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China Law Blog

Great post!

Sam

Thanks - I enjoy your graphs and analysis to help put things into perspective.

jeffolie

The cost of living is not take into account. Moving from a high cost area to a low cost area make a termenous difference.

GK

jeffolie,

Cost of living is taken into account in both the UN Human Development Index and the PPP per capita GDP (hence the PPP).

Do you think America is poorer than Japan?

Manco_Dollars

Great post! I think Japan is on par properity-wise with America at the moment. That's not a bad thing since Japan really embraces capitalism. The best run companies in the world are Toyota, Honda, etc... Heck, I've owned Toyota and Honda vehicles.

Saul

Interesting. While I would rather see America as the world's superpower (even though I am not an American) I would also like to see faster development in other nations. Both for the reason of spreading liberty and prosperity but also to further accelerate the rate of scientific and technological advancement of the planet.

Kosha

Great post. Specially the China bit as that really is the dinner topic du jour these days.

As a related side-note, many expats I hang out with here in China talks about how blind the West is to the "power of China" and how it will soon be the only super-power as America is "self-destructing."

GK

Kosha,

As long as US-protected Taiwan and South Korea exist in China's back yard, the "power of China" is not all that. When China has a puppet state near the US mainland, then only will the tide have shifted. Cuba merely 'trading' with China does not count.

How is the US 'blind' to China when every US company does business there, but Chinese people themselves don't know about their own history of the last 50 years (Tianenmen Square, Great Leap Forward, Cultural Revolution). Not that you should bring these up when you are located there, though. You might get in trouble with the government.

By the 'West', Europe is to some extent self-destructing, and China will surpass Europe.

But how is America self-destructing when US GDP is still growing at a rate similar to the world average? The US share of the world economy is not shrinking.

Plus, always use this sentence : The true measure of a country is the net difference between how many want to get in vs. how many want to (permanently) get out. By this measure, the US is very far ahead of China or any other country. Anti-Americanism is nothing more than fashion until these people's actions speak louder than their words.

Please forward your opponents this article, as well as my "US will be the only Superpower in 2030 article". Unless they refute individual points, they have nothing.

Assistant Village Idiot

Excellent analysis of the main points, but I have a few quibbles. As your "Who Hates America?" link shows, Poland is US-positive and trying to emulate it. One could use this for a proxy of all Eastern Europe, which is more capitalism-hopeful than Western Europe. How this will play out as these poorer countries join the EU and adopt more of the Western European model remains to be seen. They may influence the west as well, certainly. European demography looms large in all this.

Those European countries which are non-EU may excape the day of destruction as well: Switzerland, Iceland, Norway. Though less capitalist than the US (more like Canada), they have avoided some of the Eurosoc problems.

As for China, there is enormous difference between the coastal and inland areas in income, creating an imbalance that threatens stability there. The PRC's hope to get all the benefits of open markets without actually having an open society is another enormous tension, as you note.

GK

AVI,

How this will play out as these poorer countries join the EU and adopt more of the Western European model remains to be seen.

If Eastern Europeans are more capitalist and less interested in social models that are seen in Germany and France, they just might cause high-tax socialist systems to change, rather than be forced into them unwillingly.

Take Ireland. It is in Western Europe, but has a lower tax rate than even America (let alone Britain or France), and has a higher GDP growth rate than the US. 20 years ago, Ireland was poorer, but now is richer than Britain or France. Many Poles go straight to Ireland for employment, rather than to the bigger, higher tax countries.

Ireland's success could very well pressure other countries to adopt that low-tax approach.

China : I do contend that between now and 2015, China will have to choose between a big expansion of freedoms, or much slower economic growth. They won't be able to sustain it both ways forever.

Nitin

Hi

Just chanced upon your post:

I agree with your general thesis that a growing number of Indians admire America and identify with many of its values.

But as I've pointed out a few times on my blog, the relationship between the Indian and the American governments is driven by a convergence of (perceptions) of national interest. China being one of them.


India deserves pity, but also encouragement from America.

Hmm...neither actually. It needs America to understand India. And invest in India :-)

AndyJ

I have just tripped over your blog. I am now a fan. I enjoy well written concise discussions. You hit all three of those buttons with every post-! Thanks.

GK

Thanks, AndyJ

Prince of Darkness

Actually the US was once as poor as India is today. If I remember correctly from when I last checked, US had the same GDP per capita as India (PPP) in around 1880. So, India is around 125 years behind the US today.

India in 1970s was around where US was in 1776. So it was around 200 years behind then. So India is catching up at around 3x the speed with the rate going up in recent years.

GK

PoD,

Do you have a reliable source to back that up? I don't think the US ever had composite human indicators as low as India has today.

Plus, don't assume that India's (or China's) current rate of growth can persist when a high per-capita GDP is achieved. From the graph itself, note how Japan rose rapidly, but then tapered off as all the 'easy' growth was completed. South Korea is showing the same trend. China and India, too, will find it much harder to grow at 8% or 10% when, eventually, GDP per capita crosses $20,000. Thus, catching up to the US in per capita terms, is unlikely in the next 30+ years.

Why do you think the US (Japan, Britain, Australia, etc. are even lower) only grows at 3% a year despite having far superior economic policies, infrastructure, education, and technology diffusion mechanisms than developing regions? Because all the low and medium-hanging fruits are already consumed. After a certain point, growth only comes through technological breakthroughs..

Sridhar

Hmmm....a post filled with stupid self-loathing that doesn't even care to ponder over facts... US is in a deep economic dung-hole and will remain so for the foreseeable future, you yourself have predicted this downward trend and then, you are back with stupid rhetoric.

"India deserves pity, but also encouragement from America."

Ummm, yeah...no thanks, US needs India and China for it's own industries to grow, and also their consumers need Chinese and Indian help. toning down this stupid and classic anglo-saxxon arrogance might help in forming better relations with both India and China in the long-term future. Nobody needs your "pity", but we may have a talk if you are with us to do business. You see, your stupid jingoism sounds hollow when you are shown the facts, when are you are living in a bankrupt country that has no "clothes" to show of!!

So, Mr. GK, instead of this stupid hooliganism and over-optimism, maybe you should write why your great Amreeka is failing at almost every parameter in an economic system created by America and americans themselves.

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