December 2, 2011

China's Superior Economic Model

The free-market fundamentalist economic model is being thrown onto the trash heap of history.

Andy Grove, the founder and chairman of Intel, provocatively wrote in Businessweek last year that, "Our fundamental economic beliefs, which we have elevated from a conviction based on observation to an unquestioned truism, is that the free market is the best of all economic systems—the freer the better. Our generation has seen the decisive victory of free-market principles over planned economies. So we stick with this belief largely oblivious to emerging evidence that while free markets beat planned economies, there may be room for a modification that is even better."


The past few weeks have proven Mr. Grove's point, as our relations with China, and that country's impact on America's future, came to the forefront of American politics. Our inert Senate, while preparing for the super committee to fail, crossed the normally insurmountable political divide to pass legislation to address China's currency manipulation. Secretary of State Hillary Clinton, former Gov. Mitt Romney and President Barack Obama all weighed in with their views—ranging from warnings that China must "end unfair discrimination" (Mrs. Clinton) to complaints that the U.S. has "been played like a fiddle" (Mr. Romney) and that China needs to stop "gaming" the international system (Mr. Obama).

As this was happening, I was part of a U.S.-China dialogue—a trip organized by the China-United States Exchange Foundation and the Center for American Progress—with high-ranking Chinese government officials, both past and present. For me, the tension resulting from the chorus of American criticism paled in significance compared to reading the emerging outline of China's 12th five-year plan. The aims: a 7% annual economic growth rate; a $640 billion investment in renewable energy; construction of six million homes; and expanding next-generation IT, clean-energy vehicles, biotechnology, high-end manufacturing and environmental protection—all while promoting social equity and rural development.

Some Americans are drawing lessons from this. Last month, the China Daily quoted Orville Schell, who directs the Center on U.S.-China Relations at the Asia Society, as saying: "I think we have come to realize the ability to plan is exactly what is missing in America." The article also noted that Robert Engle, who won a Nobel Prize in 2003 for economics, has said that while China is making five-year plans for the next generation, Americans are planning only for the next election.
The world has been made "flat" by the technological miracles of Andy Grove, Steve Jobs and Bill Gates. This has forced all institutions to confront what is clearly the third economic revolution in world history. The Agricultural Revolution was a roughly 3,000-year transition, the Industrial Revolution lasted 300 years, and this technology-led Global Revolution will take only 30-odd years. No single generation has witnessed so much change in a single lifetime.
David G. Klein
 
The current debates about China's currency, the trade imbalance, our debt and China's excessive use of pirated American intellectual property are evidence that the Global Revolution—coupled with Deng Xiaoping's government-led, growth-oriented reforms—has created the planet's second-largest economy. It's on a clear trajectory to knock America off its perch by 2025.

As Andy Grove so presciently articulated in the July 1, 2010, issue of Businessweek, the economies of China, Singapore, Germany, Brazil and India have demonstrated "that a plan for job creation must be the number-one objective of state economic policy; and that the government must play a strategic role in setting the priorities and arraying the forces of organization necessary to achieve this goal."
The conservative-preferred, free-market fundamentalist, shareholder-only model—so successful in the 20th century—is being thrown onto the trash heap of history in the 21st century. In an era when countries need to become economic teams, Team USA's results—a jobless decade, 30 years of flat median wages, a trade deficit, a shrinking middle class and phenomenal gains in wealth but only for the top 1%—are pathetic.

This should motivate leaders to rethink, rather than double down on an empirically failing free-market extremism. As painful and humbling as it may be, America needs to do what a once-dominant business or sports team would do when the tide turns: study the ingredients of its competitors' success.
While we debate, Team China rolls on. Our delegation witnessed China's people-oriented development in Chongqing, a city of 32 million in Western China, which is led by an aggressive and popular Communist Party leader—Bo Xilai. A skyline of cranes are building roughly 1.5 million square feet of usable floor space daily—including, our delegation was told, 700,000 units of public housing annually.
Meanwhile, the Chinese government can boast that it has established in Western China an economic zone for cloud computing and automotive and aerospace production resulting in 12.5% annual growth and 49% growth in annual tax revenue, with wages rising more than 10% a year.

For those of us who love this country and believe America has every asset it needs to remain the No. 1 economic engine of the world, it is troubling that we have no plan—and substitute a demonization of government and worship of the free market at a historical moment that requires a rethinking of both those beliefs.

America needs to embrace a plan for growth and innovation, with a streamlined government as a partner with the private sector. Economic revolutions require institutions to change and maybe make history, because if they stick to the status quo they soon become history. Our great country, which sparked and wants to lead this global revolution, needs a forward looking, long-term economic plan.
The imperative for change is simple. As Andy Grove pointed out: "If we want to remain a leading economy, we change on our own, or change will continue to be forced upon us."
 
Mr. Stern was president of the Service Employees International Union (SEIU) and is now a senior fellow at Columbia University's Richman Center.

Questlove Blocked 3,500 Tea Party Extremists on Twitter Following Michele Bachmann Controversy


The Roots' drummer said in an interview that he has been called "colorful epithets in the past four days."

When The Roots played Fishbone's "Lyin' Ass B----" for Republican presidential candidate Michele Bachmann's walk-on music during her appearance on NBC talker Late Night With Jimmy Fallon, many have voiced their opinions.


The Roots' drummer Questlove (aka Ahmir Thompson) said in an interview with Pitchfork that since the incident, he has since received racial "epithets."
"I've seen some really colorful epithets in the past four days, but 'n----- f---head ghetto stick' is probably the one that takes the cake," he said. "I'm still trying to get my head around that one."
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Questlove said that it has also affected his social media usage, ultimately regretting the decision to play the song. "Blocking 3,500 Tea Party extremists [on Twitter] in a three day period is no fun, especially when you're a drummer dangerously close to carpal tunnel. In the end, was it worth it? Absolutely not," he added.
The musician revealed that the decision to play the 1985 track wasn't mulled over for very long.
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"It wasn't like a chess move where you have to think 12 steps ahead; you're just, like, "F---, all right, I'm gonna do it," in a kamikaze-type way," he admitted. "And I really didn't think about how it could be perceived as a misogynist swipe -- it didn't hit me until my [Twitter] timeline started showing up that it was seen that way. I was like, "F---, I forgot 'B----' is actually in the title."
Questlove said that there was a moment when he was afraid the band would be let go.
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"Last Wednesday, the day before [Thanksgiving]. We were seeing where she was going to go with it because, if you call the right channels, next thing you know advertisers are in the NBC building asking for proper action to be done," he recalled. "So we were definitely waiting with bated breath. And then her camp was like, "Look, it's Thanksgiving. Let's just put all this behind us and call it a day."
Late-night host Jimmy Fallon apologized to Bachmann a day after she appeared on the program, writing on his Twitter account Nov. 22, "I'm honored that @michelebachmann was on our show yesterday and I'm so sorry about the intro mess. I really hope she comes back."
The Roots' song choice came under fire shortly after Bachmann's appearance. Fox News' Todd Stames wrote, "Could you imagine if the network had pulled a similar stunt with First Lady Michelle Obama or Secretary of State Hillary Clinton? NBC is not commenting and Fallon doesn’t appear to have the fortitude to respond. So allow me to fill in the blanks: NBC, you disgust me."
Bachmann demanded an apology from NBC, who then sent a letter from Greg Vaughn, senior vice president of special programs and late night, on Nov. 23 apologizing for the incident and saying that what took place on TV was "not only unfortunate but also unacceptable."