Last December, the International Monetary Fund released the numbers that shook our perspective on the global economy. It was official: in terms of real purchasing power, China had usurped America’s seat on the throne to become the world’s leading economic player. While this event truthfully did not have earth-shattering practical implications (and Chinese government statistics aren’t known for their accuracy, to say the least), its symbolism – showing the decline of the American superpower phenomenon – was sobering.
This Wednesday, we experienced a moment of déjà vu: Beijing, with 32 new billionaires rounding out its officially-reported total to 100, had beaten out New York City’s previous record of 95. Perhaps even more surprising is the fact that this happened in the midst of an abysmal year for the Shanghai Composite Index, with its stock bubble bursting in the summer and multiple days of shutdown in the winter. Yet, paradoxically, China’s middle and upper classes, billionaires included, are on a continuous upward trend thanks to the country’s warming attitudes towards a market economy.
Despite the still largely nebulous state of the Chinese government, this embracing of the market has brought about competition-fueled growth, free from many regulations, that looks like it came straight out of an ECON 010 textbook. And it’s here that we find a few key chapters that Americans could benefit from re-reading – not coincidentally, they echo traditionally conservative pillars:
First, there is nothing inherently evil about wealth (or income inequality, for that matter). Forget the Left’s shouting about CEO pay. Hillary Clinton’s certainly keeping quiet about her $200,000-per-hour speeches to the upper echelons of Goldman Sachs. Forget Bernie Sanders’ pensionary proselytizing against the horrible, terrible, no-good One Percent. China and the US have Gini coefficients of 42.1 and 40.8, respectively, but what does that alone say about the standard of living in these countries? The answer, of course, is nothing. China’s ratings have skyrocketed since their economic reforms, while ours are on a steady decline. What matters is the net economic progress across all classes; wealth is not a zero-sum game, and this becomes especially true when…
Second, the government should be kept out of our business. Too often, we are blinded from both sides by apparent pragmatism and identity politics, forgetting to ask whether or not a policy is constitutional. The federal government should be kept at bay by these constitutional limits, preventing it from meddling uselessly and harmfully. This small-government principle is thankfully being adopted by conservatives during this election cycle, with many “establishment” candidates losing ground. Although their Constitution is obviously different from ours, the Chinese prosper in areas where they adhere to similar values. Rejecting calls from Western academics to revive the Chinese welfare state and institute a tax code that would inefficiently re-distribute wealth, prominent Chinese economists advocate for privatized monopolies that would independently stimulate investment.
Finally, we should cherish the values of hard work and healthy competition. The growing entitlement complex festering in the minds of our generation, along with extensive dependence on the government, is a recipe for economic disaster. In a Forbes analysis of emerging Asian markets, however, an unexpected trend of growth-positive traits was found within the Chinese billionaire crowd. Industries with strong government connections give rise to corrupt, exploitative monopolies, prone to stagnation. In contrast, the Chinese billionaires were characterized by healthy turnover rates among the top 10, a modest ownership of the country’s GDP, and – most importantly – activity in industries with weak ties to the government.
Of course, it’s naïve to assume that these three pillars of conservative economic thought are the status quo in China. The country still struggles with political corruption, domestic turmoil, and threats of a return to a command economy, as explained by Dr. Michael Auslin in his recent talk about “the end of the Asian century.” Hope remains, however, in the pockets of innovative factory workers and forward-thinking billionaires spread throughout. And perhaps even we Americans can learn something from them, making a return to the building blocks of a healthy market economy.