Saturday, October 03, 2009

Here we go again

Why do so many people think that economic progress is some kind of zero sum game?

Here is a recent NY Times article about the size of the Japanese and Chinese economies.

The headline is "Chinese economic juggernaut is gaining on Japan" and the first sentence reads: "For years, Japan as been readying itself for the day that it is eclipsed economically by China."

Here is some more:

 ..many economists expect Japan to cede its rank as the world’s second-largest economy sometime next year, as much as five years earlier than previously forecast.

At stake are more than regional bragging rights: the reversal of fortune will bring an end to a global economic order that has prevailed for 40 years, with ramifications across arenas from trade and diplomacy to, potentially, military power.

China’s rise could accelerate Japan’s economic decline ...

From there it gets downright funny:

China has also surpassed Japan in having the biggest trade surplus and foreign currency reserves, as well as the highest steel production. And next year, China could overtake Japan as the largest automobile producer.

To be fair, there is a flash of sanity near the end of the piece:

Some economists say Japan does not need to fear its neighbor. China became Japan’s largest trading partner in 2006, and China-bound exports were among the first to show signs of recovery in the recent slump. As the global auto market stagnates, carmakers like Toyota and Nissan are making a renewed play for the Chinese market.


People, the UK, France and Germany all seem to have survived being "surpassed" by China.  They probably didn't even notice. 

Further, even if China doubled its current GDP, where would you rather live, in Japan or in China? For me that is a no-brainer. Japan would still be massively richer than a doubled GDP China, have better infrastructure, less pollution, and more freedom. 

China's rise is undeniable, but it is still a very poor country with a long way to go. And the mere fact that China is rising does not mean that others have to be falling.

1 comment:

Anonymous said...

I think it's not so much an idea that economics is zero-sum per se but that national economic power translates into political power. consider this quote from the godfather

"Well, I say yes. There is more money potential in narcotics than anything else we're looking at now. If we don't get into it, somebody else will, maybe one of the Five Families, maybe all of them. And with the money they earn they'll be able to buy more police and political power. Then they come after us. Right now we have the unions and we have the gambling and those are the best things to have. But narcotics is a thing of the future. If we don't get a piece of that action we risk everything we have. Not now, but ten years from now.