It’s not said enough that wealth creation isn’t war. In reality, wealth creation is the most peaceful act the world has ever known simply because we produce in order to get. To produce is to bring desirable goods and services to the market in order to get things we desire.
This basic truth is seemingly lost on columnist Walter Russell Mead. While 99.999999999% of us couldn’t measure the economy of the block we live on, Mead recently wrote from a comfortable perch presumably somewhere in the United States that “China’s Economy Hits the Kids.” Imagine making such grand presumptions about over a billion people in a country so vast. See the block you live on to see why…
Yet even if Mead perhaps for being Mead were privy to specific China economic minutae, the passably reasonable would still be skeptical. To see why, consider Apple alone, the world’s most valuable company. It’s well known that Apple sells a fifth of its iPhones in China. Translated, if China’s economy were in decline (or were expected to decline) then logic dictates that U.S. equity markets would be in freefall too. Except that they’re not.
Still, it’s useful to think about what Mead asserts even if market signals reject his headline contention about an economy on the skids. That is so because while Mead correctly dismisses the idea that China’s economy is set to surpass that of the U.S., he oddly suggests that a slowdown in China would somehow have “mixed blessing” qualities for the U.S. Really? How?
If we ignore how important the Chinese market is to the most valuable U.S. companies, we can’t ignore that every day the Chinese get up and go to work the American people grow richer and richer. It’s not just that their feverish production boosts our living standards as ours does theirs, but their production itself powerfully lifts economic activity stateside. Why? The answer is simple: work divided is always and everywhere the source of stupendous leaps in individual productivity.
Indeed, while Adam Smith was writing about the genius of labor division in a simple pin factory, the truth about spreading production across as many hands (and machines) as possible does not cease gifting us with remarkable leaps if the “hands” are in a different country. The simple truth is that China’s rush away from collectivism in favor of profit-motivated production lifted the United States by virtue of it lifting China.
It’s a small reminder that there’s no “mixed blessing” to be found in any Chinese contraction, particularly one born of Chinese leadership retreating from the very freedoms that have resulted in so much prosperity. Those leaps in China were good for the world in much the same way that U.S. advances lift the world. Put another way, if you hate Silicon Valley as conservatives increasingly (and puzzlingly do), you’ll really hate life without Silicon Valley.
Mead would be wise to apply what’s true about Silicon Valley to China. Except that he doesn’t. He writes that “slowing Chinese growth won’t end America’s China problem,” as though an economically weaker China would redound to the U.S. No, it wouldn’t. Adam Smith’s truths are timeless, as is the truth that trade is the greatest foreign policy concept mankind has ever conceived.
Without question, war between the U.S. and China grows more costly with each day that American and Chinese people get up and go to work. In other words, if you hate a growing China you’ll really and truly hate a declining China.
