would see liberal democracy as the best model, as opposed to Soviet-style central planning. Obviously, its citizens would want freedom, democracy and the rule of law
President Clinton believed that the Chinese would “demand a greater say for freedom.” George W. Bush said that China would enjoy “more open contact with the world of freedom” and that entry into the WTO would bring “enormous opportunities for U.S. exports” and more jobs.
Labor-union leaders thought otherwise. China would use its vast market and cheap labor to threaten America’s interests and American workers. It would go for the long game, measured in centuries, as opposed to America’s obsession with quarterly results. These Cassandras were ignored in the rush for profits.
In 2001, China was admitted to the WTO at America’s urging. It made some changes to its economy. Westerners rushed in, expecting China to play fair, let them operate freely, and not steal their technology. America was especially enthusiastic, closing thousands of factories and outsourcing millions of jobs.
China kept its currency artificially low, making its exports cheaper abroad and destroying jobs in Western countries. This led to the incredible growth of China’s economy, but equally crimped America’s economy, producing unemployment, underemployment and homelessness. This led to the loss of manufacturing capability in many sectors in America, especially smartphones, computers and hardware. (Just visit Office Depot and Home Depot.) Little better than carpetbaggers, the top 1 percent got fabulously rich by exploiting China’s cheap labor and selling America down the river.
In 2008, the Chinese got a shock with Wall Street’s implosion and the global economic crash. They assumed that Americans were experts at free enterprise. Instead, they realized just how stupendously incompetent and corrupt this country really is (as Amy Goodman, Jane Mayer, Markos Moulitsas, Robert Scheer, Matt Taibbi and others point out routinely).
In 2012, Xi Jinping became China’s leader. He no longer looked to America as a role model. He steered China toward state control and repression of journalists and lawyers. Communist Party diktat superseded the rule of law. Dissent was stamped out. Rivals were purged. Xi recently got himself appointed president for life.
He told the world that “Chinese wisdom” was better than America’s chaotic democracy for “solving the problems facing mankind.” He unveiled the “Made in China 2025” economic plan, whereby China would use subsidies and tariffs to gain world leadership in crucial industries. And he has promised to invest over $1 trillion abroad.
China invests wisely, builds infrastructure, makes friends, graduates scientists by the thousand and accepts global warming. America squanders trillions on pointless wars, burdens its students with immense debts, and denies evolution and science (“lies straight from the pit of hell” — Rep. Paul Broun, R-Georgia).
The Economist magazine summed it all up in an editorial, How the West Got China Wrong: “It bet that China would head towards democracy and the market economy. The gamble has failed.” China “is not a market economy and, on its present course, never will be.”
Accordingly, China’s retreat from democracy and a market economy is the absolute “starkest reversal in modern geopolitics.”
America is left like a spoiled brat in a casino, having squandered his trust fund, nursing a hangover, wondering what happened. On NPR recently, Sen. Chuck Schumer, D-New York, said, “There has been no greater transfer of wealth in the history of the world [than] has occurred in the last 20 years” because “China has been stealing our intellectual property, our jobs, our wealth for 20 years.” More accurately, America stupidly let it.
At a time when the West should be united behind a strategic thinker in the Oval Office, we have a moron angering our allies, tearing up treaties, unchecked by Congress. This is why spineless Republicans must be booted out before they let this moron wreck America’s interests any further.