First, the quality of economic growth matters more than the quantity. Second, laissez-faire is out, industrial policy is in. Third, trade policy should give priority to American workers, not consumers. Basic economics tells us that capital and labor are finite, so they need to be allocated in a way that maximizes productivity and growth. Experience has shown, painfully, that governments are much worse at this than markets. Market failures exist, of course, such as pollution or military vulnerability, but they are exceptions. Bidenomics accepts the value of markets but sees market failure all around, in everything from regional, racial and gender inequities to the lack of rural high-speed internet and affordable child care. When market failure is so broadly defined, there is effectively no limiting principle on government intervention.
- Date Posted:
- June 8, 2023
Postponements of China’s date with economic destiny have cast some doubt on whether it will ever happen. The country’s productivity growth has slowed, and its demographics have turned. China’s workforce is already shrinking, a decline that will probably accelerate in future decades. The UN projects that China’s population aged 15-64 will decline by more than 100m in the 2030s. If China’s GDP does not overtake America’s by the middle of that decade, it may never do so, according to Capital Economics, a research firm. The OECD, the Lowy Institute, and the Centre for Economics and Business Research, project that China’s GDP will overtake America’s at some point in the 2030s. The Economist Intelligence Unit thinks it will happen in 2039. That prediction is strikingly close to Goldman Sachs’s original date [of 2041], set 20 years ago.