When Americans Cheer China's Economic Decline, They Cheer Their Own
Do readers remember the Microsoft Zune? It’s still available on Amazon through “third party sellers,” but one would be hard pressed to find an individual in possession of one on the subway, or while walking the streets of any major city.
Even Amazon’s description of the once highly-touted response to the iPod reads as dated. It stores “up to 20,000 songs,” but thanks to “Hey Google,” “Hey Siri,” and “Alexa,” most of us can listen to seemingly every song ever recorded through the purchase of the increasingly ubiquitous smart speakers that populate our apartments, houses, cars, along with the supercomputers that sit in our pockets. The Zune was a failure, as has Microsoft's Bing seemingly flopped. The search engine never seems to have caught on. We "Google" everything, but rarely do we "Bing."
None of this should surprise us. No less than Microsoft founder Bill Gates himself has acknowledged that most of his commercial experiments have come up short.
Gates’s real-world experiences rate serious thought in consideration of all the hand wringing of late from the historically market-friendly American right about China. The commentary from the purported side of limited government increasingly sounds like anything but. A good example would be a recent co-authored opinion piece in the Wall Street Journal by former CKE Restaurants CEO Andy Puzder and former U.S. Senator Jim Talent (R-MO). Puzder and Talent view China as the enemy, and as such, they’re cheering President Trump’s trade war.
Among other things, they argue that China’s economy has grown thanks to the country “stealing from other economies.” Or, as they quote Trump on the issue, the Chinese government has pulled off “the greatest theft in the history of the world.”
On its own, such a statement doesn’t stand up to the most basic of scrutiny. Lest Puzder and Talent forget, the underlying basis of Republican policy thought since at least the Ronald Reagan era is that theft doesn’t work as a driver of growth. Think about it. Reagan’s point, and it was the correct one, was that heavy taxation would exist as an inhibitor to innovation; that governments reaching too deeply into the pockets of the innovators would eventually find nothing in those pockets. Yet Puzder and Talent want us to believe that the Chinese, presumably for being Chinese (?), have figured out a way to take from the productive in historical fashion (their words, and those of the president) without a huge decline in U.S. output? This is contradictory on its own, and ever more contradictory when we remember the countless opinion pieces authored and co-authored by Puzder over the last three years that have extolled the myriad virtues of the booming Trump economy. How could that be if an historical heist of American abundance were taking place care of the Chinese, and better yet, how could China be experiencing its “slowest growth since 1992” (according to Puzder and Talent) if its alleged thieving were as skillful as they and Trump believe it to be? Inquiring minds want to know.
Whether the above questions will ever be answered (a rhetorical question) or not, it’s worth returning to the Microsoft example. Puzder and Talent thoroughly lament the apparently very sticky fingers of the Chinese when it comes to IP theft, but not explained by either is what the Chinese would steal. The Zune and Bing are a reminder that most ideas from even the best of the best fail, or come up short. To the latter the co-authors might respond that the Chinese only steal proven market winners, but such an argument ignores how incredibly skillful one would have to be to know which market winners will have staying power. Figure that Microsoft’s Internet Explorer once had dominant qualities, qualities so dominant that always backwards looking antitrust authorities stepped in to neuter the Seattle giant. It turns out the antitrust actions were wholly unnecessary. The past is a pretty unreliable indicator of the future. Competition ultimately rendered Internet Explorer yesterday’s news.
Where the Puzder/Talent thesis becomes even more suspect is when they contend that China’s economy has been a creation of the “Chinese Communist Party.” Sure, but if the economy is state directed, what’s the worry? Seriously. Both Puzder and Talent are old enough to remember how disastrously backwards and non-competitive were the communist economies of the 20th century, so why bother writing opinion pieces cheering Trump’s actions meant to neuter China? If the state really does run the show such that it’s “created tremendous economic imbalances, saddled China with debt, and bred suspicion and disillusionment among trading partners,” then there’s nothing to fear.
Except that China’s economy exhibits little that anyone would remember about the countries behind the Iron Curtain during the 20th century, which is a hint that the country is far more free market than rhetorically free market types on the right would care to admit. Stating the obvious, a state-directed economy wouldn’t be a fraction as vibrant as China’s is.
Crucial here is that if China’s economy is free, conservatives should stop whining. Would they prefer the old days when China’s economy was truly communist and the people were desperately poor? Puzder and Talent acknowledge some liberalization from the past (after Mao, they admit “the party injected a degree of freedom into China’s moribund economy”), but add that there's “a limit to how much control the socialist regime is willing to sacrifice.” So, which is it? If China’s economy is free, Puzder and Talent should find a new country to attack. If it’s not free, as in if the socialists aren’t willing to sacrifice more control, then they needn’t worry. Nor should Trump. State directed economies always fail. Puzder and Talent should tell Trump to call his “trade war” off. Why war with a nation controlled by “socialists”? Left alone, socialists will suffocate themselves.
Except that Puzder and Talent are not calling for Trump to cease his tariffs. They’re instead cheering them. They’re excited to report that “China’s industrial sector has lost five million jobs in the past year, nearly two million of them because of the trade war with the U.S.” The problem there, of course, is that U.S. companies are the most valuable in the world, and one reason they’re the most valuable is due to huge demand for American goods from increasingly acquisitive Chinese workers. Assuming a weakening Chinese economy, wouldn’t this mean reduced demand for U.S. goods? Puzder and Talent don’t answer this basic question.
Indeed, for Puzder and Talent to acknowledge that the only closed economy is the world economy would be for them to further admit how very much a trade war with a growing nation vandalizes basic economics. In short, Puzder and Talent would have to admit what they hopefully secretly know, but won’t publicly say: their cheers for China’s economic decline amount to implicit cheers for a similar dip in the U.S.
