US Should Take Note: China’s Mix of Individual Self Interest and National Economic Interest

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Steve Clemons Learning about Wuxi Industrial Park New District.jpg(Learning about Wuxi’s New District Industrial Park; photo credit, Peter Pi)
So far, any slice of China and the Chinese people one wants to cut out is full of economic, cultural and intellectual diversity — so I fear that it is very easy for an observer to see what he or she wants to see in this country. That in itself, though, seems to be a huge change from what this place was like 30, or even 20 years ago.
One of the behavioral characteristics many before me have seen in China is the well developed sense of self interest in China. Japanese citizens in contrast seem to me to be much more focused on their group, and clubs, and other vastly sprawling social networks. The Chinese want to do business, do projects, engage in hobbies, be pragmatic and get ahead.
In my encounters here, I don’t get a sense from many people of deep concern for the common good, for the broad public welfare. They expect the government to see to these needs and to make the choices that promote public happiness and well-being, and when the government doesn’t — as many feel in environmental issues — the public gets frustrated. Otherwise, the average citizen doesn’t really ponder these larger issues and has mentally delegated them to the political order.
The one exception I have found to this in Beijing, Wuxi, Shenzhen, Shanghai and some other places in speaking both to municipal officials, Shanghai port designers and engineers, industrial park managers, and even military representatives is that the global financial crisis created the potential of an economic tsunami for China that might have wiped out not only a great deal of China’s wealth — but the state’s ability to promulgate “hope” for a better economic future among its advancement-hungry citizens.
China takes jobs seriously — hugely seriously. During the financial crisis, the country’s provincial authorities and national government created incentives for firms to retain rather than layoff workers. They invested heavily in training and re-training programs with highly detailed job replacement support for those workers displaced during the crisis.
The kinds of programs China deployed are enormously expensive — and in most capitalist societies, these programs are modest if not trivial, and often used more as fig leafs to seduce recalcitrant political parties, and occasionally labor unions, to accept economic arrangements that can have harsh displacement impact on, for example, American workers.
One could argue that it would have been more economically efficient for China to just let the hand of economic fate reorganize the Chinese political economy — to reward the most competitive parts of China’s economic base and to punish the parts that were too dependent on American and European consumption, or too costly and uncompetitive given new pressures from places like Vietnam, Laos and Cambodia.
But China’s national interest — and sense of concern for average citizens in the group sense — prompted these large scale supports in job retention, retraining, and new job creation.
It’s not possible to observe what China has done without a significant amount of respect for its commitment to its workers — which prompts the question of what tools does the U.S. government not have at its disposal to make similar efforts on behalf of U.S. citizens during a time of severe economic crisis.
The U.S. economy is back in wobbly territory — and there is much that can be learned from China in my view in the way that the country here mixes individual economic self interest and national economic objectives.
America needs to be making substantially greater investments in high-wage job generating infrastructure development that can help generate for the US economy recurring returns over generations. That is what China is doing — and there is no excuse that is rational for the U.S. not to be doing what it needs to do to leapfrog out of its current economic morass into a more dynamic, innovation-driven future.
— Steve Clemons

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24 comments on “US Should Take Note: China’s Mix of Individual Self Interest and National Economic Interest

  1. Anna says:

    There is a bewildering complacency in the US among BOTH smug Dems and Reps that China is doomed and to be condemned because it is an authoritarian “dictatorship” that tortures Tibetans, a country devoid of freedom peopled by minimum wage slaves and that none of its growth stats are to be believed. This is a cartoon “Dr Evil” version of the world even though there are partial truths in some of these beliefs.
    The problem lies not in the GULF between belief and reality in China, it lies in that same GULF of belief in the US itself. Look at question’s excellent breakdown – for all of China’s lies, stats and obfuscation, that pyramidal concentration of wealth is indicative of an almost feudal political and economic state where wealth is rapidly and unabashedly depleted from the plebeians to a Financier Oligarchy, to an Orwellian extent unimaginable by even the most corrupt elite in China.

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  2. David Billington says:

    One of my sisters was an exchange teacher in China for a few
    weeks a couple of years ago. She went to what the Chinese
    consider a small city (400,000 people) and expected to find a
    class of second graders. Instead, she walked into an auditorium
    filled with an entire school of several hundred children plus
    teachers who wanted to practice their almost impenetrable
    English. She was treated like royalty and the school loved having
    her but it was clear that China is trying to do things on a scale
    that boggles the mind.
    There are certainly serious problems over there. The cities
    depend on unstable foreign demand rather than the huge rural
    majority that can’t leave the hinterlands, and the speed of their
    industrialization is really a marker of an earlier stage in
    modernization, ie. what the West did privately in the late 19th
    and early 20th centuries.
    The real test will come when they are farther along, with more
    mature industries and more saturated markets and have to
    compete higher up the value ladder. If they can do better at
    creating all three of the things we used to have (high wages,
    high employment, high productivity), while we can only have any
    two of these things, then they may have something to teach us.
    But I think you are right to sense possibilities in China that don’t
    fit the categories of American understanding, even if sadly there
    is much in China that does. There are energies over there that
    could be transformative, some in ways we could find hopeful, if
    events cooperate.

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  3. David says:

    Once again, thank you questions. One of the most important functions of a capitalist government is responsible, reasonable redistribution of wealth, which clearly tends to concentrate over time in the hands of the wealthy if not responsibly redistributed through government policies and government programs.
    And please, none of this nonsense about how private citizens know better what to do with their money than the government. The economic collapse of 2008 put the lie to that nonsense. The very wealthy know how to be reckless greedheads when given the opportunity by lax federal regulation of economic activity. The only rational argument is that taxation must be reasonable, as must federal regulatory policies, and the more one is a beneficiary of our economic system, the more one should be willing to give something back to that system for the commonweal.

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  4. Anna says:

    China will do whatever it takes to maintain a certain level of investment and development to ensure a healthy rate of employment because it FEARS riots and widespread unrest from laid off workers. There were some labor agitations even before the financial tsunami hit, and they were prepared to spend on infrastructure and public projects while tightening liquidity and curbing speculation in the stock and real estate markets because of this FEAR.
    In contrast, the US is a tranquilized and de-fanged “democracy” where politicians work hard on behalf of the wealthiest elite, siphoning TARP and other life-saving liquidity from taxpayers straight to their patrons out of Bernanke’s Bag o Tricks, with nary a protest from those legions of unemployed who are still Hope-ing.

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  5. nadine says:

    Obama doesn’t operate in the real world, but in the world of symbols and rhetoric. He has no clue about real work – economic, legal, engineering – that has to be done in response to any of his executive orders or new laws and regulations. None. It’s all a game board and Monopoly money to him.
    Successful pols have some notion of the possible before they issue orders. This is why Obama is failure, and will soon be universally seen as one.
    In Gitmo’s case, Obama just wanted to collect his Superbowl ring before playing the game. He and his amateur buddy AG Holder found out the hard way that the reasons for opening Gitmo and keeping it open were hard and intractable. There is nowhere to send hardened Al Qaeda jihadis (unless you like the catch&release system) and we sure as hell don’t want them mixing with our American prison populations with full access to American courts.
    So now Obama looks a fool. That’s because he is one.

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  6. Don Bacon says:

    Executive orders are the tools of autocracy and dictatorship. The practice of using executive orders to set policy has evolved over the years and is currently governed by principles that have been established by precedent, oversight by Congress and the public, and intervention by the courts. It is generally accepted that, where executive orders have been based upon appropriate constitutional or statutory authority, they have the force and effect of law.
    Obama’s most noteworthy Executive Order: Executive Order 13492, January 22, 2009, ” Review and Disposition of Individuals Detained at the Guant

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  7. Don Bacon says:

    Some trivia: Obama has issued an average of 3.1 new Executive Orders a month, slightly ahead of Bush-43.
    Totals: Obama 57, Bush 291. These are exclusive of the Executive Orders describing “national emergencies” which are routinely renewed annually, 23 in number.

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  8. nadine says:

    Larry, our ruling class is having authoritarian envy. Obama and Tom Friedman lead in this. I’m sure they would love to abolish US elections so they could get on with telling us peons the right way to live.
    That they don’t seem to mind the way China’s ruling class has treated China’s people, should be a red flag (pun intended) to all the rest of us.

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  9. WigWag says:

    Is China just one big speculative bubble getting ready to burst or is it more than that?
    Here’s an article about a hedge fund manager who thinks China’s bubble is about to burst and its days of growth are over. (The NY Times likens him to a young George Soros).
    Let’s hope he’s wrong because if he’s right, it would be disasterous for the world economy.
    But this guy is putting his money where his mouth is. Here’s the link for those who may be interested.
    http://www.nytimes.com/2010/07/20/business/global/20hedge.html?hp

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  10. questions says:

    Wow, the WaPo’s expose of public records (!!) regarding the security complex. A few notable quotables, in my reading at any rate….
    http://projects.washingtonpost.com/top-secret-america/articles/a-hidden-world-growing-beyond-control/
    “Every day across the United States, 854,000 civil servants, military personnel and private contractors with top-secret security clearances are scanned into offices protected by electromagnetic locks, retinal cameras and fortified walls that eavesdropping equipment cannot penetrate.”
    “In all, at least 263 organizations have been created or reorganized as a response to 9/11. Each has required more people, and those people have required more administrative and logistic support: phone operators, secretaries, librarians, architects, carpenters, construction workers, air-conditioning mechanics and, because of where they work, even janitors with top-secret clearances.”
    “Today, many officials who work in the intelligence agencies say they remain unclear about what the ODNI is in charge of. To be sure, the ODNI has made some progress, especially in intelligence-sharing, information technology and budget reform. The DNI and his managers hold interagency meetings every day to promote collaboration. The last director, Blair, doggedly pursued such nitty-gritty issues as procurement reform, compatible computer networks, tradecraft standards and collegiality.”
    “The practical effect of this unwieldiness is visible, on a much smaller scale, in the office of Michael Leiter, the director of the National Counterterrorism Center. Leiter spends much of his day flipping among four computer monitors lined up on his desk. Six hard drives sit at his feet. The data flow is enormous, with dozens of databases feeding separate computer networks that cannot interact with one another.
    There is a long explanation for why these databases are still not connected, and it amounts to this: It’s too hard, and some agency heads don’t really want to give up the systems they have. But there’s some progress: “All my e-mail on one computer now,” Leiter says. “That’s a big deal.”
    “It’s not only the number of buildings that suggests the size and cost of this expansion, it’s also what is inside: banks of television monitors. “Escort-required” badges. X-ray machines and lockers to store cellphones and pagers. Keypad door locks that open special rooms encased in metal or permanent dry wall, impenetrable to eavesdropping tools and protected by alarms and a security force capable of responding within 15 minutes. Every one of these buildings has at least one of these rooms, known as a SCIF, for sensitive compartmented information facility. Some are as small as a closet; others are four times the size of a football field.
    SCIF size has become a measure of status in Top Secret America, or at least in the Washington region of it. “In D.C., everyone talks SCIF, SCIF, SCIF,” said Bruce Paquin, who moved to Florida from the Washington region several years ago to start a SCIF construction business. “They’ve got the penis envy thing going. You can’t be a big boy unless you’re a three-letter agency and you have a big SCIF.”
    “Among the most important people inside the SCIFs are the low-paid employees carrying their lunches to work to save money. They are the analysts, the 20- and 30-year-olds making $41,000 to $65,000 a year, whose job is at the core of everything Top Secret America tries to do.
    At its best, analysis melds cultural understanding with snippets of conversations, coded dialogue, anonymous tips, even scraps of trash, turning them into clues that lead to individuals and groups trying to harm the United States.
    Their work is greatly enhanced by computers that sort through and categorize data. But in the end, analysis requires human judgment, and half the analysts are relatively inexperienced, having been hired in the past several years, said a senior ODNI official. Contract analysts are often straight out of college and trained at corporate headquarters.”
    “Soon, on the grounds of the former St. Elizabeths mental hospital in Anacostia, a $3.4 billion showcase of security will rise from the crumbling brick wards. The new headquarters will be the largest government complex built since the Pentagon, a major landmark in the alternative geography of Top Secret America and four times as big as Liberty Crossing.”
    **************
    Absolutely fascinating study in what happens when you have too much data to analyze, when you try to work forward from information to knowledge instead of backwards from knowledge to information, when you try to take money from one group and give it to another, when there’s status to be gained, when even janitors have to have security clearance, when the it’s not just the left hand’s not know what the right hand is doing, but when the finger tip doesn’t talk to the knuckle joint, or perhaps when adjoining cells don’t share information.
    According to a chart in the network theory book I’m reading (“Six Degrees: The Science of a Connected Age, by Duncan J. Watts) 433,577 actors are within three degrees of Kevin Bacon (at the time of the writing of the book), and more than half a million are within 4 degrees.
    How in heaven’s name does one chart the possible influences within a few degrees of anyone? Well, read the WaPo story to find out how difficult it is to collect and collate multiple data points.
    Add to the informational difficulties all of human behavior (status seeking, hating loss, being underpaid and overworked, using 4 or 5 computers, being unsure that the information one has is worthy, and in a few years, the deleterious effects of NCLB on up and coming analysts) and you can see how these problems are not going to go away.
    Given that the Post has only public records to go by, I think we should be a little worried!

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  11. questions says:

    More on SoSec lies and distortions and complete misunderstandings:
    http://www.dailykos.com/storyonly/2010/7/17/884132/-Zombie-Social-Security-lie:-Worker-to-beneficiary-ratio-will-kill-the-system
    According to the book discussed, the ratio of workers to beneficiaries is a non-issue.

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  12. questions says:

    rc,
    I would add that if you think about what SoSec payments mean to the, umm, bottom 50% of us, the idea of privatization is utterly ludicrous.
    Most people cannot afford to save anything. Without the compulsory savings of SoSec, these people will have nothing at retirement. Their children will not have much, AND they aren’t likely to have lots of children to take direct care of them anyway since our fertility patterns have changed so much.
    That nearly thousand a month that is the average SoSec payment (2004 data from googling) is all that there is. Invested individually, much will be lost in fees and market tankings. And invested voluntarily, much will be used to pay the electric bill instead.
    Will the oligarchs hear this? Or will they continue on the same path towards having one person’s controlling 100% of the wealth and income of the nation (I would guess that’s the limiting condition towards which we are headed, whether or not we actually arrive there.)
    The logic is, of course, that we will head this way unless we have significant pushback.
    The network theory book I’m working on notes that having wealth gives you more opportunities to get more wealth and that this pattern has been noted all over the world. Once you’re networked in, you are networked in. The gov’t, then, needs to fight against a lot of nodal points. HCR is a start, but it’s been slanted towards the wealthy, still. The BP fund is something, but there seems to be a possibility that they will get some kind of write off for it. The AIG settlement seems to be in the same class of things as well. They are apparently “sensitive” to trying to find a way to avoid using fed money to pay the fed fine. Hmmm. Money is fungible, though.
    And the Senate is worried that the wealthy are paying too much in taxes…..

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  13. rc says:

    “By 2007 the richest 1 percent were back to where they were in 1928

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  14. questions says:

    http://www.dailykos.com/storyonly/2010/7/18/885254/-The-rich-get-richer
    “Consider: in 1928 the richest 1 percent of Americans received 23.9 percent of the nation’s total income. After that, the share going to the richest 1 percent steadily declined. New Deal reforms, followed by World War II, the GI Bill and the Great Society expanded the circle of prosperity. By the late 1970s the top 1 percent raked in only 8 to 9 percent of America’s total annual income. But after that, inequality began to widen again, and income reconcentrated at the top. By 2007 the richest 1 percent were back to where they were in 1928

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  15. Warren Metzler says:

    I was only in China once, in 2001, but have followed events in that country since visiting Hong Kong (1969), on R & R from Vietnam. And one thing I am certain about, is that their government lies through its teeth about almost every activity that happens in that country.
    Further, all the citizens who live there, or the vast majority, have personally decided to believe the myth that a communist government can work while everyone who works hard gets rich. And believes that personal self development is in no way hindered by every day having to lie to almost every you know about almost every belief you have except to get rich.
    This is utter nonsense of course. And at some point in the future, resolving that huge contradiction will occur, and anyone who knows just a little about world history knows that the forces of nature will resolve that contradiction. And when they do, the disruption will be huge; make Tiananman Square look like a sunday school picnic.
    Remember, this is a government that just sent a man to jail for over 10 years (for sustaining a business data base about the amount of oil in China’s oil fields) for betraying “national security”.
    Steve often gives prescient assessments. And may be giving an accurate assessment of what his various contacts tell him.
    But I have this deep feeling this story of China brilliantly managing the recent world recession has as much validity as the one time claim Mao swam like hundreds of miles of the Yellow (?) River in a few days.

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  16. Don Bacon says:

    I have hoped that Steve Clemons, a past traveler in the Middle East and Japan, could personally experience the one and only China. Now I have a feeling that Steve, when the time is right, will have a lot more to say about the Middle Kingdom.
    Oh, excuse me, Red China, that despotic regime, the home of sweat shops and child labor. Gotta be politically correct.

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  17. Fidel says:

    Don’t forget Cuba has made good progress with all non-economic indicators in spite of the US embargo for most of the 2nd half of last century. Here’s a lift from Wikipedia, though many other sources are easily available.
    “The economy of Cuba is a largely state-controlled, centrally planned economy overseen by the Cuban government, though there remains significant foreign investment and private enterprise in Cuba. Most of the means of production are owned and run by the government, and most of the labor force is employed by the state. In the year 2000, public sector employment was 76% and private sector employment was 23% compared to the 1981 ratio of 91% to 8%. Capital investment is restricted and requires approval by the government. The Cuban government sets most prices and rations goods to citizens. In 2009, Cuba ranked 51st out of 182 countries on the Human Development Index with an HDI of 0.863; remarkably high considering its GDP per capita only places it 95th. Cuba also significantly outperforms the rest of Latin America in terms of infant and child mortality, morbidity, educational attainment and an array of other social and health indicators.
    In the 1950s, Cuba had a vibrant but extremely unequal economy, with large capital outflows to foreign investors. The country has made significant progress since the Revolution towards a more even distribution of income. Despite the economic embargo by the United States, the economy grew at a rate higher than the rest of Latin America until the collapse of the Soviet Union, its main trading partner. Between 1990 and 1993, Cuba’s GDP declined by 33%. Yet Cuba has managed to retain levels of healthcare and education, and since 2000 the economy is rapidly recovering and growing at one of the fastest rates in the world. Cuba has a highly-developed service industry with one of the largest professional workforce in the world. Its number of doctor per capita is ranked #1 in the world.
    Cubans receive low housing and transportation costs, free education, and health care and food subsidies. Corruption is common, though far lower than in most other countries in Latin America.” http://en.wikipedia.org/wiki/Economy_of_Cuba
    And another perspective:
    “This is the secret behind Cuba having overall economic indicators such as a GDP that puts it in a league with Bangladesh, but social indicators, such as in health and education, comparable to Australia. Furthermore, these social indicators are averages and disguise the fact that while in Cuba there is a relatively egalitarian distribution of wealth, in the Western countries there are vast, and increasing, disparities in wealth, with many communities within these countries having significantly lower living standards. . . . Cuba’s Medical School of the Americas even educates working class and minority students from the US who are denied access to medical school in the world’s richest country!” http://www.greenleft.org.au/node/37004
    Now that sounds a bit more like Obabma before he became a white house man!

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  18. JohnH says:

    I don’t like China’s treatment of its citizens in terms of the freedoms we take for granted.
    However, an economy is supposed to work for its citizens. In that regard, China has made considerable progress, the United States not very well at all…unless you happen to be in the top 0.5% that owns this “democracy.”
    And I understand that the Israeli economy works very well…for about 18 families…

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  19. PissedOffAmerican says:

    “I can’t help but notice how often Clemons expresses exaggerated respect towards some despotic regime or another on his blog. China’s rise is impressive. I don’t think its treatment of its citizens is something to hold up as an example”
    Coming from anyone other than a staunch supporter of the racist and oppressive policies and practices of Israel, your comment might be taken seriously. But coming from you, its just a blatant example of hypocritical piety.

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  20. larry birnbaum says:

    I can’t help but notice how often Clemons expresses exaggerated respect towards some despotic regime or another on his blog. China’s rise is impressive. I don’t think its treatment of its citizens is something to hold up as an example.

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  21. JohnH says:

    A lot of countries take the welfare of their citizens seriously. Japan, Germany and France are a few of the ones known to take industrial planning seriously.
    But there are also a lot of countries that you wouldn’t think about. Morocco had a program to eliminate slums by 2010. Today it’s hard to find a slum in a major city. Rural poverty is still a problem, but the cities have built a lot of apartments and the government has worked with developers to make them affordable for lower income families. Now Morocco is looking at national health care!
    Venezuela under Chavez took what had been oil company profits and began applying the money to social programs. A literacy program virtually eliminated illiteracy. A health care program made medical care widely available for the first time to people outside the wealthy classes. The list goes on.
    If the United States has any industrial policy, it is concentrated on military armaments and technology. Beyond that, US policy is to coddle the wealthiest few, who are free to invest anywhere but in America and employ anyone but Americans. Sheer stupidity.

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  22. PissedOffAmerican says:

    “China takes jobs seriously — hugely seriously. During the financial crisis, the country’s provincial authorities and national government created incentives for firms to retain rather than layoff workers. They invested heavily in training and re-training programs with highly detailed job replacement support for those workers displaced during the crisis”
    Steve, do you visit Chinese sweat shops and take notes on how to manage child labor???
    And if Chinese factories are turning out poisonous plywood and sheetrock that is toxic after being installed here in the states, just imagine how deadly the actual factories are. No big deal, I guess, they’re just kids. Anything to make, or save, a buck, eh?

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  23. David says:

    It is what is was in 1937: pushback from short-sighted capitalist interests which somehow equate deficit reduction with their well being, and Americans in general are now pretty easily herded into “deficit panic.”
    Think how laughable it is to the Washington punditry, to Republicans, and to frightened Democrats to suggest that the federal government needs to invest another $1 trillion in job creation, and do it in such a way that state governments and national Republicans who want Obama to fail cannot block it.
    What a sad commentary that China did a better job of job preservation. What we need, of course, is aggressive new 21st century job creation, especially through smart answers to the energy crisis.

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  24. Don Bacon says:

    The obvious excuse for the U.S. not to be doing what it needs to do is that the U.S. does not have state people-oriented capitalism enabling large long-term investments, but rather corporate profit-driven capitalism looking at fast returns, in a ‘security state’ where the Pentagon accounts for between two-thirds to three-quarters of the U.S. procurement budget.
    So the U.S. is stuck in second gear while China is in overdrive. The U.S. not only doesn’t have the means to take care of its people but its economy suffers too. While China is strong financially — GDP growth #4, current account balance #1 (2009 world rankings), the U.S. seriously lags most other countries — #151/181.
    But, hey, China doesn’t have eleven nuclear carrier groups rusting away in various world oceans. We can be proud of that.

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