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Frank Rich, economist

Posted By Russ Roberts On August 24, 2008 @ 12:06 pm In Politics | Comments Disabled

After mentioning Michael Phelps’s success, Rich writes [1]:

This was a rare feel-good moment for a depressed country. But the
unsettling subtext of the Olympics has been as resonant for Americans
as the Phelps triumph. You couldn’t watch NBC’s weeks of coverage
without feeling bombarded by an ascendant China whose superior cache of
gold medals and dazzling management of the Games became a proxy for its
spectacular commercial and cultural prowess in the new century. Even
before the Olympics began, a July CNN poll [2]
found that 70 percent of Americans fear China’s economic might — about
as many as find America on the wrong track. Americans watching the
Olympics could not escape the reality that China in particular and Asia
in general will continue to outpace our country in growth while we
remain mired in stagnancy and debt (much of it held by China).

How
we dig out of this quagmire is the American story that Obama must tell.
It is not a story of endless conflicts abroad but a potentially
inspiring tale of serious economic, educational, energy and health-care
mobilization at home. We don’t have the time or resources to go off on
more quixotic military missions or to indulge in culture wars. (In
China, they’re too busy exploiting scientific advances for competitive
advantage to reopen settled debates about Darwin.) Americans must band
together for change before the new century leaves us completely behind.
The Obama campaign actually has plans, however imperfect or
provisional, to set us on that path; the McCain campaign offers only
disposable Band-Aids typified by the “drill now” mantra that even
McCain says will only have [3] a “psychological” effect on gas prices.

Yes, China is growing quickly. Yes, they have mobilized a lot of resources to win gold medals in gymnastics and diving.

But they are a desperately poor country that represses their people too often, has filthy air, and has a massive problem dealing with an exploding urban population. Their mobilization of resources to win medals in gymnastics and diving is a scandal for such a poor country, not a triumph. Meanwhile, in the United States, we are suffering through a mild something, maybe a recession with unemployment at 5.7%. Our debt problem is minor. The fact that a lot of US debt has been purchased by the Chinese government that will be repaid in dollars that buy a lot less than they used to is tough on the Chinese not us.

The idea that Obama will have a plan to reverse matters and set us on the right track is simply a fantasy. We will continue to run trade deficits whether Obama or McCain is elected. We will almost certainly run Federal budget deficits under either man as well.

Finally, Chinese growth is good for the United States. The economic race is not like the Olympic race. It is not zero-sum. In the Olympics, if you win the gold medal, I can’t. In economics, both countries can grow together.

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[1] Rich writes: http://www.nytimes.com/2008/08/24/opinion/24rich.html?adxnnl=1&adxnnlx=1219593647-sNmxVi9OhlojKZgw3vTjBg

[2] July CNN poll: http://politicalticker.blogs.cnn.com/2008/08/04/poll-americans-wary-of-chinas-economic-military-strength/

[3] says will only have: http://firstread.msnbc.msn.com/archive/2008/06/24/1163504.aspx

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