1/In today's @bopinion post, I discuss the challenge from the Chinese model of political economy.

Has China found a more effective way to run a country? (Maybe.)

And if so, what should we do about it? (Steal their best ideas and discard the rest.) https://www.bloomberg.com/opinion/articles/2020-10-21/china-has-a-few-things-to-teach-the-u-s-economy?sref=R8NfLgwS
2/China's rapid growth is not, by itself, a reason to think the Chinese model is superior to the American model.

After all, China is still much poorer than the U.S. It's a lot easier to grow fast from a low base -- just build a lot of stuff and copy foreign technology...
3/But in recent years, China has advanced to the technological frontier in many areas. That's something few middle-income countries are capable of doing.

For example, China is clearly in the top rank of nations when it comes to A.I. technology. https://www.nature.com/articles/d41586-019-02360-7
6/China is home to the world's fastest trains. It's a leader in genetic engineering. It's launching a probe to Mars.

China is clearly now an advanced nation in the technological sense, which makes it a real peer competitor to the U.S. -- or to any other country.
10/People are starting to notice this string of successes.

The Economist, long known as a staunch defender of economic liberalism, recently entertained the notion that Xi Jinping may have found a way to make state capitalism work. https://www.economist.com/weeklyedition/2020-08-15
11/So while China's model has not yet proven superior to the U.S. model of liberal capitalism, it's now POSSIBLE that it's better. It's no longer clear that the U.S. is ahead of China in many ways that matter.

Which brings us to the question: What do we do to stay ahead?
12/The answer: We do what we've done in the past.

Identify our rivals' best ideas and tweak our own model a bit in that direction.

This is the American way. And it has worked for us before.
13/During the Cold War, the USSR seemed to be pulling ahead in science, with Sputnik, etc.

What did we do? We invested a ton in science, shoring up our technological dominance.
15/In the 50s, the USSR seemed to be on the verge of overtaking us economically, with a big state-led investment push. That turned out not to be true. But just in case, we launched our own program of state-led investment: The interstate highway system! https://www.army.mil/article/198095/dwight_d_eisenhower_and_the_birth_of_the_interstate_highway_system
20/All of this will require a lot of federal government spending.

That's fine. China has shown that austerity is a counterproductive idea, as long as you spend money on things that will produce a return for society overall.

Research, infrastructure, and education will do that.
21/America's strength is to learn from rivals' successes without mindlessly copying their approach. We did it to beat the USSR, and we can do it again to stay ahead of China.
22/Our job is not to sit here and shout that the American model is better than the Chinese model.

That is the path of complacency, of chauvinism, of willful stupidity, and -- ultimately -- of decline.

Instead, we must ADAPT AND WIN.
23/We cannot and should not copy China's authoritarianism (much as Trump would like to).

Instead, we can and should implement better, American-style versions of its investments in research, infrastructure, and education.

We can do this!!

(end) https://www.bloomberg.com/opinion/articles/2020-10-21/china-has-a-few-things-to-teach-the-u-s-economy?sref=R8NfLgwS
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