[Dialogue] Something to consider

[George Holcombe]

Now that the elections are over, we may be back to something we  
talked about in the 70's.

George Holcombe
14900 Yellowleaf Tr.
Austin, TX 78728
Home: 512/252-2756
Mobile 512/294-5952
geowanda at earthlink.net






November 10, 2006
OP-ED COLUMNIST
China: Scapegoat or Sputnik

By THOMAS L. FRIEDMAN
Shanghai

As I was saying, Mr. Rove, Americans aren’t as stupid as you think.

Now that we’ve settled that, and now that we’ve had an election  
that clarified which country is most important in shaping U.S.  
politics in 2006 — Iraq — I’ve come to visit the country  
that’s most likely to shape U.S. politics in 2008: China.

The civil war in the Republican Party, which you are about to see,  
will be all about Iraq — whom to blame and how to withdraw before  
the issue wipes out more Republican candidates in 2008. But the  
coming civil war among the Democrats will be all about China.

I still believe that when the history of this era is written, the  
trend that historians will cite as the most significant will not be  
9/11 and the U.S. invasions of Afghanistan and Iraq. It will be the  
rise of China and India. How the world accommodates itself to these  
rising powers, and how America manages the economic opportunities and  
challenges they pose, is still the most important global trend to watch.

It really hits you when you see the supersize buildings sprouting in  
Shanghai, or when you look at the world through non-American eyes.  
Kishore Mahbubani, the dean of Singapore’s Lee Kuan Yew School of  
Public Policy, told me the other day that Asia right now “is the  
most optimistic place in the world.” More people have come out of  
poverty faster there — particularly in India and China — than at  
any time in the history of the world, and as a result, he notes, more  
people in Asia than anywhere else in the world today “wake up every  
morning sure that tomorrow is going to be better than yesterday.”

But one person’s optimism can be another person’s flat wages. And  
that is why the Democrats and China are almost certain to butt heads.  
The Bush team’s focus on Iraq and terrorism, coupled with the  
Democrats’ lack of control over either house of Congress, has kept  
China-U.S. relations largely out of the headlines and on a relatively  
even keel during the Bush II years.

But two things will change that. One is the Democrats’ return to  
control of both the House and Senate — powered by politicians like  
Nancy Pelosi, who has long taken a hard line vis-à-vis China on both  
economics and human rights, and Sherrod Brown, the newly elected  
senator from Ohio, who comes to D.C. with strong protectionist  
leanings from a state that has lost thousands of manufacturing jobs  
to Asia.

The other is the mood reflected in a Nov. 2 analysis in The Financial  
Times, headlined: “Anxious Middle: Why Ordinary Americans Have  
Missed Out on the Benefits of Growth.”

Technology and globalization are flattening the global economic  
playing field today, enabling many more developing nations to compete  
for white-collar and blue-collar jobs once reserved for the developed  
world. This is one reason why growth in wages for the average U.S.  
worker has not been keeping pace with our growth in productivity and  
G.D.P.

“Economists call this phenomenon median wage stagnation,” noted  
The Financial Times. “Median measures give the best picture of what  
is happening to the middle class because, unlike mean or average  
wages, median wages are not pulled upwards by rapid gains at the top.  
As the joke goes: Bill Gates walks into a bar and, on average,  
everyone there becomes a millionaire. But the median does not change.”

Many Americans lately have started to get that joke, and it is one  
reason that with this new Democrat-led Congress we are likely to see  
a surge in protectionist legislation, more Wal-Mart bashing, a  
slowdown in free-trade expansion and increased calls for punitive  
actions if China doesn’t reduce its trade surplus — which surged  
to a record in October.

China, in other words, is inevitably going to move back to the center  
of U.S. politics, because it crystallizes the economic challenges  
faced by U.S. workers in the 21st century. The big question for me  
is, how will President Bush and the Democratic Congress use China: as  
a scapegoat or a Sputnik?

Will they use it as an excuse to avoid doing the hard things, because  
it’s all just China’s fault, or as an excuse to rally the  
country — as we did after the Soviets leapt ahead of us in the space  
race and launched Sputnik — to make the kind of comprehensive  
changes in health care, portability of pensions, entitlements and  
lifelong learning to give America’s middle class the best tools  
possible to thrive? A lot of history is going to turn on that answer,  
because if people don’t feel they have the tools or skills to thrive  
in a world without walls, the pressure to put up walls, especially  
against China, will steadily mount.



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