China vs US - 2009-08-31

Our prognostication record here at NN has been pretty good this year. We forecast the bankruptcy of one or more of the US automakers. We forecast the election of Barack Obama, 4 months before the election was held. And not only did we forecast the winner of the last Superbowl, we gave you the exact score. And in plain English – you don’t get Nostradamus-style riddle predictions from Naked News.

Now, we are looking into our crystal ball once more and things do not look good for the United States. I believe we’re seeing the last days of the United States as the world’s undisputed military and economic superpower. Soon, that position will belong to China… if it doesn’t already. I recently read my national newspaper’s Business section, and saw there were no fewer than five major stories – in one day – about China and its business ventures, acquisitions, and trading restrictions.

China is buying up natural resource companies around the world. Its Gross Domestic Product – GDP – is expected to RISE nearly EIGHT percent. Compare that to the roughly two point four percent projected for the United States. China is apparently planning to purchase forty-three billion dollars’ worth of overseas energy companies this year. That’s nearly fifty percent MORE than last year.

China is proving that even in a global context, a managed economy can be much more effective than the free market system. That is a scary concept to us free-market thinkers. And it’s our own fault.

Unlike the US, China has grown rich by selling products cheaply, while at the same time restricting what and who can sell into its market. We have to wonder why the US government isn’t fighting China’s protectionist policies, the way they do with, say, Canadian beef and lumber. We also have to wonder why more ordinary Americans aren’t fighting back. Despite the fact that imported Chinese goods are often – as we discussed in a previous NN Commentary – cheap largely because they’re DANGEROUS, Americans continue to choose CHEAP over SAFE. This is also seriously undermining North America’s own manufacturing jobs – the lifeblood of much of the country – for this short-term benefit.

It’s a vicious cycle. Even in good times, Americans want cheap goods, and the cheapest goods come from China. Then, American workers suffer job cuts when local manufacturers shut down, and Americans can then only AFFORD cheap goods from China.

While China becomes richer and more powerful, Americans are presiding over their own demise.