The Chinese value the appearance of working hard, not actual hard work. Cheating among Chinese students is pandemic. Chinese companies regularly publish misleading or outright fraudulent earning statements and quarterly reports. While the Chinese government seems to be taking steps to reverse these trends, it will take a long time to undo their culture of corruption. Contrast this with the American culture of honesty; fraud and cheating are national scandals, not the norm.
Second, the US currency is the world reserve currency because the world trusts that the US will keep paying interest on the debts. A trillion dollar debt is not actually that large, and this is reflected in the near-zero interest rates on treasury bonds. If there was a belief in the market that America would no longer be able to pay off the debts, interest rates would be sky-high. But the opposite is true. The national debt is just a talking point for people who don't understand economics. (The largest owner of American debt is...America!)
Finally, I am unsure what evidence there is that the US culture has moved away from innovation, risk-taking, etc. If anything, there are many more entrepreneurs today than there ever has been before; the maker movement, youtube celebrities, and startup culture is evidence of a growing number of people who are not employees of large corporations, but independent businesses.
A better question is why America became a super-power in the first place?
I think many of the assumptions of American exceptionalism are not root causes, as the majority of the reasons for why America, and the west in general, have risen to global domination are embedded in, how should I put it, conflict creation, and not conflict resolution. The west has benefited tremendously from the deliberate, and sometimes accidental ability to create conflict around the world, and gain profits from it including in China. This isn't some controversial claim, this is pure, and simple Nationalism, and enlightenment ideas of State.
However as the industrial dregs settle down, and as Imperial might whimpers, we're seeing the rise of countries that were left destitute in the past 150-200 years, regaining a sense of internal stability. The result of this new founded stability around the world unfortunately, or fortunately, creates a new world where the center is other than the west. Already India, and China are talking about a polycentric world that activity eschews the hegemony of the west, in favor for a more equal world, because let's face it the west is the 1%.
Even if we deny all that it would be very difficult to refute that America has in the past 100 years been an incredibly stable nation compared to the entire world, and coupled with an active participation in global economies. It was perhaps the only nation on the planet that was internally stable, and had a strong external presence. All other nations eventually declined, had internal struggles, or were just emerging as global economies. This alone gave America an unprecedented advantage over the last 100 years, and that advantage is slowly becoming meaningless as the entire globe is stabilizing.
Conflict creation for profit is something inherent to humans, not the West alone. We are predators, we eat bunnies, and because bunnies don't kill us in return, we think that it is ok.
For example, Spanish conquered South and Central America, but the people that lived there were not conflict free. In fact, if you compare Spanish with Mayans that will extract the heart out of their alive enemies, or their skin, Spanish were saints in comparison.
Spanish used the help of subordinates Indians to remove the people in power.
Let's not talk about China's History: it is probably as violent or more violent than the West's. For certain intrigues were way more sophisticated as central planning was way bigger.
We can mention Shaka Zulu, or Muslims in Africa.
The main difference was technology advancing so fast as to make non west people bunnies in comparison. Arrows against repetition rifles, or tanks and planes against horses.
China had only a few types of enemies prior to fighting Europeans - its historical rivals were never fully united and organised states. And it's not like China didn't embrace technology. They in fact did, and used guns and rifles to great effect against tribes in the northwest prior to European "harassment". The only technology they didn't foresee was the steamship, but there was no way to foresee that in the 1750's. It was in fact European organisation that made its military so superior to China's. With good leadership and training, Chinese weapons is sufficient to defeat European forces, sans steamship, http://en.wikipedia.org/wiki/Battle_of_Taku_Forts_(1859).
"The lack of training was a direct result of a serious lack of ammunition. Corruption seems also to have played a major role; many Chinese shells appear to have been filled with cement or porcelain, or were the wrong caliber and could not be fired. Philo McGiffin noted that many of the gunpowder charges were "thirteen years old and condemned."[2] What little ammunition was available was to be preserved for a real battle. Live ammunition training was rarely carried out."
And of course, corruption and ineffective organisation are qualities that states will gain over time - the longer a state is in power the more corrupt it will become, until one day it collapses.
Chinese technology is perfectly capable of defeating Europeans with superior technology in battle. http://en.wikipedia.org/wiki/Battle_of_Liaoluo_Bay
The key as always is organisation and leadership. Technology means naught without it.
Does this apply to highly intelligent horde AI that you order to annihilate an opposition with the wave of your hand?
I know this isn't based in current reality, but mark my words when I say that the country that produces the smartest and most effective AI weapons at a sufficient scale will be king.
We're already seeing the first retirements of humans in exchange for AI weapons.
I'm not talking about violence at all. The goal of a state is in fact to have a monopoly on violence. I'm not taking sides at all, just pointing out the history of the past couple hundred years.
China is like any other state, in fact it was literally the first instance of the Modern State that had centralized authoritative systems of governance that provided various facilities throughout the Empire, mandated by the emperor. Heck we have one of the first instance of the fiat currency being used in China, which in itself shows the internal stability of the Chinese state. Not to mention their vastly superior ability to mitigate famine throughout the country. Europe during all this lacked tremendously. For instance during the 18th century enlightenment era millions of people died due to famine, and other hunger related diseases in Europe, whereas in China during the same time period we see the Qing successfully provide millions of peasants with precious grains, and intelligently rationing them out through centralized sources. This was the norm in China. Compared that to the blunders of the later Qing, and infamous Mao. It's astounding how far China has come.
China being more violent than the West is bullshit. Both where at least equally violent. All states are violent. They require violence, and coercion. Well actually we can't really forgive the British literally starving the Indian population, by deliberately instating rules that caused millions of people to starve to death, while exporting record amounts of grains to Britain. Oh yes. The West wasn't that violent, or cruel...
The myth is that the West had technological superiority compared to other nations, and built their empire from that technology, but that really doesn't cut it. What the West was able to do is exploit that technology to create a new economic system, you know, globalization. Many nations had similar technologies, except the West's ability to politically maneuver regions in their own favor, and thereby exploiting that region to export trade goods back home is what actually made them incredibly successful. This export starved other nations, countries, and kingdoms, both literally, and metaphorically of various other prosperities. This exporting of goods is what drove the British, and the Imperial powers in general, and what produced a wealthy economy in those countries. Eventually draining away so much wealth from those regions that we see the effects to this day.
I'm not saying that West was either more, or less violent than any other nation in history, just pointing out what happened in the recent past, and what continues to happen even today.
Furthermore it's an assumption to think that conflict creation is inherent in human beings, because it's really not, and there are many instances of various government being satisfied in their own domains. China, and India being an example where incredible wealth meant a stable state, and that stability was satisfying to those population that actively pursuing conflict for even more wealth would be seen as idiotic. They knew they had more than enough. The West knew they were beggars, and so they conquered. The continued exploitation through conflict is not a preferred method of existence, as we are seeing with the USA.
> This exporting of goods is what drove the British, and the Imperial powers in general, and what produced a wealthy economy in those countries.
Deirdre N. McCloskey in her book 'Bourgeois Dignity: Why Economics Can't Explain the Modern World' does a pretty good job of explaining that this imperial trade (amongst other factors) doesn't do enough to explain why The West became wealthy.
To quote McCloskey: "What's wrong with such images? This: the world did not change by piling up money or capital. It changed by getting smarter about steam engines and wiser about accepting the outcome of innovation."
If imperialist trade is what caused British wealth to increase by a factor of sixteen or more since the 16th or 17th century, why didn't countless other states become modern-day wealthy during countless other imperialist expansions?
Nor did the Industrial Revolution do it. The printing press was invented in China (1041) some 400 years before Gutenberg (1450) caught on to the idea, and the Industrial Revolution didn't happen for another 300 year after that!
McCloskey's suggestion is that Bourgeois Dignity is what caused the change. That society came to dignify innovation. That average Jane Citizen came to be able to invent and bring to market innovation. Not only that, we now glorify the innovator, rather than prosecute them.
So it wasn't British imperialism that made Britain rich. Free trade does more to cause the wealth of nations than imperialism ever could. But free trade isn't enough either.
McCloskey argues it isn't Capitalism that is so important to modern wealth, because capitalism -the accumulation of capital- has been a thing since people have been gathering seeds.
As Sam says in his article it is Innovationism that made the modern world so extremely wealthy. That we are prepared to iterate so rapidly, ever more rapidly, and dignify those who do the innovating.
So I disagree that the imperial redistribution of wealth is what has caused 'those regions' to be affected to this day. As India embraced Innovationism -in manufacture, call centres, software development- we have watched it become increasingly more wealthy.
That is the old Imperial myth, that's as old as Imperialism itself. It's such a condescending perspective, as the countries from all around the world were just as inventive, and innovative with their technologies. What happened was very subtle. It was simply the fact that the already rich countries had no reason to expand, while European societies had every reason to expand, as their society was in complete tatters compared to Asia. The rise of European society wasn't just accepting innovation, while others declined innovation, no. Europeans just had more of an incentive to use that innovation for personal gains, while societies in Asia had every incentive to use that innovation for inner stability, and stay course for a non-expansionistic policy. I mean we have Europeans using gunpowder to blow each other up, while China used it for public entertainment, pacifying them, by utilizing it for fireworks. Not mention the Indians were better equipped with firearms compared to the Europeans. I mean India invented rockets at the very time the Imperial powers came in, so that right there throws out the idea that other societies were less inventive, or that invention somehow leads to wealth. They were simply more hesitant to utilize that invention to expand, as inner stability was more valuable to them.
Really I don't know how people can justify that idea. Steam engines don't give you wealth. Using the steam engines for the export of resources does. It was only with the railways that Imperial powers were able to export wealth from India. Not to mention the deliberate sabotage from within the country, by playing the political game very intelligently (the same thing happened in South America, and Africa). How can you ignore the deliberate deindustrialization of the India under that Raj? I mean you have state sponsored brutality such as chopping off the thumps of basket weavers, and making steel production illegal so that they can't practice their trade. Imperialism actively sought to close off, tax out, or straight make local industries illegal, thereby increasing wealth as the Imperial powers were able to sell more readily. The same thing happened with China, albeit indirectly, by deliberate sabotage.
How can you ignore the very idea of Nations, and Nationhood being a very corrosive force that has put ruthless competition at the basis of governance, on a scale never before seen?
Innovativeness does not even begin to cut it. I mean if you're going to argue on culture, then you're putting up a silly argument which says almost nothing, but definitely reiterate Europe's superiority in "culture", which is not a new argument. It's the same old argument that's been used by imperial powers to justify their ruthless conquest since the beginning. It isn't just inventiveness that made Imperial powers more powerful, but a shift in perspective that allowed them to both create the state, and utilize authoritative power for economic gains, coupling that with technology that allowed for global reach.
Just as European society was going through what China had gone through 2000 years ago, that being complete inner turmoil resulting in total war producing a centralized state. Just then it was blessed with unprecedented technological capabilities (that was in fact imported from all across the world), coupling that with the ideological stance which burgeoned due to constant conflict within European society. Ok. So here we have that "cultural" advantage, in that European society was just more ruthless than any other country in the world, not just more inventive. Invention means nothing, and does not produce wealth, it's the use of that invention that matters, and admittedly the Imperial powers did use invention to its fullest capabilities.
Asia in general was in a period of decline at that point, a slowing down, because we don't see the activity of Chinese, and Indian merchants in this period we instead see a recession, and any economist would tell you that this is completely normal for a society.
What wasn't normal for these societies, nor was expected, nor seen ever before in history, was an external force, that too coming from across the globe, that actively had the ability to exploit that recession. That force was able to exploit that recession in a way that allowed for the export of wealth by employing global technologies, and introducing a new set of state sponsored ideologies (soft power).
But you hit on a very interesting point, but don't follow it through to conclusion:
> What the West was able to do is exploit that technology to create a new economic system, ...
> Furthermore it's an assumption to think that conflict creation is inherent in human beings, because it's really not, and there are many instances of various government being satisfied in their own domains. China, and India being an example where incredible wealth meant a stable state, ...
A stable economy is not a Nash equilibrium, and therefore unsustainable (not necessarily, but ...). Those nations were defeated, because they settled in a non-Nash-equilibrium and they were destroyed because of that. The west created a new equilibrium and it absorbed the world.
This is not the fault of the west, or of anyone at all, any more than my wet coat is the fault of the rain. If you live in a non-Nash-equilibrium state you are one change of tactics by one of your friends or enemies (or pets, really) removed from extinction (or at least massive change).
These states would have been defeated and replaced sooner or later regardless of whether any individual player felt the need to do so. It was easy to do, just requiring the first domino to get pushed over. The west was there at the right time with a better system, no more, no less. And most of the destroying would have been done, not by western soldiers, but by people in those old systems who very likely enormously benefited from introducing the new system.
Of course, and so the same will happen today. Nothing has changed. There are no winners, or losers, just the eternal game.
I'm not saying these people were "better", or "worse" these were people, and so the coming chaos will reflect their humanity. The West shouldn't be afraid.
These are good points but I would disagree specifically that other nations want "a more equal world". My take is that they want to wear the crown next, not share it.
Well a more equal world is in the economic interests of those nation, because it will allow them far greater power than they currently have. However a multipolar world is not in favor of the US as it will mean that there's greater competition. Greater competition means that USA has decreased political capabilities, way less influence in geopolitical matters, and a decreased ability to "protect American interests", we can already see this happening to an extent.
BRICs banding together amongst each other to create economic prosperity is the only means for these countries to increase their living standards, and so cooperation is incentivized.
Competition is a zero sum game for these countries, and they know that.
As someone who spent more than half of his life in China, I'd have to agree with you, at least from an anecdotal perspective. Trust is hard to build in China. A lot of people care about making money but people scarcely think about creating value for the society. Wealth is synonymous with consumption. The worst part I think, is the 1) social stability is valued over social mobility 2) individuality is shunned rather than celebrated.
In America people are encouraged to pursue your desire, the mentality of "not giving a fuck" and do what you love is admired and regarded as a sign of courage. In China someone who questions the conventions is deemed as social outcast. People in China are more concerned with the appearance (having face) than trying to be innately satisfied.
Things may have changed over the last decade. But I think China still faces this tremendous cultural problem, despite the development growth.
As a Chinese, I agree with you. A lot of (let's say most of)Chinese people actually care more about making money than creating value for society. But, I think this is a short-term wave, especially starting from 1978. And in China, people need more money to establish safety of life since there are less social security and public welfare comparing to western countries. This could change when there are more social security program, more insurance, medical care. So, I don't think this is a "tremendous cultural problem".
Disclaimer: I came to the US when I was 12 and I have been living here for eleven years. I was born in Hong Kong, but I think I know quite enough about the mainland China. But please correct me if I am wrong.
As a Chinese, I think this is not short-term. I think it has to do with culture, how people were brought up. I don't remember the proper term for this, but people are pressured to make money. Call it peer pressure for all and from all sides.
It is expensive to live in China. It is very expensive to own a house. Here in NYC I can own a decent house in a very good neighborhood for $500,000 - $600,000. A software engineer with a couple years of experience and working for a decent company can afford the mortgage.
Here in America I help my parents with their mortgage (well after all I am also on the paper). But they are okay with me not paying, yet I do because I can afford to help them! But in China, people will talk shit behind your back and people look down on you if you don't help with mortgage or if you don't own a house. Every Chinese New Year you are expected to give out red envelope. $100? No way. You visit someone's place? Gift. I know we do that here in America too, but when was the last time you actually visit your uncle and give him a nice whiskey?
Here in America you can get married without even owning a property. Rental is fine. In China people like to own a house because a house is money. In the old days farm owners are like house owners today. Who cares if you worked as a government official? or whether you are literate or not if you don't own a farm or some livestock? Actually in China today there is a 70-year land-use right. You can own a piece of land for 70-year...
It has a lot to do with culture, how people were brought up. When everyone started to show off how well their children are doing, everyone are now suddenly in a race for better. Many couples have to break off because their parents believe the child deserves better.
But you have a great point about social welfare though. In China social welfare is very hard to get. In the U.S. you can move to CA and get tax benefit if you declare yourself as CA resident after a few months, but in China you can't just move to another province ("state"). Most workers in China work at another province and their children cannot get benefit there because their parents don't have the right "residency paper", let alone the complex over 100 different documents one has to get in one's life time.
It's not such a big deal; in Hong Kong, for instance, all property (with very very few exceptions) is leasehold land. The most common term is now 75 years. The city has been in existence long enough that many of the original leases have come up for renewal at least once. In the vast majority of cases, the government signalled far in advance (10+ years) that: (a) it would renew the leases, and (b) the terms under which they would be renewed.
Yes, it is a different system than freehold property in Europe and America, but that doesn't make it unworkable.
Well, you're basically asking more than a billion people to change their cultural value on a fundamental level that has been instilled starting 5000 years ago. I wouldn't casually put it aside as a minor issue that can be solved by social security.
Additionally, my impression is that "trust" vehicles like contracts don't hold the same weight that they do in places like the US. They get broken and tossed aside all the time and the legal recourse you can have is minimal.
Many of those cultural issues are caused by feedback loops, which are thought to be good, do not work in our system since very long time ago. Equilibrium in this system does not necessarily indicate the system at this stage is a good one. There is an old saying that is spot on: "兴，百姓苦，亡，百姓苦" (No matter whether it thrives or declines, average person suffers).
China's growth has long since been an organism that feeds on the back of the gorilla of US growth. If the US economy would hit a major recession, China would come crashing down with it. On the other hand, if the Chinese economy would have a major collapse, the US would suffer, but still be able to re-route core-value manufacturing processes to new countries (or back home).
I agree with your cheating note, many of the Chinese take great pride in stealing innovation and ripping off US intellectual property, to the point where anyone well-informed on the matter knows that they have their fingers in the networks of almost every major US Corporation, siphoning away hard-earned gains by our workers. I have further exposure to this through product manufacturing, where Chinese companies are well-known for ripping off blueprints from the US companies that outsource their manufacturing. Tools like Alibaba have only increased this sort of misbehavior exponentially.
What the US has that China often doesn't demonstrate are the intangibles in regards to honest work-ethic that produce genuine "value", rather than "value" based on a manipulated currency and outright lazy copy-catting. Once they demonstrate their self-sufficiency by doing honest innovation, then I'll credit them for a job well done. There's a lot of value in US-China relations, but they still have yet to prove that they could "hop off the back of the gorilla" and stand alone.
FWIW, the U.S. got its start as a major industrial power by a major act of industrial espionage. (Francis Cabot Lowell went over to England for two years, worked in the textile mills, memorized all the details of their workings, and opened the first textile mill in the U.S. in Waltham, MA.) Large-scale American industrial espionage continued throughout the rest of the 19th century. American goods had the same reputation for being cheap knock-offs of British innovations that Chinese goods do now.
I don't think this has anything to do with the respective cultures of either nations. Remember that China has a long culture of valuing knowledge for its own sake. Rather, it's rational for the firm that's behind to copy the firm that's ahead. The firm that is ahead has no such option available to it. That's also why it's never the best students that cheat off their peers - they have nobody to cheat from. China and the U.S. (in both periods of history) are just responding to the incentives available, as ambitious actors in their own right.
I dispute the assertion that American goods were considered cheap knock-offs by the end of the 19th century. By the mid 19th century, the "American Style" of assembly-line manufacturing with interchangeable parts was considered to be the most efficient form of manufacturing [1] and was thereafter adopted in Britain and the rest of Europe. This method was derived from various aspects of the English system and was not invented in America, though it was first widely adopted there. Though there are well-known examples of industrial espionage, American innovation in manufacturing can be attributed a combination of vast natural resources, dynamic social structure, and widespread generalist education (as opposed to the apprenticeship system of Britain at the time) [2].
I agree with pretty much all of what you said, and I also wanted to add a bit more along these lines. It's all pretty much anecdotal, so take it for what it's worth.
Engineers that I've worked with in China are wildly different from what I consider engineers in the US. They seem to be better at making a given process ruthlessly efficient, but they're not so great at creative problem solving--I suspect it's a cultural thing more than anything else, but that's just an opinion.
So I think that China is great at adding value in making things efficient and cheap from an operational standpoint, but I don't think they add a lot of new ideas, which are an outcome of creative thinking. Once there are countries more desperate for manufacturing money (South America region, maybe?), China will have a problem because the jobs will leave and they will have to find a way to generate value in other ways.
For now, they don't really own many brands that people know; they manufacture white-label goods, so to speak, but I can't think of any specifically Chinese name-brand goods that people buy because they are superior to anything we have in the US. Sure, a huge portion of stuff is made in China, but when was the last time something big was invented in China?
It fits with your initial point, that China is dependent on US ideas, whereas the US loves their low prices, but ultimately doesn't need them.
I think that 15 years ago that was true of Korean manufacturers, and look at them now. Hyundai was a brand that was fairly reliable, but was ridiculed in popular media. Now it's on par with Japanese brands and often considered premium. Also, Samsung went from making parts for everything to developing and marketing their own premium products. Chinese manufacturers can easily follow this same path and I think it is already happening.
The camera industry is a familiar example— both Canon & Nikon began by making copies of German Leica and Contax cameras, then tweaked them, then moved into innovative original designs. By the 70s or 80s, Canon and Nikon had surmounted their industry, while Contax was bought by a Japanese bit player and Leica was reduced to a niche luxury manufacturer.
http://www.canon.com/camera-museum/history/canon_story/1946_...http://www.kenrockwell.com/nikon/rangefinder/sp.htm
And yet, Japanese and Korean engineers still have problems with creativity relative to their western counterparts. A lot of that has to do with a hierarchical Confucian culture. Sure, they've mastered quality and efficiency, but some areas need more than that, namely software.
Except Korea and Japan aren't autocracies. They're just so much more flexible by having an open democratic process and open markets. The CCP is its own roadblock in China. Sure it can make special economic zones and play command economy with construction and development (lets ignore the ghost towns they have built for now), but that approach is self-limiting.
China won't liberalize the way Korea and Japan did after the war. They're very much in bed with complete political, economic, and cultural control. That means worse outcomes from a capitalist point of view. They can only manufacture US widgets and steal blueprints for so long. They really don't have a capitalist and innovators culture. Usually that's a temporary problem in western-style governments, but in an autocracy its fatal. Look at Putin's terrible oil-based economy. Autocrats can't play the open liberalization game because autocracy is naturally very, very conservative and controlling. Part of this game, if not the most important part, is giving up quite a bit political control and performing regulatory actions that hurt the top players like fighting corruption, preserving competition, protecting IP and property rights, helping labor movements go forward, and cleaning up the environment. Autocracies dont often do these things. If they did, they would probably cease to be autocracies.
> They really don't have a capitalist and innovators culture.
Have you ever read any of Bunnie's many articles about shanzhai? Sure, the big corps in China are state-controlled monoliths, but the grassroots level is seething with innovation and way more capitalist in a "red in tooth and claw" sense, unconstrained by silly Western ideas about intellectual property, health & safety, etc.
I completely disagree with your notion that U.S. is less interdependent than China. The exchange is clear: U.S. needs cheap Chinese manufacturing to proliferate its innovation, and in turn, China gets direct access to U.S. blueprints, and is able to leverage and improve upon them to produce their own products. This is basic economics, not a question of "who is genuinely innovating". American companies need cheap manufacturing as much as the Chinese needs technological know-how. Why? Because if no one buys "innovative" products (because of how much cheaper they get) then we wouldn't get that innovation in the first place.
China is huge but US imports are pretty well diversified at this point. Today we import a whole lot from Vietnam, India, Malaysia, etc.
It's mainly the consumer electronics sector that would be hit hardest. The lower-tech manufacturing has already moved away from China to a large extent.
I agree. In fact, it is almost like the market has figured out 'a way for both countries to work on what they're really good at' (paraphrasing TFA). "Governments that at least partially cooperate," on the other hand, I agree would be a welcome change.
I think the typical rhetoric of "China is bad because it steals innovation!" is usually misplaced. From China's perspective, there is nothing wrong with "stealing innovation," as this model has helped grow China's economy and lift millions out of poverty over the past few decades. The diffusion of information does not produce the same "value" as the production of information itself, but from China's perspective this diffusion certainly has its own value if it boosts the growth of native industry (which can one day hopefully enable China to produce more value from its own production of information).
From the American perspective, I think we tend to ascribe more value to hanging on to our innovation than is actually there. Hanging on to innovation will always provide a temporary advantage. The value of innovation is also dependent on the cost of preventing diffusion of the products of innovation. If the results of innovation are so valuable, companies should do more to prevent the outward flow of information, by locking up information systems and trying to hold on to as much of the involved human capital as possible. However, we do not do that as much as we should because there are other forms of "value" we can get by not locking up our innovation and human capital. In previous decades, Japan, Korea, and Taiwan have all followed practices similar to what China does today. The growth of native industries may have hurt America's ability to compete in these markets (and even in America itself), yet companies like Sony, Samsung and others have brought value directly to American consumers and encourage more innovation now that they actively compete with American companies in the innovation game.
To coin a proverb, "There is nothing wrong with stealing innovation until you steal the life from that which creates it."
China, culturally, does not innovate or foster the mindset of problem solving or collaboration that is visible in highly innovative - honestly innovative - environments. That's why, anecdotally speaking, several major science journals do not accept papers from Chinese higher education facilities, due to having to deal with far too many retractions. I'm only a bystander to this issue, but I know it's real and will take generations to correct.
I thought it was more like "there is nothing wrong with stealing innovation until its your own innovation that is stolen." As China climbs the tech ladder and have more to lose than win by stealing, I'm sure they'll become believers in IP.
There is already some bias in CS conferences with respect to Chinese submissions, which is why in blind review we take great care to "hide" our nationality (I'm not Chinese, but work in China and publish paper with Chinese). It really isn't fair, since there is some really good research going on in China, but it gets drowned out by a few bad apples.
Yeah, their ability to replace US/developed nation demand with internal demand in order to allow the RMB to float freely will be interesting. As it is now, a lot of their growth is based on government spending and some creative financial engineering with debt (similar to Fed and containment of toxic mortgage assets) and currency manipulation intended to create a huge domestic manufacturing base.
I think, complicating this, is the implicit social contract between the govt and the populace regarding economic growth and jobs. As flawed as the US system is, it is (purely IMO) a more fault tolerant - in a dynamic systems/perturbation sense - than Chinese society.
China's economy crashed big time in fact. They took on upwards of $30+ trillion in new debt in just six or seven years to continue faking the old levels of growth, trying to buy time. They pulled a Japan, at warp speed.
In other words, China took on nearly twice as much debt as they gained in GDP expansion over that time. Since the later part of the previous decade China has seen a plunge in the return on invested capital when it comes to GDP growth - the situation is so dire now, they have to add over $1 of new debt per $1 of new GDP they get out of it. The party is over. China is already the most indebted country on earth (while half a billion of their people live on $2 per day), and their pace of debt accumulation isn't slowing down. The outcome of that financially toxic situation is obvious.
To keep faking 7% growth, China has to take on $20 to $30 trillion in new debt in just the next five or six years. It's a scale of debt the world simply has never seen before.
This. The Chinese economy is driven by investment, not export (though that helps). Western investors think investing in China is a good idea - that's where the growth comes from. And they're not wrong - investment in China has paid off (for those that have managed to navigate its complicated business-politics).
> Contrast this with the American culture of honesty; fraud and cheating are national scandals, not the norm.
Fraud is basically the biggest national industry in the U.S. Just look at:
- The 30% of all medical spending that is wasted.
- The rise of for-profit colleges with super low graduation rates and even worse employment prospects. Same with law schools.
- The fact that the majority of people who graduate high school and college are functionally illiterate.
- The massive pharmaceutical settlements for faking safety/efficacy data, illegal marketing, bribing doctors, etc.
- The complete lack of food safety regulations and/or enforcement. E.g. a third of fish sold aren't even really the species that they are claimed as, 80% of supplements sold don't contain any of the ingredients they are claimed to have, etc.
- The crumbling of the train systems, city water systems, etc.
- The massive subsidies on fossil fuels that are causing climate change and destroying the oceans.
- The financial system
- The fact that the vast majority of science isn't replicable, or isn't accurate even when it is replicable.
Etc. The main reason corruption seems worse in China is because of the billion dollar propaganda campaigns that use schools and the media to systematically blind people to the underlying issues, and the fact that the vast majority of activists get arrested and threatened with life in prison if they ever protest again.
You're going to have to backup that claim that the majority of people that graduate from college are functionally illiterate. I call bullshit on that being true.
The American food system is one of the safest and most regulated on earth. You may disagree with some of its practices, but that does not make it unregulated nor unsafe. The claim that America has a complete lack of food safety regulations is laughable, you couldn't be more wrong.
America has always had for-profit colleges, and there's absolutely nothing wrong with that. They work perfectly fine. America has had by far the best university system for many decades and still does. The rest of the world has nothing like it.
Massive subsidies for fossil fuels? In fact the subsidies are not massive compared to the industry and dollar figures in question, even if those subsidies should not exist. If you want to talk per capita fossil fuels and the destruction of the environment from that, let's talk about Norway's output - that bastion of everything America is supposed to aspire to.
America merely contributes upwards of half of all global science and innovation. Given the immense output record the US possesses, you're going to have to do a lot better to discredit it than throw out an empty soundbite.
You're wrong in your claim that the majority of college graduates are not functionally literate.
2% of college graduates fall below a basic level of literacy.
14% of total adults fall below basic on prose; 12% on document; 22% on quantitative. The numbers of college graduates are vastly lower than those.
And further, digging into the data, I'd be willing to bet that half of those numbers of people that struggle on basic literacy - in english - do so because their primary language is either not english and or they have very little command of the language (first generation immigrants etc).
It is certainly interesting that the "National Assessment of Adult Literacy" report indicates that only 13% of adults can perform that sample task of "computing and comparing the cost per ounce of food items".
Same for comparing and contrasting two newspaper articles, which is probably even more relevant -- if you can't do that, then you're immediately disqualified from pretty much every profession that pays a living wage. And that's not even a very high bar, considering that newspapers are written at what's supposed to be a 6th - 8th grade reading level.
Sure, the bar of 'fully understanding' is ridiculous. People don't have 100% accuracy with anything. Most people would also fail the same measure if the document was spoken vs written so despite the name it has little to do with literacy.
Note: The bar for functional literacy includes banking paperwork which is intentionally designed to be confusing. If more people understood it they would rewrite it to be less clear. Also, your failure to understand what you linked precludes you from the ranks of 'functional literacy'.
PS: While high, you might reasonably interpret at least intermediate as an acceptable level for college graduates and that's well over 80%.
Talk about fraud. The site mentions "proficient" in quotes trying to make that sound like a low level of performance when in fact it is the highest rating on the assessment (2 spots higher than "Basic")!
I'm guessing the rest of your bullet points are a stretch as well (at least they seem like stretches and now we know you cite bogus sources).
> The complete lack of food safety regulations and/or enforcement.
There have been some major recalls due to food safety in the last 5-10 years(1).
In the last 5 years, the Food Safety Modernization Act was passed (2).
In the last 5 years, the "Egg Rule" was passed (3). "Over 15 months, FDA inspectors visited about 600 facilities nationwide that produce about 80 percent of the country's eggs to determine if they are in compliance with the Rule, which went into effect in July, 2010."
You can also find thousands of warning letters the FDA has written to companies over the last decade on their website (4).
I searched through the warning letters for "supplements" and found exactly 500. (5) The letters were issued for all kinds of reasons, from outrageous claims, to products not containing the advertised chemicals. (6)
I'm not going to argue the other points you list, but when it comes to the FDA, your assessment of "completely lacking in regulations and/or enforcement" was overreaching.
There's a billion people! You can't make any generalizations about "hard work". It's just overly broad stereotyping at that point.
Do Uighurs value hard work? Tibetans? Subsistence farmers? City-dwellers? I don't really know what people mean when they say that the Chinese "value hard work". Which Chinese?
By this standard, no one could ever say anything about "China" at all. Sam Altman says that the Chinese economy passed the U.S. Was that the Uighur economy? Tibetan economy? Subsistence farming economy? City-dwelling economy?
See how these questions add nothing to the conversation?
If the conversation is about China collectively, then it's not invalid to make other statements about China collectively. If you disagree with the parent's assertions about China, then let's hear it, but just pointing out that China is really big does not tell us anything we don't already know.
You're eliding two very dissimilar things. I'm not saying you can't group people and say quantitative things about them (like GDP). That would be stupid.
I'm saying I have no idea what a statement like "the Chinese value hard work" means. It is not testable or quantifiable, and it's genuinely meaningless. Now maybe you could publish some survey data that shows Chinese people more value hard work. That might add something to the conversation.
People don't treat populations and individuals as the same thing; the population is its own entity with its unique properties, and, obviously differences. The question is whether those differences are sufficiently exploitable. This is how policy works. If you are saying that you can't generalize over a population, you're saying that there are roughly zero between-population differences that are exploitable for strategic policy. Random things are unstrategizable.
I think that the Chinese and Japanese value hard work more than Americans and Canadians, and I think so because Americans and Canadians have an unfortunately true belief that intelligence is highly predictive of performance, and also that intelligence is not meaningfully improvable. On the other hand, I think that Chinese and Japanese people have the belief that effort is a far better explanation to performance.
The problem is that performance must surely be at least a combination of effort and ability; a depressed person may have the bodily ability to pick up the phone for their friends, but they might not care anymore.
I thus say this: if you go looking for studies on cross-cultural pedagogy, I claim that you're going to find that American and Canadian students are significantly more likely than Chinese and Japanese students to avoid harder challenges, to pursue easier challenges, to practice mastered over unmastered material, and to avoid a problem after poor marks. Does this speak to all work? Of course not. But it's a window into culture, rather than just comparing mean hours studied or worked between populations.
Indeed. People forget that China has twice the population of United States and European Union combined. It's often silly to treat them all as one uniform group.
I once had a friend say something about how the Chinese valued hard work. Then I asked him what cultures don't value hard work. He squirmed as he started ticking off a list of countries whose populations are predominantly black/Latino...
>The Chinese value the appearance of working hard, not actual hard work.
It's very interesting how deep this type of behavior is ingrained in their culture.
For example, western cultures have Aesop fables (e.g. Tortoise and the Hare) which tend to celebrate hard work and punish laziness. Eastern cultures have fables that tend to celebrate being clever or manipulative (e.g. The lion and The Rabbit).
It's also interesting to see how this plays out today. The Chinese Happy Farm (original Farmville) was a huge success in part because it allowed users to steal crops from their neighbors. This type of behavior is considered okay as long as you are clever enough not to be caught.
Lets not get crazy and read too deeply into things like how game mechanics reflect social values. You can maraud and raid in any popular iOS game for Americans as well, such as Clash of Clans.
This is textbook confirmation bias. You're ignoring the writings of every Chinese philosopher valuing hard work, the tendency for Chinese schools to value rote memorization--a very work-intensive activity--over creativity, the fact that American railroads were basically built by the Chinese, and the fact that you're likely reading this on a device made by hard-working Chinese hands. Your willingness to see East Asian culture as inherently underhanded because of an internet game is somewhat telling.
>western cultures have Aesop fables (e.g. Tortoise and the Hare) which tend to celebrate hard work and punish laziness. Eastern cultures have fables that tend to celebrate being clever or manipulative (e.g. The lion and The Rabbit).
Aesop fables valuing cleverness: The Clever Sheep, The Crow and the Pitcher, The Ass in the Lion's Skin, the Fox and the Sick Lion, the Fox and the Mask... there are others. Ancient Greek heroes are constantly clever and manipulative.
Well-known Chinese fables celebrating hard work and punishing laziness:
磨杵成针 (Grinding an Iron Pestle into a Needle)
Li Bai was fond of playing when he was young, so he was always absent-minded in classes. Today he would catch little birds on the hill, and tomorrow he would pick dates on that hill. One day, he saw an old lady sitting at the riverside when he was crossing the brook. The old lady was grinding an iron pestle without fear of tiredness. On seeing this, Li Bai laughed at her and said: "People who do this job are fools." The old lady answered kindly: "I am determined to grind the iron pestle into a needle even if the iron pestle is so thick and hard. "Li Bai took the iron pestle and felt tired after grinding it for a minute. Then he complained: "Oh, how long can I get it done? I quit." The old lady shook her head and sighed: "The pestle can be grinded into a needle, as long as you keep working hard." The old lady’s words moved him, and Li Bai remembered them by heart. From then on, he spared no pains to study, and eventually became a great poet.
精卫填海 (Jingwei filling the sea)
Originally the daughter of the emperor Yandi, Jingwei perished at a young age in the East Sea. After her death she chose to assume the shape of a bird in order to exact revenge upon the sea by bringing stones and small twigs from the mountains nearby over the sea in an effort to fill it up. Jingwei has a short dialogue with the sea where the sea scoffs her, claiming that she wouldn't be able to fill it up even in a million years, whereupon she claims that she will then proceed to take ten million years, even one hundred million years, whatever it takes to fill up the sea so that others would not have to perish as she did.
守株待兔 (waiting by a tree stump for rabbits)
In the Spring and Autumn Period, a farmer in the State of Song was one day working in the fields, when he saw a rabbit bump into a tree stump accidentally and break its neck. The farmer took the rabbit home, and cooked himself a delicious meal. That night he thought, "I needn't work so hard. All I have to do is wait for a rabbit each day by the stump." So from then on he gave up farming, and simply sat by the stump waiting for rabbits to come and run into it. The saying satirizes those who wait for strokes of luck instead of working.
Please don't project your confirmation bias onto me. How you got that from one comment is more than just a bit absurd, especially considering I said most, not all, so there are definite outliers as you mentioned.
I also specifically said eastern cultures, which are not limited to Chinese, and the example I gave is in fact a Panchatantra fable, making it Indian in origin, not Chinese. But don't let that stop you from making assumptions and blasé accusations with your alt Hacker News account.
This is not my alt account. I'm just not that active. These are not outliers, you are simply incorrect. If you believe your assertions to be anything but assumptions and blase accusations of entire cultures, I'd be happy to read your published work on the matter.
I don't understand economics enough to address the point on debt, but I have to comment on that:
> American culture of honesty; fraud and cheating are national scandals, not the norm
Wait what. Fraud and cheating are sometimes national scandals if media bothers. But there's absolutely no honesty. Corporations lie and steal. Journalists lie. Startups... well, things like astroturfing, lying to users, tricking them into doing things that are harmful to them, "growth hacking", etc. are not only tolerated but encouraged.
Call it selection bias, but I don't see much of this "culture of honesty" anywhere in the western world, and especially not in the United States.
I would argue that the very notion that cases of fraud and dishonesty make such large media headlines underscores the American culture of honesty the OP is referring to.
Brian Williams was just suspended for six months without pay for lying about a single news story more than a decade ago. From a business perspective, NBC knows their viewers won't take them seriously if they keep a potentially dishonest news anchor on the air.
I agree that fraud and otherwise unethical behavior is still pretty present in the American system, but there's at least a cultural understanding that these things are bad; this, of course, presupposes that A) you can prove that the behavior was either fraudulent or unethical, and B) that the perpetrator was caught.
>Brian Williams was just suspended for six months without pay for lying about a single news story more than a decade ago. From a business perspective, NBC knows their viewers won't take them seriously if they keep a potentially dishonest news anchor on the air.
Interesting. I see the fact that he wasn't fired and permanently publicly disgraced, unable to ever work in journalism again, as evidence that the American culture of honesty is a farce.
We signal that it's bad, but when we catch people cheating and lying, we give them a slap on the wrist. The message is, "Lie, cheat, but don't get caught. And if you do, you'll get off easy."
Americans tend to under-estimate the country we live in, or conversely, over-estimate the competition. I lived in and ran a Startup in Thailand for 7 years, and therefor learned this lesson the hard way.
I agree with your assessment. There is a research firm, Muddy Waters, that specializes in exposing fraudulent companies, and from what I understand, they are doing very well. This article is devoid of the 'counter points' that I see brought up regularly (sometimes too much, or too hyperbole oriented) over at ZeroHedge. That site is by far the other side of the coin to this article, such as the following postulation:
The McKinsey graph on China tells it all. For the moment, forget about leverage ratios, debt carrying capacity and all the other fancy economic metrics. Does it seem likely that a country which is still run by a communist dictatorship and which was on the verge of mass starvation and utter impoverishment only 35 years ago could have prudently increased its outstanding total debt (public and private) from $2 trillion to $28 trillion or by 14X in the short span of 14 years? And especially when half of this period encompassed what is held to be the greatest global financial crisis of modern times
And don’t forget that most of this staggering sum of debt was issued by a “banking” system (and its shadow banking affiliates) which is bereft of any and every known mechanism of financial discipline and market constraints on risk and credit extension. In effect, it is simply a vast pyramidal appendage of the Chinese state in which credit is conjured from thin air by the trillions, and then cascaded in plans and quotas down through regions, counties, cities and towns.
> you don't understand how reserve currencies work
You seem to be making a statement of fact about the contents of the author's mind. Do you really have a way of knowing for sure whether the author understands reserve currencies (or anything else)?
> and your conclusions are wrong
I don't think the author could be "wrong" about his opinions, so maybe you're talking about his predictions? If so, I don't understand why you're making a statement of fact that his predictions definitely don't agree with what will actually happen, because that would seem to require knowledge of the future.
Is it possible that you can't be sure whether or not the author understands reserve currencies, and that you can't be sure what will happen in the future, and that you and the author just have different opinions about complex topics?
In addition this whole thing is anchored on continued growth. At some point there isn't going to be any growth left, specially as pop. growth rates decline and the third world begins toward economic equilibrium. You can't grow forever, at a global scale. At some point, thirty or forty years from now the growth we depend on for economic viability (as a society) is not going to be there. A new model will have to emerge. The so called neo liberal economic system depends on growth... But its not going to be there forever, as Japan has learnt.
You bring up a good point, namely, on a fixed sized planet how can we have growth forever?
I have some hopes that society on a planetary scale will learn that materialism is bullshit and that we are manipulated by clever advertising and pro consumerism messages in movies, etc. Notice how many characters in movies drive over the top expensive cars - just as one example. Same with houses way larger than a family needs for comfort and a happy life.
One thing that I do admire from the article is that Americans do worry about the future in a good way even they still have big advantages. This is a key trait most contemporary Chinese are somewhat lack of. And this alone can tell a lot. For this purpose, it does not matter which competitor the op chose to mention in this article.
There is a fair amount of casual broad-stroke stereotyping, armchair economics and calls to patriotism in this post and throughout the replies that I don't find very appealing. I have seen this type of post increasingly often and it's starting to worry me. Is this the type of community that HN attracts?
Rampant fraudulent reporting from Chinese officials regarding fishing quotas threw off the global catch totals for years. Until they realized that the Chinese officials were lying (due to raises and payments based on meeting quota) the true scope of global fishery loss wasn't understood.
I'd echo the comment of the appearance of working hard, not actual hard work. I managed a group in China for a few years and they come in at the listed start time and exit and the listed end time in the job description. They're precise, I'll give them that. But are they harder workers? No, I don't think they are. They work differently than Americans (if that is your sphere of knowledge) and maybe that's where the misinterpretation is coming from.
These lazy orientals built the largest high speed rail network in the world in less time than it'd take a US rail bill to even get through Congress. They launched their first space station in 2011 (albeit a minimal one) and are planning a manned moon mission, following their first successful lunar lander in 2013 Starting from a space program that was basically nothing 15 years before. Corruption and fraud are rampant in the BIC (Russia is out of the picture, let's face it) nations but I think it's part of nascent country's development. And let's not forget, Steve Jobs was a huge fan of "great artists steal" quote by Picasso.
P.S. Your characterization of 1 billion people as all knockoff makers is dangerously close to the idea that Chinese are mere "culture bearers," while Westerners are the "culture creators," as said by a great mid 20th century ethnologist. Please don't let HN decay into right wing moonbattery, as most anonymous communities do.
There was a time when the United States had loose labor and environmental protections. Combine loose labor and environmental protections with an almost complete lack of respect for personal liberty and property rights and it sure is easy to get things done.
P.S. The population of China was 1.357 billion as of 2013.
"Cheating among Chinese students is pandemic."
Care to give some reference and more clarification (Chinese students where? in US? China?) to back this up? Sounds similar to me to the same narrative as "Asians get good scores because they cheat." I'm appalled when I first heard about this, do people really believe that? or is it just an easy excuse for "non-asians-not-getting-good-scores", to feel good about themselves?
[Edit] I'm not questioning your comment about Chinese companys' practice, just feeling that sentence about "those cheating Chinese students" out of place.
[Edit] Interesting, just got my 1st downvote on HN, ever. Scratching my head now....what's the downvote for? Asking the OP to back up his own claim is offending or what?
I live in China. I know a black American guy who used to take IELTS exams for Koreans when he lived in Korea. Please think of how flagrantly obvious this was. The Korean students in question had powerful parents but it's still indicative. The entire country of South Korea has had the SAT canceled on at least one occasion when the exam papers were leaked. My girlfriend's friend was dating a guy who sold SAT answers at one stage. As to the culture of cheating my friend's wife sat an English proficiency exam for her cousin that said cousin needed to graduate ~community college as a kindergarten teacher. Those are things that are a matter of public record or personal experience.
There's more in this line from Ed at educationrealist.wordpress.com though I can't speak to their reliability. According to them there are massive threads on college confidential where people reconstruct SAT exams.
Cheating on tests is really common in China and Korea.
Thanks for the reference, at least you cared to search and show it!
10% of 25,000 for that particular exam does sound a lot, and that's probably why it made national news in the first place. Does it mean 10% of all Chinese students (in China) cheat? Is it a proof that "Cheating among Chinese students is pandemic."? Definitely Not. I can find way more examples where 0% of Chinese students cheat in national level exams (actually, I probably can't, because "nobody cheated in the exam" won't make the news). Does that mean "Chinese students never cheat."? Of course not either. I'm not trying to be the PC police here, but I'm just baffled that a sweeping claim like that got used as the basis of OP's thesis and everybody seems to be agreeing with it. I thought HN's audience could do better than that...
Yeah, this is why I didn't bother constructing a more robust argument showing the clear trend. Consider that you may be unwilling to entertain the possibility that this phenomenon actually exists.
What "trend" are you referring to? "Cheating among Chinese students is pandemic." is the trend? So it used to be not "pandemic" but has become more and more so recently? That would actually be very interesting to read if not merely backed up by some hand waving stats or anecdotal evidences.
Should the goal of the US be to emulate happy, stable, wealthy, smaller economies but arguably more egalitarian northern European democracies?
Or rather, should we chase China in a race to the bottom? Lower corporate taxes, longer working hours, reduced environmental protections, with the goal of creating a fabulously wealthy klepto-capitalist ruling class? How dare people criticize kids burning the candle at both ends to make other people billions of dollars, China is beating us!
I wish I could upvote this more than once. American insecurities about China seem to come from people who don't understand how unenviable China's position is. The country is authoritarian, polluted, crowded, and corrupt. People in China work hard because living in China really, really sucks if you are poor. Members of the wealthy ruling class all own property overseas and send their kids to university overseas. They made their money from owning manufacturing companies that sell goods to American brands. There isn't much of a middle class because white-collar jobs in China are so limited and pay so poorly because so many college graduates are competing for them.
There is literally nothing about China's economic system that would be appropriate for the US to try to emulate. We need to look to Northern Europe if we're looking for an example to model our system after.
I think you are hitting the right point, that China's system has a lot of flaws that we don't want to pick up. However, you are casting this in absolutist terms, "NOTHING about China's economic system would be appropriate," and I do not think that is correct either. Just because China has some flaws, such as its inability to handle environmental and social problems, it is a fallacy to then say that every thing about it is flawed. I think a more reasonable response is to say, "we should look to Northern Europe, but we should also look to China, and be wary of making the same mistakes found in any given system, whether in China or in Northern Europe."
Lately I have been trying to avoid using weasel words. I'd rather err on the side of painting with too broad a brush than weaken my statements with a bunch of qualifiers that add no meaning.
Having said that, I really can't think of one aspect of China's economic system that would be appropriate for the US to emulate. We're envious of their growth rate and insecure that their GDP will surpass ours, but that doesn't mean any of their actual policies are appropriate for the US economy.
You can't have endless impressive growth. Once you're developed its going to hit a reasonable cap. China is still developing. You can't compare the most mature economy to one of least developed. The move from back-breaking farm labor all day to manufacturing is MASSIVE growth. The problem with Western democracies is that we moved past that stage over 100 years ago. Now we're in a service based economy. That just doesn't have that wonderful growth curve.
As many democratic and liberal nations have discovered, its a fool's errand to chase growth on that curve and, as you said, the wealth and stability of north Europe is a tempting target to emulate. With recent moves towards proper socialization like Obamacare and focusing on tax cuts for the middle class and raising the minimum wage, I feel like we're on the path to those economies and have long stepped off the path of just beating down workers for tiny gains as we fight the laws of diminishing returns. How much workers unrest does the CCP violently take down per year to keep people in line? How many secret police arrests?
These pro-China pieces are mystifying to me. Geeks always seem to worship autocrats and dictators for whatever reason. I guess they like the idea of a centralized control by elites, but that simply doesn't scale well and it invites corruption and other inefficiencies much faster than a more open political process. I'd rather live in the poorest Western nation than in China or Russia. Its crazy that we're actually seeing their system as superior to ours. Only on HN would this drivel be voted so highly. INTJ social and moral blindness is in full effect here.
I look forward to the scandinaviation of all things. I believe its the best path humanity has.
"Geeks always seem to worship autocrats and dictators for whatever reason."
I do not think this is entirely correct. You don't see widespread support for the majority of the world's autocrats. I think geeks want technocrats, not simply autocrats. In that sense, it is important to distinguish between different types of autocrats. There is a reason you see more pro-China pieces than pro-Russia, pro-Syria, pro-Cuba, or pro-Saudi pieces for example.
What people see in China is a society which has faced many challenges - demographic challenges, economic challenges, environmental challenges, stability challenges. They are not a democracy, and yet they perform much better on many issues than the vast majority of autocracies out there - as Syria falls to pieces, Russia's economy falters, and Egypt regresses from revolution, states like China are actually making some progress, however slight, in meeting needs of their populations.
China as a system that is superior to ours? I do not think sama and others are actually arguing this. However, I think that a state like China, while being an autocracy, does not make mistakes only - occasionally it does something right. And when a state occasionally does something right, there is a lesson to be learned.
>There is a reason you see more pro-China pieces than pro-Russia, pro-Syria, pro-Cuba, or pro-Saudi pieces for example.
I'm fairly political so I imagine I pay attention to this stuff more than most, but you bet your bottom dollar people here and on reddit and slashdot sing the praises of Cuba, Syria, and Russia. Usuallly the sentiment come from Europeans and others with an anti-US bone to pick. As someone who has done business with both the Chinese and the Russians, its incredible how shitty and dishonest their business culture is. I don't think a lot of the people cheerleading them have any idea what they are talking about.
> but you bet your bottom dollar people here and on reddit and slashdot sing the praises of Cuba, Syria, and Russia. Usuallly the sentiment come from Europeans and others with an anti-US bone to pick
I think its a lot more common that American Exceptionalists mistake arguments of the form that, e.g., Cuba does better on some narrow measure than the US despite its much poorer, economy, so one might want to consider how the US could do better, or that abuses being complained about in Russia have parallels in the US, or that US government (or popular media) complaints about Syria are hypocritical in light of the same sources defense of regimes with the same features, in greater degree, than Syria shows as "singing the praises of" Cuba, Russia, or Syria.
> These pro-China pieces are mystifying to me. Geeks always seem to worship autocrats and dictators for whatever reason.
It's because we see the world through the lens of our relationship with our computers, and in that relationship, we are dictators. We tell the computer what to do, and it just does it. It never asks for more vacation time or complains when we push it to its physical limits. In those cases where it doesn't do what we told it, 99% of the time the reason is because we phrased the request wrong. Then we look at democracy and start thinking, man, how inefficient all this taking into account other peoples' needs and principles and desires is!
When you start thinking of the world as a computer, it's not a giant leap to think that the solution to all its problems is just to give someone out there root privileges.
I disagree. I think it's mostly because geeks like effective solutions.
Dictatorships, despite all their scary failure modes, have one very good feature democracies lack - they get things done. When there's a new power plant to be built or transportation project to be realized, they just happen. There's no need to pander to clueless people bitching about things they don't understand. No anti-nuclear movements, no NIMBYsm, etc. No decision-making overheads because various politicians are bribed to support different groups. No pandering to electorate. If it needs to be done, it just gets done. In contrast, western governments are pretty much incapable of any serious action on anything that matters.
I think this is the very reason geeks seem to worship benevolent dictatorships. They're just efficient. It's maintaining the benevolent part that is hard.
> Dictatorships, despite all their scary failure modes, have one very good feature democracies lack - they get things done... I think this is the very reason geeks seem to worship benevolent dictatorships. They're just efficient.
Not really -- or at least, not necessarily. Modern scholarship on Nazi Germany, for instance, has found that despite its much-vaunted efficiency it was actually a morass of feuding power centers all fighting each other to get Hitler's ear, which resulted in massive inefficiencies that in the end contributed materially to their loss in World War II. Fascist Italy was much the same way. And even the dictator himself didn't help matters -- look at the story of the revolutionary Me 262 jet fighter (http://en.wikipedia.org/wiki/Messerschmitt_Me_262), which arrived too late to help Germany fend off the Allied bomber offensive because Hitler decided apropos of nothing midway through development that it should be completely retooled to function as a bomber instead.
Dictatorships look efficient, because they tend to focus resources on high-profile prestige projects of the kind that would never get off the ground in a democracy because they make absolutely no economic sense. If you build a pyramid, people are gonna look at it and say "wow, those people sure can get things done." But in their everyday operation they run according to the whims of the dictator, which hurts efficiency rather than helping it.
Thanks for the Messerschmitt story, haven't heard of that before.
> projects of the kind that would never get off the ground in a democracy because they make absolutely no economic sense.
I think here's the crux of the problem. Not everything that makes economic sense is good, especially if we're talking about current, greedy (as in, locally optimizing) economy. Sticking to fossil fuels until very end makes economic sense. Not investing in basic research makes economic sense. Slave labour makes economic sense. Stupid resource-wasting zero-sum games like political campaigns or advertising make economic sense.
Among all the good things it does, following the economy also leads to completely batshit insane decisions. This is, I think, what many geeks have problem with. They seek solutions that are powerful enough to get us out of the holes we're in despite the economy.
> And even the dictator himself didn't help matters
An even better example would be the ongoing investment in prestige battleships when it was the U-boat fleet that brought Britain to within a fortnight of surrender.
>have one very good feature democracies lack - they get things done.
I think this is a misconception. Chaotic system almost exclusively defeat planned systems. A chaotic market will beat communist central planning every time. A chaotic fight for life via evolution will beat robots every time, etc.
Humanity's greatest achievements have been done under largely western, open, and democratic societies (for various definitions of) from ancient Greece to what the US and EU has been able to do. While autocratic systems have their success stories, they're more rare and often hit a wall due to the natural of autocracy (threaten the political order, favor system stopping innovation).
You're using an American OS on an American network stack and American root DNS and American URLs on an American designed CPU in English at an American website to have this conversation for a reason.
I suggest you check out Kelly's Out of Control or Taleb's Anti-Fragile.
While it's true in general that chaotic systems tend to fare better than planned in our world, I think the problem is with limitations of human cognitive capabilities, not with the idea of planned systems per se.
For one, there's a reason that successful designs tend to have one person's vision (even if many are involved in actual construction). We all know "design by committee".
Secondly,
> A chaotic market will beat communist central planning every time.
I am starting to believe that central planning has failed so spectacularly because people can't handle that much complexity in their heads + you actually have a distributed system. If we tried that again, but with computerized economy and a centralized algorithm running global optimization, I think it could fare much better than previously, and much better than distributed market systems we have today. Yes, it will cost us some economic freedom, but this very freedom is what is driving humanity to its grave by destroying the environment and pretending we're not running out of cheap energy.
> A chaotic fight for life via evolution will beat robots every time, etc.
This I strongly disagree with. "Chaotic fight for life" works almost infinitely slower than human mind it crafted. It might have evolved a dog over half a millenium, but Boston Dynamics got halfway there over few years. We can optimize better and iterate faster. Evolution is cool and all, but let's not discount the minds we have and the fact that they, not biological evolution, are now the driving force on the planet.
Completely agreed. Most of China's growth has been from moving people from agriculture to manufacturing. Essentially activating its giant labor force to compete on price. This has lifted millions of people out of poverty. However, it's still not entirely clear if China will be able to avoid the middle income trap that many countries seem to get stuck in as labor becomes more expensive and they aren't able to compete on price anymore.
Excellent points. I live in a community with a fair few retired state officials, and the China fear/admiration is also entrenched amongst folks who are already very wealthy, and have a passing interest in staying on top of international politics. There is something to your observation of wealthy individuals of medium to high intellect falling in love with autocrats, as though if a few smarter people could just control a little more, things would be better/more optimized/grow faster.
The twist of course being the punchline to Zen and the Art of Motorcycle Maintenance. What is better? Why optimize? Growth for what purpose?
We've already chosen the race to the bottom, friend.
The Chinese have a head start, but don't worry, we're following as closely as we can manage and as our nation-specific bonus we already have the klepto-capitalist class in place.
> One thing that I’ve found puzzling over the last ten or so years is the anger directed towards people who choose to work hard
That feels somewhat disingenuous. If 'sama is referring to the sentiments expressed on this board, from what I've seen, it's not anger towards people choosing to work hard, but anger towards demands of hard work of others from those who stand to benefit at their expense.
Ie, the anger is towards VCs who talk glowingly of start-up founders working themselves to the bone and, in turn, towards start-up founders who talk glowingly of 0.01% equity-holding employees grinding out hour after overtime hour.
Certainly working really hard without an expectation of being compensated it (either with equity or cash) is dumb. I've argued a lot that startups should give employees more equity, and I think that's shifting. Also, most startups I'm aware of, at least in the bay area, pay large salaries at this point.
I'd have to disagree. At least based on my definition of large and my experience interviewing in the Valley.
For example: If you're making X amount of salary and paying $1500 for a one bedroom in Big City Y, you'd have to make at _least_ $24k more in SV if you wanted a comparable one bedroom apartment. It's probably even more than that as I don't know anyone paying less than $3k for a one bedroom within 10 miles of SF.
For a junior dev making $80k in Austin who is moving to SV, getting that $20k bump is certainly plausible and in the above scenario would work out fine.
But what about a family of 4? They need a 3 bedroom house. How in the world is that family going to make enough to afford a house northing of $1m? How much would that person have to make to even support half the cost of their houehold? $200k? $400k? Those types of salaries just aren't happening at startups.
Not every opportunity is great for everyone; people with families generally don't like to travel, that doesn't mean that a job that entails travel is a bad one.
Having a family is clearly a choice. And having 3 kids is very different from having 1. These people will always have less material goods and have a harder time scraping by than someone with no dependants when the cost of living is high. This is true of any industry in any expensive area, it's what you should be expecting if you have kids.
In any case, the original comment is wrong about housing prices, you get shafted when you try to live right in the heart of SF, pretty much everyone with a family is going to have to commute from somewhere, you can still get comparatively cheap 3 bedroom houses in san jose, and there's still plenty of tech companies with offices in the south bay.
This is probably the single biggest factor that's keeping me from moving out to CA. There's a lot of great companies out there and I think I could learn a lot but I also don't want to go broke.
Edit: How are people making it without a really high salary or living with three other people?
I call real estate the "evil sponge." As a region becomes more affluent, the price of real estate appreciates at least in step with this. Due to the leveraged debt financing of RE, the reality is often that price appreciation is a multiple of wage appreciation.
This takes pretty much all the surplus capital in a region -- among everyone but the rich -- and locks it up in an inert asset.
Think of it this way: a starter home in the Bay Area is about a million dollars. In SoCal -- not cheap by any means -- it's more like $400k. The average AngelList seed round is $400-$600k. So every single house in the Bay Area locks up the capital required to seed fund at least one new venture.
What could all those smart people in the Bay Area be doing if all their capital were not locked up by an inert asset?
What's worse is that there are idiots who cheer this on because it will supposedly exclude people they don't like (the poor, blacks, etc.) from their neighborhoods. I read a great book called Detroit: A Biography. It explained how RE hustlers used racism to fleece people: first they'd sell a neighborhood to white folks. Then they'd pay black people to walk around in it. Then they'd scare the white folks into selling below market, jack the price back up and sell it to blacks, and meanwhile sell a further-out more expensive neighborhood to those same white folks. Rinse and repeat. I suppose if you harbor these kinds of views it's kind of poetic when they're turned around and used to con you, but it harms everyone else too.
I was hoping the housing bubble crash would bring relief, but it's right back up there. Either the entire economy needs to inflate until RE is reasonable again -- which would give us $8 loaves of bread -- or real estate needs to fall over and burn. We need something like the 2008 housing crash with no recovery-- to unshackle the real economy from the rentier asset economy.
For instance - if I bought a house in the 1990s for 200K and it's now worth a million dollars, it isn't stealing $800K from anywhere. That's new wealth that I have that I can also put to work. (Even if I don't take a mortgage out on the house, I can invest more of my other money more aggressively, if I'm paying less mortgage, or know that I have a high value asset in my home)
I think it's more appropriate to look at the monthly rent differential.
Let's say that a 1BR in Palo Alto costs $2,500, and a similar one in Austin costs $1,000. [0] In that case, there is a $1,500 * 12 = $18,000 differential. Let's double it to include how much you have to make to have that much take-home income, and you have a $36,000 per year difference. If an angel-fed startup has 3 employees, then there is a ~100K per year of effective real estate tax. (Approximately 20-25% rather than 100%[1])
The trade-off is, how much more likely are you to succeed and scale based on being in SF vs Austin?
[0] I'm basing both #s on the very accurate "Approximate the first Google result" method.
[1] One can argue that everything is more expensive in the bay area, but total cost of living comparisons are tough to do. Is it % of spending or absolute dollars? Does it depend on public schools? Quality of goods?
It's not "stealing" 800k. That would be a bit too strong. But the problem is that your 800k comes via the fact that newer entrants to the market must now take out monster mortgages. It's not wealth created, but a draw on future wealth and an increase in the interest payments of younger workers.
It's sort of a generationally regressive tax. I personally suspect that policies that protect and encourage RE hyperinflation have been pursued as a way for the baby boomers to economically eat their children.
Rent prices are also quite tied to real estate prices, so when the latter appreciates rents go up too.
Over the long term, rent usually fixes to a certain % of "All in" housing costs. (Usually close to mortgage payments plus upkeep plus condo fees)
The difference is that rent is a short term costs, so for startups they're not eating the 30 year home ownership cost, just the monthly rental differences.
It is a generationally regressive tax only to the extent that parents die with no assets left. If they die with positive assets, then the value of their homes gets handed to their kids.
The CA system is painful for other reasons. At the outset, it's a tax by people with good credit on people with bad. (You can't get the tax benefits of home ownership unless you have good credit) The bigger issue is the nature of the taxation... Because tax increases on houses can't rise as fast as the homes themselves, new homeowners pay a penalty relative to the value of the house. (If you and I both both buy homes in the same neighborhood. You paid 500K 3 years ago, and I pay 1mm today, my tax burden will be almost double yours)
There is a reason that successful, fast-developing nations such as Singapore have enacted tight controls over the ability of a zero-value-add rentier class to extract all the value from a growing economy.
Have you seen Singapore real estate prices lately? The same 2-br condo (Parc Vista @ Boon Lay, never a particularl desirable location to begin with) I used to rent for $1000/mo back in ~2005 is going for ~$3500/mo now, the building hasn't gotten any newer in the meantime, and this is actually a bit cheaper than it was two years ago.
My company relocated to San Fran a few months ago, I had to quit because moving there from Dallas made no financial sense.
Even with a massive raise my monthly savings would be cut in half (or more), and spending in excess of a million dollars on a home is way too risky (look at all the people who went upside down during the last recession). Barring something incredibly unlikely, such as the equity I own actually being worth something, I would likely have to add an extra 10 years or more to my expected retirement age if I chose to live and work out there.
Everyone is renting. Ok, I have one friend thinking of buying a house in Oakland since he grew up in in NorCal and wants to stay here.
Almost everyone has roommates (if they're single), or lives somewhere less convenient (if they're not).
Some people are skating by on rent control (still jealous of my friend's room in the mission for 1k/month).
Some people are burning through their income to fund a nice place but most people are saving their money.
personally I'm not sure how long I'll stay in the bay, so I'm not looking at buying anything atm since prices do seem insane. Seems reasonable for me to save my money while I'm young and my costs are low, seeing what the future brings.
Working too much, to the detriment of your health, sleep, family, and friendships, for any amount of money, even if you are the founder, is dumb. Perhaps Steve Jobs would've caught up with science and stopped his cancer earlier if he took a break.
I run a start-up with 100+ people. Vacations, family time, sleep - these are good and ultimately productive things. The normal person works so they can live, be healthy. They don't live so they can work.
citation: Steve Jobs by Walter Isaacson, authorized by Steve Jobs. What political agenda? I run a company and work a lot, but I think working is only one aspect of human existence and we should try to strike some semblance of balance.
I mean we all love large salaries but it's a symptom of something more fundamental namely that there are a lot of people who work hard but don't have the skills the market need and don't have the means to re-educate themselves.
It's not like everyone is getting more, it's that there is a divide where some gets more and a lot gets less.
Thats what this is all about. It's no ones fault but it has nothing to do with who works hard or not.
I suppose the sentiments of people who say "don't work hard" can vary. Many people tie working 'hard' to hours put in. I will say there are many schools of thought on this. If I am super focused and work 'hard' for 30 hours a week and enjoy my life the rest of week, how is my productivity and creativity compared to someone who puts in 70 hours? Are they really out-competing me? What does the research show on this, compared to anecdotally stating "All successful startups that I observe work hard at all hours, therefore this is THE way"? You are one of a small group of people that could make this observation. Just because that is common in successful companies, doesn't mean it is the best way.
I disagree. I think he is talking about the general 'anti-workaholic' attitude. I see it all the time and have personally been called out for wanting to work too much. I don't know enough about China's culture, but I know in America it is looked down upon to work non stop even if it is just for a few years of a person's life.
For good reason. It is both unhealthy and inefficient to work massive amounts of hours. There are multiple studies that show that overall productivity increases when you don't work over 40 hours a week.
The studies I've seen show productivity falling at 40 hours and dropping off a cliff at 50 for most activities.
I don't think the blame for the workaholic culture lies primarily with VCs, though some do encourage this. I think it's mostly a part of the cult of male ego. "I worked 70 hours last week! How many did you work? 50? Wuss! I'm so much more hard-core than you!"
People also lie about how many hours they worked. In reality they work maybe 20-40 and then do things like... uhh... hang around in here... for the other 20-40. Again part of the macho one-upmanship thing... putting on an act of working ridiculous hours to look hard.
Its a grind game. Obviously my WoW character level 70 is far superior to your WoW character level 50.
Unfortunately companies can be killed by this kind of primitive behavior when the 70 hour/week guy executes less shareholder value add than a 20 hour/week intern.
Give someone a stupid metric to aspire to, they'll max it. Might destroy the company in the process, maybe even themselves or their own careers, but they'll max the metric number, thats for sure.
I've run into this before as well, where guys will brag about how much (unpaid) overtime they put in, how early they get to the office in the morning, etc. I feel pity for them, not respect.
> In reality they work maybe 20-40 and then do things like... uhh... hang around in here... for the other 20-40
So much this.
There's just a huge level of inefficiency with working ridiculous hours on a regular basis. Just because you're engaged in the physical act of coding/designing/writing/etc. does not mean you are producing anything of value. In reality you'll probably do something that needs to be fixed a week or two down the road.
I've watched people who work till 9pm everyday. After 5:30 or 6 they mostly just browse the internet and fiddle around. In reality they should probably work from 8 or 9 - 5 or 6 and take a healthy 3 to 4 hour break and go home. Then after their evening has settled down get back into working on something for another hour or two at the leisure of their own home. This is much more productive than just slugging it out at the office with no work life balance at all.
One thing that I’ve found puzzling over the last ten or
so years is the anger directed towards people who choose
to work hard
I think there is serious merit to that sentiment. Others in this thread have made very keen observations on this all pervasive national attitude that has blanketed America in the past decade or two.
however the biggest issue facing the US is this message that excelling
isn't to aspired too, acceptance of who you are and who someone else
is is all that matters. It is a self defeating mindset. Don't worry if
you fail, you had no choice, you just can't do better. Here let us
take care of you....
And fully expecting to be flamed, I give you perhaps, the most lucid and no-nonsense explanation of how this kind of self-defeatist thinking has come about envelope the national psyche, in the form on a nice quip by none other than, Peter Thiel himself:
The countercultural in the '60s was the hippies. You know, we landed
on the moon in July of 1969. Woodstock started three weeks later, and
with the benefit of hindsight, that’s when progress ended, and the
hippies took over the country.
He adds:
Today the counterculture is to believe in science and technology. You
know, our society, the dominant culture doesn’t like science. It
doesn’t like technology. You just look at the science-fiction movies
that come out of Hollywood — Terminator, Matrix, Avatar, Elysium. I
watched the Gravity movie the other day. It’s like you would never
want to go into outer space. You would just want to be back on some
muddy island. And so I think we’re in a world where actually believing
that a better future is possible that you can have agency and work
towards a better future, that is actually radically countercultural.
Why ignore the elephant in the room? The U.S. is more unequal than it has been since before WWII [1], and that is a big reason why its growth is stagnating.[2] It's time to stop taking seriously any analyses that do not address this.
It's inconvenient to discuss inequality if you are a VC in SV... let's be honest, it's their game to win, and the losses won't hurt them that badly anyway.
It's more comforting to rely on the "didn't work as hard as me and therefore don't deserve as much cash" line.
Wage growth has been stagnant since the 70s, and a working wage is all the vast majority of people can expect as a way of gaining money.
Additionally, there is an important distinction here: VCs deal in wealth with income being derived from that wealth, and normal people deal in income, with wealth being derived from that income.
VCs get dividends from their stocks. Normal people save up to buy a house, or put money into a retirement account.
China's growth is stagnate. That's why they needed tens of trillions in new debt since the great recession to juice the GDP numbers. Subtract out the $30 trillion in new debt, throw in the real inflation rate (like many governments, China lies about their real inflation rate), you get economic contraction. That means the only difference between their fake growth today, and the horrific outcome on the way, is a little bit of time and tens of trillions in additional debt that will never be repaid.
Not necessarily. 70% of the U.S. economy is based on consumer spending, meaning the disposable income has to be there in the first place. China's economy is not structured this way.
The US is unequal largely because the US exported millions of blue collar jobs to Asia but did not proportionally increase incentives to create jobs for those displaced. This only affected the middle class as the highest earners benefited or were untouched by the job exports. The US then created huge incentives for "investment" in home purchases and other real-estate, creating a spectacular bubble that worsened inequality all the more when it burst. That did impact higher earners. Everyone is worse off. So, it must be the case that now Congress and the President are working together to make job creation, manufacturing and competitiveness a priority, right? Not so much. New manufacturing innovation centers appear to be patronage boondoggles. While billions went to bank bailouts, the Small Business Administration saw no significant increase. Taxes actually increased for employment, and the US healthcare law has made health insurance more (not less) expensive for many employers.
I don't mean to eye-roll, but Sam on economics tends to be, well, meh. The thing I always remind people when they say that China will take over the world is that everyone said the same thing about Japan in the 1980s (remember the movie/novel Rising Sun?). What happened?
Well, the mercantilist economic toolkit has an endgame. Neither Sam nor I knows when it's going to let them down, but building an entire economy on cheap labor and radical amounts of investment is hard to sustain. Eventually you need things like domestic demand and that requires wages, which short-circuits the export machine. Japan got caught in that trap, and China will eventually too.
Not to mention that it's not just the U.S. and China competing in a vacuum. China's real economic threat is on the low-end. As they've boomed and their labor has become more expensive, many foreign companies are re-offshoring elsewhere.
Also let's keep in mind that we have yet to see all the effects of the unprecendented demographic experiment of the one-child policy. They will be dealing with an aging population on a scale never seen before.
Finally, the U.S. has a lot going for it when compared with its developed peers - growing population, attractive to immigrants, and a culture of entrepreneurialism and risk-taking (which Sam seems to think is in decline...not sure I see the same thing).
When China's elites stop wanting to send their children to U.S. universities and find ways to get their capital off the mainland, then I'll worry.
It's the straight line fallacy: the belief that a trend that's operating today will continue to operate in the same way in the future. History doesn't work like that. It is much more like the biological model of punctuated equilibrium (http://en.wikipedia.org/wiki/Punctuated_equilibrium), where things don't change until suddenly they all do.
China over the next 50 years has a lot of promise, but it has a lot of challenges to face too: environmental degradation, systemic corruption, authoritarian politics that increasingly clash with the needs of a more educated populace, the temptation to flex its new muscles by knocking over some of its more annoying neighbors. There's no guarantees that China in 2065 will look anything like China does today.
An important difference is that Japan is a considerably smaller country, and to surpass the US they'd have to pull off something really remarkable and raise their per-capita GDP 2-3x above that of the US to surpass it absolutely.
China is more interesting and realistic because all they have to do is achieve a per-capita GDP somewhat similar to the US, and their vastly larger population makes their economy (and power) much bigger too. Japan didn't eat the world, but they did achieve a per-capita GDP about 2/3rds that of the US. If China just gets that far it'll already change the game beyond imagining.
Japan's economic demise in the 1990's is actually attributed to foreign investment and a massive, speculative asset price bubble - caused by the land lease laws, property taxes, and poor policy on interest rates.
China is not perfectly communist, but their planned economy is a bit more robust than most other capitalist markets when it comes to reacting to negative market forces.
China has the population for domestic demand, and their rising middle class is filling that with their wages, so don't write of China for Japan's faults just yet.
There's a population difference. While the US is more than twice as populous as Japan, it is less than a fourth as populous as China. It would be crazy if Japan became wealthier than the US; it would be only natural if China did.
There are also many other differences: differences in resource/energy availability, differences in the global environment, differences in policy options available to the government, differences in internal structure and diversity, etc. The Japan-China comparison is popular these days but it misses a lot of the things that distinguish China from the old Japan.
As a native Chinese (I'm tired to claim this every time when commenting on China related topics.), I think the op needs to do a lot more homework on China. It's not an easy task to know something you are not familiar with with just numbers, even if one has more than enough numbers.
The main fallacy in that article is that USA is important because innovation. The conservative solution proposed by the author is to go back to an hypothetical golden age "that encourages investment, welcomes immigrants, rewards risk-taking, hard work, and radical thinking, and minimizes impediments to doing new things", like the good old times before.
My question is: what are you talking about? The "social" America of the '50s and '60s? The America of the technological boom of the 90s?
America is even more innovative today than decades before. More risks are taken today than before (the crisis of 2008 is also proof of that).
Are you sure that lack of innovation is the problem? Do you think that china is getting bigger and bolder because more risk taking? LOL no. They are conservative and fatalistic and hierarchical as ever.
I think that the American disease should be explained in another way.
In other words, stop complaining about unsustainable work habits leading to physical and mental problems among founders, and let venture capitalists turn that hard work into (a) profit for them while (b) keeping you all safe from Chinese Dominance.
I don't understand why Altman doesn't address the underlying arguments against "hard work". The modern workers movement was about receiving more of the profit from business. He seems to want workers to take the pay cut while still providing the same incentives to capital investment.
Mentioning China's lack of environmental regulations is just a red herring that distracts people from the real solution. Consider the following:
It's illegal for me to build a cruise missile in the US. Likewise, it's illegal for me to import a cruise missile into the US.
It's illegal for my startup to pollute when I produce a Gizmo in the US. However, it's totally legal for for me to import said Gizmo from China after I paid someone there to pollute for me.
Any sane environmental regulation must be applied at the point of sale as well. The problem here is our environmental regulation. We can't change what China does but we can change our broken laws.
1. US GDP per capita is still almost 8x that of China: $53,042 US vs. $6,807 China (http://data.worldbank.org/indicator/NY.GDP.PCAP.CD). While there are other ways to measure this (such as the PPP Sam cites), the magnitude of difference remains large. So even if China's economy in the aggregate is larger than the US's, the US is still much richer per capita.
2. As China grows richer, I expect the US will too. In modern inter-connected economies with few trade barriers growth in one generally benefits the other too. One example would be as one country's citizens gain greater purchasing power, they become bigger consumers of the other country's goods and services.
US GDP per capita is still almost 8x that of China
One reason this might not be the right metric is because absolute power of a country matters more than power per citizen. Imagine a country with only one citizen, but a trillion dollars. The country wouldn't be very relevant. Even if the citizen tried to hire a military and use it, they wouldn't get very far. They wouldn't exert much influence economically either, in the sense of causing other countries to become dependent.
Also, total number of citizens is an important metric in itself. People in both the US and China will pretty much do whatever their power structures tell them to do. If that means beating a war drum, there are going to be a lot of people agreeing with war on both sides, but far more in China. Overwhelming forces can be stopped with tactics and technology, but when technology is comparable the casualties are usually comparable. And China has been gathering our technology for a long time.
War isn't the concern right now, though. The example was just meant to illustrate that China seems to have more options than the US.
As China grows richer, I expect the US will too. In modern inter-connected economies with few trade barriers growth in one generally benefits the other too.
History seems to disagree. As one country grows richer, other countries tend to become subservient. There's no such thing as modern human nature.
It's difficult to explore this question without being accused of racism, but I'd like to better understand why some cultures are so much more economically successful than others. The Chinese are such a great example of this. Wherever they go, they seem to end up being very successful. For example, in the Philippines it's claimed that Chinese are 1% of the population, but control 60% of the economy (http://opinion.inquirer.net/31223/ethnic-chinese-dominate-ph...).
> why some cultures are so much more economically successful than others
They're not. You're falling prey to selection bias. The Indians, Chinese, Bengalis, Nigerians who have chosen to go abroad are unique and special. They're the ones who take this courageous initiative to go into a land of unknown, likely other Chinese who are not travelling abroad - if they would, they probably wouldn't do as well.
I suppose the other part can be explained by culture. I'm a brown guy who came to America sometime ago, my family relatives are right now basically all priming their kids to become doctors. They are so committed to the idea that their kids are going to become doctors that I would bet a good amount of money that the kids will get good MCAT stores, will get residency, and perhaps even open their own clinics (they know this is where the money is, and they let their kids know this too).
The path of lifee I think is more conservatively and clearly defined in India than in America or other Western societies. In America, if your son wants to be an artist, a painter, a musician, you tell him to try his best. Indeed it is socially acceptable both by families and our society for a person to aspire to be anyone he wants to be, to do anything he or she wants to do. In contrast, the strongly knitted social cohesion and solidarity of places like India and Bangladesh impose a certain structure and path: you go to school -- you try really hard, you respect the hell out of your teacher, you go to college, you get married, and you try your darndest to provide as much as you can for your wife and kid. And that is not done by playing with high-risk games -- it is done by going the way that is known and suggested by community leaders, friends, families.
I don't think I've answered your question very satisfactorily or completely, the best I can say is it's the culture that's responsible for this. And I'm totally not happy right now with mainstream culture of America (especially the one lead by corp: misogyny is rampant (have you read the shit Eminem says in interviews? Why is Chris Brown still so celebrated?), math/science aptitude is equated to unattractive geekiness, etc. etc.
(I'll probably get accused of cultural imperialism for this comment, but well, it's the Internet and people can accuse anyone of anything. I'll probably also get some facts wrong, but corrections are welcomed for that.)
I think a lot of it comes down to "culture has consequences". It may not be possible to say that one culture is "better" than another, but that doesn't mean that the collection of habits & worldviews that make up culture doesn't have real effects in the real world. And then when you apply the yardstick of economic success - which itself is a culturally relative value, many cultures don't care about money at all - of course some cultures will do better against that metric.
Some examples:
Many cultures (Indian, Pakistani, everything descended from Spain/Portugal/Latin America) have a very loose notion of time. When you say 6:00 PM, you really mean sometime between 6:00 and 7:30 PM. This is great for social occasions, where everyone shows up relaxed. It's not so great for business deals or transactions, because it makes it very difficult to plan or schedule anything efficiently. Imagine running an airline where every passenger might show up in a 2-hour window after the official departure time.
Some cultures (like the American South, Arabia, or Russia) tend to be very honor-based, where if someone slights you, you have to enact revenge or be seen as weak. Other cultures (like Silicon Valley, Christianity, or some Confucian cultures like China and Japan) are much more "turn the other cheek" - when someone slights you, you refuse to associate with them and instead focus on building up yourself and your relationships so that your personal life improves, figuring that they'll get their come-uppance eventually. The former is more effective in sparsely-populated settlements where everybody knows everybody, because word travels around and a 3rd-parties assessment of you as weak could negatively impact future relationships. The latter is more effective in densely-populated environments with a number of chance encounters, because each new opportunity comes with no memory of previous encounters, and so your time is better spent on activities that are positive-sum for yourself rather than negative-sum for your opponents. The contemporary economic world is much more like the latter than the former.
Some cultures (notably the U.S.) believe that it is the responsibility of the person being offended to speak up and assert their boundaries. Other cultures (notably Japan and China, and historically Native American societies) believe that is the responsibility of the actor to avoid causing offense. Both of these are local maxima within a society of like people; in the U.S. everyone is jostling for position and constantly negotiating what's okay and what's not, while in Japan everyone knows the rules for what's socially acceptable and doesn't step outside those bounds. However, when they contact each other, it's pretty clear that the culture that believes it's somebody else's responsibility to speak up when their rights are violated will run roughshod over the culture that believe it's somebody else's responsibility not to violate rights. Witness how the first American settlers reasoned "Hey, if the indigenous people don't have the concept of land rights, all this land must be free for the taking!" while the indigenous people were more like "You take our land, give us diseases, destroy our way of life, and herd us on to reservations, and all because we greeted you as friends."
(As a side note, I suspect the latter cultural disagreement is behind much of the distrust and criticism of Silicon Valley startups. As a startup founder, you have to believe that what you're doing is making the world a better place, and so you just do things and see how it comes out. If people object, you take their objections into account and see if you can work out a compromise solution that respects their rights too, but you don't specifically try to think of everyone that might possibly be negatively affected and avoid doing it if there's even one such person. However, many people - even in the U.S. - operate under the assumption that "Other people should not do things that hurt me", and so they are somewhat justifiably upset when they lose their job due to technology or their private data is used by advertisers or their favorite product goes away.)
Anyway, bringing it back to China - I think that Chinese culture has a combination of elements that together are pretty well-adapted to the modern business environment. It highly values learning for learning's sake, which is very handy in today's information-focused world. It's pragmatic and engages with the real world. It generally focuses on positive-sum engagements and long-term relationships, placing a high premium on social harmony. It incorporates a strong work ethic and belief in duty as a virtue.
American culture is also well adapted to the modern economic world, but in different ways. American culture places a high premium on risk-taking and pragmatic innovation. It is also a guilt-focused culture rather than a shame-focused culture; the latter is probably Chinese culture's greatest business weakness, as it encourages people to hide mistakes rather than learning from them.
Both of them are significantly more well-adapted than other cultures that focus on personal honor, shame avoidance, male-dominance (one of the U.S's key economic advantages over the last 60 years has been the entry of women into the labor force), or traditional values. These are not bad cultural traits, but they are disadvantages in competing in a system that values rapid adaptation to the needs of others.
This is a very insightful comment. Thank you. I think I saw an article on HN before talking about this different notion of time, unfortunately i cant remember the title.
Indians in Uganda controlled something like a quarter of the economy while being only 1% of the population. That was one of the main reasons they were expelled from Uganda. I find the Philippines number pretty remarkable not so much for the Chinese success but that the non-chinese allowed the situation to continue.
> The other stark contrast is how much harder people in China seem to work than people here, and how working hard is considered a good thing, not a bad thing.
It is a survival thing, not an inherently good thing. Those factory workers or university students aren't working 14 hour days because of the 'virtue of hard work'. They're doing it because they have to in order to stay alive in the continious stampede of progression that is China.
See how 'hard' most Chinese people work once they've got money. Most of the hard work of wealthy Chinese to conceal their wealth in western coutries.
The historical track record of the largest economy being
overtaken by another is not good. Sometimes it’s
violent. (For example, Germany and the UK in 1914.
To give WWI as an example of the consequences of GDP league tables seems like a bad reach to make the event sound apocalyptically important when it doesn't represent any radical change in balance of power at all.
As I understand it, the Kaiser's geopolitical motive was to avoid being dominated by the Dual Entente given Russia's growing strength. He expected GB to stay neutral given it was generally more friendly to Germany than Russia and was fairly isolated from European mainland issues given its interests in the colonies.
In any case, why compare UK GDP and not British Empire GDP which at that time would have dwarfed Germany?
The central question of the start of WWI was who gets to pick over the bones of the ottoman empire and to a lesser extent the bones of the austrian empire. Several very big players decided "it'll be me, and I'll fight everyone else for my share".
What's interesting is that it's very common for wealthy Chinese to invest in / move their families and their money into the States. Just look at places like Seattle, where around one-third of all $1+ homes are purchased by foreign Chinese, and according to this NYT article, three-quarters of their purchases are all cash. *
San Francisco and Vancouver are in the same boat. Bids for property that are all cash and 20-30% over market price are commonplace.
Hopefully with the USD strengthening to foreign currencies, 2015 will be the year this trend reverses, as foreign investors advantageously start to move capital back into their home countries.
After listening to a recent episode of Invisibilia, I've become somewhat convinced that one of the root ills of current American society is extremely low expectations.
Whenever I think of countries like China, I think of an entire population driven to be more excellent. I know that's not true in general (people are people everywhere), but I still feel there is a stronger expectation that, as a human, you will do more than just exist and consume junk food and mass media.
America feels sluggish to me... safe and dumb and comfortable but not content. It's like the feeling I get when I spend an entire weekend on the couch binge-watching Netflix.
No. But you always hear in stories about the more disciplined populace and the focus on education standards. It's possible those are overblown, but I would argue that the average American (myself included) definitely gets the impression that we are a bunch of slobs compared to the Chinese.
I have never gotten that impression, and given that 1/3rd of the Chinese population are still in small farming communities, several of which do not have access to things the average American considers basic and fundamental to life, I don't see how anyone would have that impression.
"I think of an entire population driven to be more excellent."
People are driven to excellence, but only because if you aren't, you face a lifetime of working on a farm your entire life or in extreme poverty. It's a good motivator.
Men especially focus on excellence (and making money) because the 1-child rule has pretty much given women the pick of the men with the most money and are the most successful. Another good motivator.
"America feels sluggish to me... safe and dumb and comfortable but not content. It's like the feeling I get when I spend an entire weekend on the couch binge-watching Netflix."
It's only 'sluggish' because most people have a very good standard of living and rather than focusing on their next meal, can actually enjoy some leisure time. If you compare this to some of the wealthier people in Shanghai or Beijing, it's the same.
"I've become somewhat convinced that one of the root ills of current American society is extremely low expectations."
This has been happening for years. Especially to our education system. What do you think happens when kids are taught that "Everybody is a winner" and they are shielded from the realities of competition and life?
I look forward to the day where nationalism is seen as an anachronism. I know this probably wasn't the primary message of this post and that YC has funded a number of non US startups but if you swap US and China in this post, I wonder what kind of reception it would get.
That'd also be an interesting thought experiment. The modern nation-state as a concept is barely a century old; before WW1, a number of prominent countries (Russia, China, Austria-Hungary, much of Africa) thought of themselves as empires or kingdoms, and people's daily allegiance was more toward local municipalities and neighborhoods than the abstract concept of a nation.
I wonder if at some point in the future we'll see pseudo-corporatism as a social organizing principle, much like in Neal Stephenson's books.
OK, I'm fed up. China is really dangerous and way too aggressive. Obviously, its political system is on an imperialist ego-superpower course.
It's spending on its military like crazy. The navy strives to reach a size and power never seen since the demobilisations after the Second World War. Its navy patrols aggressively in foreign waters, often provoking fights and shooting up foreign boats even though China didn't declare war. It's only a matter of time till the aggressive behaviour hits some wrong ships, boats - or maybe an airliner mistaken for a fighter.
Plenty invasions of sovereign countries in the last 35 years alone prove it's unfit for lasting peace, an imperialist hyper-aggressive power. This aggressiveness is underpinned by intense propaganda and myth-building at home, with entire service industries inflaming the population against countries they cannot even point at on a map. Racism plays into this as well, with lots of derogatory names for foreigners of exotic looks.
China's gunboat and cruise missile diplomacy with occasional and nowadays frequent bombing of neutral countries is out of control, but a United Nations Security Council veto power protects them against formal repercussions. They even bombed an American embassy 15 years ago and nothing happened!
I'm especially concerned about how they now discuss how to wage a future war against the United States. All the public discussions are solely about how to defeat American land-based defences so Chinese naval battlegroups can close with the American coasts and bomb military and strategic targets at will. Unmanned combat drones are an especially favoured tool for this; many Chinese appear to have high hopes for these. The range and stealthiness is apparently at the centre of their hopes.
We shouldn't stand by this and pretend we aren't involved.
China's aggressiveness needs to be contained now!
> We’ve had an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work [2], and radical thinking, and minimizes impediments to doing new things.
I think a major reason the middle class was able to live a fairly cushy lifestyle without doing much real work was some combination of:
- A massive supply of overseas slave labor, coupled with a complete lack of environmental regulations both domestically and abroad.
- Being able to tax people overseas by deflating the dollar.
- Heavy investment in infrastructure.
- A large population boom.
In other words about 20% sound policy, and 80% finding ways to steal money from other people and future generations. Since we're no longer investing in infrastructure or doing much in the way sound policy, and we're also losing our ability to steal money from others, I don't really see how the U.S. is going to sustain itself regardless of hard work, innovative thinking, immigration policies, etc.
Speaking from personal experience, the atmosphere in the U.S. is a lot better than in China, in terms of the recognition of importance and respect to science and technology fields as well as scientists and engineers. I feel an implicit discrimination towards engineers in Chinese culture in the sense that "you are regarded successful if you hold a management position and live a (perceived) decent lifestyle, but not if you get your hands dirty, tinkering around stuff and being managed." when I worked in China. In Chinese college, the "elite majors" including cooperation and government management usually have the highest bar of admission.
All of that also seems true of the US. Everyone wants a "leadership" role, either in government or in the private sector as CEOs or management in general, and even schools nurture students into "leadership" more than "science". Even in Silicon Valley, engineers and scientists don't enjoy the highest status (founders are above them, and VCs above that).
Arguably, the only place in the US where scientists are on the top of the food chain (or close to) is academia.
This post isn't particularly well thought out or argued, but special mention must go to footnote [2] for being self serving nonsense. While those complainers do exist and are wrong about some aspects of the situation they are quite right to criticise the exploitative start up ecosystem.
A third of China's population are still farmers -- compared to the US's low single digits. It's per capita GDP is somewhere around Peru's and Iraq's. While this has been rapidly changing, it is yet to be seen how much of China's rapid growth the last couple of years is propped up by government malinvestment (ghost cities, etc.). We've seen high growth rates in many countries throughout history. The question is whether this is sustainable, and how much of the low-hanging fruit of growth China has already used up.
I lived in Shanghai and worked at a startup for a year after college. The startup expat and startup local communities are surprisingly developed.
There are a lot of co-working spaces, hacker spaces, and start up events. For anyone interested in China, you can live in Shanghai without speaking Mandarin.
Western training in programing, design and product is highly valued. Salary offerings are lower by a factor of 10. Regardless, its easy to live and identify alternative income sources.
I'd love to answer any questions for people interested in the Chinese startup space.
They've also started to block Gmail and seriously block most VPNs. A good number of expats are looking into leaving recently because of the recent restrictions.
That was always the case. Even when I got there, there were "expats looking to leave". Because theres such a heavy influx of people coming in, it doesnt matter.
Exactly. I did oDesk work at 20$ an hour, approached a number of expat entrepreneurs/business people, and eventually started working at Converse Asia Pacific as an agency manager. The opportunities are pretty rich if you know how to find them.
"Salary offerings are lower by a factor of 10", compared to where? A decent freshly graduated developer in Shanghai can easily make 1.5-2k USD a month. Where you do get 10 times more than that?
I think idea of the RMB being a reserve currency is laughable. It's controlled by an authoritarian government whose only history with the currency is to manipulate it in their favor. And said government has repeatedly made it difficult for foreign companies to do business in the country. Why anyone would think that people would trust such a currency is beyond me.
One major point often overlooked in this discussion is, that nobody trusts the Chinese government. In foreign policy, China has to pay dearly for very little trust/support in return. Therefore I don't see the dollar getting dethroned any time soon.
I also don't believe that China is getting risk management right. Corruption in government and industry, extreme growth rates and untrackable webs of debts will sooner or later stop Chinese growth unless it transforms into a much more liberal or democratic form of government.
The US could easily remain the world's only superpower if it was ruthlessly focused on doing that. Actually it would have been easier 40-50 years ago. The opportunity is fading away.
Interestingly, the US often behaves as if it wants to control the world. So either this is a misperception, and the leaders of the US don't want to control the world (and they're spectacularly bad at public relations), or they're spectacularly bad at implementing their plan.
With all the advantages the US enjoyed last century it would have been possible. Maybe actual control of the world territorially is unnecessary, and some group is content to control the world financially. Or maybe the people implementing whatever plan have some perspective that make whatever they're doing make sense to them.
I wonder if that perspective is actually good for the US (it probably is not meant to be, other than for the elite). Perhaps they're using a flawed model that will seem painfully obvious later. I'm guessing it is something like the banking crisis. Some guys are following a flawed model that they think should work, and other guys are looking out for themselves, and eventually the whole thing will fall apart.
> People generally have to buy energy (oil) in our currency, which adds a great deal of support (though we’ve already seen the very beginnings of the PetroYuan).
Can someone explain why using USD as a medium of exchange supports the USD? I can see this effect insofar as central banks will hold a trade-weighted basket of currencies and having more trade in USD will increase that share of the basket. Other than this effect, is there (an) other(s)?
I understand that products and services sold by US companies boost USD (vis-a-vis buying iPhones in your example), but why would, say, a Brit buying a Xiaomi phone using USD boost the USD? The USD holding time would be rather short, I would imagine.
> The most important story of 2014 that most people ignored was the Chinese economy overtaking the US economy. (This is using the purchasing power parity metric, which incorporates differences in the price of goods, but the Chinese economy will overtake on other metrics soon enough.)
It is an important story, but I think it was largely ignored in the U.S. because it is essentially a domestic Chinese story. PPP GDP equivalence is a major step on the path of bringing Chinese living standards up to those in the U.S. and Europe. That is an achievement that will be good for the world, but it will really great for China.
If you want to compare China and U.S. as players on the global stage, then I think in most cases one will get a clearer picture of relative strength by sticking with nominal GDP. China's nominal GDP is bit more than half the U.S. GDP. It helps understand why the U.S. has the dominant currency, dominant military, etc.
China has grown its economy tremendously by taking the world's IP (by contract or theft) and building goods to export. That's how the U.S. caught up to Europe 150 years ago, so unlike other posters I don't think it's a terrible thing.
But it is true that China, to become a true economic superpower, must start creating innovative Chinese goods that other Chinese will buy, and which they can export. So Americans aren't just buying Apple phones that are made in China, but are buying Chinese products, the way they buy Japanese cameras or German cars.
That could be difficult to achieve, because the Chinese government does not permit free exchanges of ideas and views...which can make it hard to innovate. By its very nature, innovation makes people uncomfortable, and China's leaders do not currently permit things that make people too uncomfortable.
From everything I've seen in the financial press about their rapid accumulation of shadow debt, the situation is even worse than that chart reveals.
So at at a time when robots are set to overtake human labor, China's demographics are rapidly aging, and they lack even a meaningful social safety net - you want me to buy the bogus claim that China is about to become the next dominant economy? Not a chance in hell.
In another five years they'll likely have accumulated another $20 to $30 trillion in new debt, all going toward faking economic growth so they can pretend their economy didn't stop growing six years ago when the global consumer crashed.
Back in reality, accounting for real inflation, and accounting for their need to leverage extreme debt to fake growth, China's economy is not growing at all, and is most likely headed toward decades of Japan style stagnation - in a best case scenario.
Worst case scenario, they get old way before they get rich (guaranteed), their 400-500 million farmers revolt as their future potential goes sideways, robots take half their manual labor jobs, they stack up $80 trillion in debt (on a third rate currency that nobody trusts even today), and collapse into social chaos and revolution, as the party fails to deliver on decades of promises.
Those 400-500 million farmers? China should have maybe 15 to 25 million farmers. So they have 400+ million unemployed persons the Chinese system is intentionally holding in stagnation to avoid upheaval, because there's zero chance China can create half a billion new jobs, much less at a time when the age of robotics is upon us.
It seems like people are advocating for centralized solutions to "problems". But after recently reading Mitchel Resnick's book _Turtles, Termites and Traffic Jams_, I can't but help wondering what decentralized solutions might look like?
>My explanation is that this is simply what happens in a low-growth, zero-sum environment.
Or perhaps it's due to globalization. There are other cultures in the world that don't value working very hard at the expense of other things in life. Perhaps it's sometimes good to listen to the arguments at look at values from other cultures. For example, working hard might not maximize the well-being of a person.
Now that the internet is widely used more and more people in the United States are exposed to other cultures around the world. Especially Europe, which includes many countries that have a reasonable standard of living, yet work slightly less.
I have seen precisely this kind of national soul searching before.
The UK entered WWII the world's greatest power and exited as a small bankrupt island. But did the myth of exceptionalism evaporate with the change in status - hell no.
The UK's leading role in the world derived not from the exceptional nature of its people and/or institutions but from the fact that it was the first nation to fully embrace and benefit from the industrial revolution. If you want to understand the relationship between that kind of lead and innovation take a look at the stream of inventions, discoveries and innovations that the UK spawned at the time.
Similiarly, The US's leading role in the world derives not from the exceptional nature of its people and/or institutions but from the fact that it was the first LARGE nation to fully embrace and benefit from the industrial revolution. Unlike the small island that was the UK the US was large geographically and demographically and rich in natural resources that were readily accessed. The large domestic market enabled the US to steamroller over smaller foreign markets and competitors.
For the first time in its history the US is facing (as did the UK) an international competitor that has a bigger domestic market. This is a massive change.
Will the US do a better job adjusting to the new reality? Hell no!
If you want a good insight into the likely pattern of evolution of US culture study post war Britain.
The RMB is growing in importance and rapidly becoming an increasingly stable financial instrument in global trade. That is not to be debated.
Even though China's economy has overtaken the US in scale, there is one MAJOR issue that is commonly overlooked when contemplating the possibility of them becoming the go-to global currency... They are still an authoritarian state that controls and manipulates the free flow of information in-and-out of its borders. Baidu, Tencent, Weibo, and Alibaba are all still clones of basic US internet infrastructure. Until there is a great lifting of restrictions on the flow of information inside of China, I don't see them building the next Google anytime soon. (Baidu does have Andrew Ng doing some cool stuff in Deep Learning tough!)
I'm not trying to say there isn't innovation coming out of China, just that there won't be a technological renaissance to the likes of Silicon Valley until people can communicate more openly online about potentially dangerous ideas.
Can the RMB survive and increase its power with constant tension with HK and Taiwan over political ideology? I'm not sure... If the Chinese can slowly open up its internal lines of communication without massive protests or radical power struggles, they will be unstoppable.
The only question left in my mind is when given the choice to purchase technical infrastructure from the likes of Google/Facebook or Baiudu, what are developing markets (SEA, Africa..) going to pick. Chinese tech companies ideals might be more inline with rapidly developing companies than the old guard in SV..
Regarding exceptionalism, I had a course in law school taught by Justice Scalia. His first words were, "I believe in American exceptionalism and if you don't, you can find the door." His intentions were to provoke us and he was baiting a brave law student to disagree with him.
Required reading for the course included De Tocqueville's - Democracy in America - as to "leave it to a Frenchman to explain America to Americans." In summary, it was a hell of a course!
That's really interesting. Did he expound on why he thought this was the case? I agree; as sama said, the volume of inventions made here are highly disproportionate to the population share. Laser, semiconductor, airplane, assembly line, nuclear power, etc. I think two of the key drivers were the form of government (a republic "by and for the people") and a demographic boon of immigrants willing to work themselves to the bone for a better life, because they believed in equality of opportunity.
Ironically, I think he has had a big hand in the decline of the former with the Citizens United decision. And the equality of opportunity has been in decline for decades.
Yes, his focus was on the "separation of powers." He said the Soviet Union had more guarantees than our Constitution, however without separation of powers they were "mere parchment guarantees." He also touched on innovation and industriousness being in our DNA. Which all tied back into individual liberty and the role of government (to protect individual autonomy, as the people don't exist to serve govt).
However, most everything circled back to the separation of powers.
Is American exceptionalism a glorified term for "we're special just cuz?" Isn't every country special by virtue of its individuality? Or is America thought to be exceptional because it excels on generally accepted criteria (wealth and military power.) Criteria whose importance, funny enough, was determined in the first place by...America. Like being both judge and participant in a beauty contest.
Nope, not on that gem. But they tried later to answer some of the others. For example, a historically relevant case was being discussed, where SCOTUS found a rather significant law passed by Congress as unconstitutional (effective immediately). A student said "isn't the idea to gradually change a major law, to do minimal damage, like bringing a ship into port." He retorted with, "Heaven forbid we actually held Congress accountable for doing their job and passing good laws. There are many bad laws that are constitutional and good laws that are not. They have the ability to revisit and modify existing law, but they never do and choose to leave it to the Court to decide its constitutionality."
> The main area of noncooperation with the United States
> [was] resistance to repeated United States efforts to
> ... open its market more to foreign goods and to change
> other economic practices seen as adverse to United
> States economic interests.
> The relative economic power ... was undergoing sweeping
> change ... This change went well beyond the implications
> of the United States trade deficit ... The persisting
> United States trade and budget deficits ...
> led to a series of decisions in the middle of the decade
> that brought a major realignment of the value of ...
> currencies ... the ability to purchase more United States
> goods and to make important investments in the United
> States [resulting in them being] the main international
> creditor.
> ... growing investment in the United States ... led to
> complaints from some American constituencies ... seemed well
> positioned to use its economic power to invest in the
> high-technology products in which United States ... were
> still leaders. The United States's ability to compete under
> these circumstances was seen by many ... as hampered by heavy
> personal, government, and business debt and a low savings rate.
China since the turn of the millennium? No, Japan in the 1980s.
I am (and I suspect most of the readership is) too young to remember the fear the US felt about Japan in the 1980s, but a dense, ageing population and arguable a cultural rigidity capped growth.
The secret to this is not genetics or something in our drinking water. We’ve had an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work, and radical thinking, and minimizes impediments to doing new things.
It's disappointing (though not surprising) to see Altman dismiss the possibility of genetic differences between populations playing a role in differential economic success. While it's true that the US population has enjoyed many non-genetic advantages, genetic and non-genetic factors are not mutually exclusive. Showing that non-genetic factors do play a role is not the same as showing that genetic factors don't play a role. (I'm tempted to call this the "Guns, Germs, and Steel Fallacy," since Jared Diamond's work on the subject is essentially a book-length expansion on this basic error.)
If you read Larry Bird's biography, you'll learn how in high school he became obsessed with basketball, practicing at every opportunity and shooting 500 free throws every morning. He also had the good fortune of having a series of outstanding coaches and living in a culture that valued basketball prowess. On the other hand, he also grew to be 6'9".
I'm wondering how important it is to be the economical super-power?
This reminds me Steven Colbert interviewing Thomas Piketty. Colbert jokes about the short work weeks and two-months vacations in France. Piketty's reply: "in Europe, many people believe the purpose of civilization is to work less, have more vacation, take care of your friends and family. But you can make a different choice and that's fine". France is still the 6th economic power.
There's so much biased and simplistic thinking here that it's hard to respond without writing a whole essay. But the note about China being more individualistic is just laughable considering the Communist Party's forceful manipulation of their economy. In fact, it is the US's strong individualism religion that will prevent any coordinated response to our decline, such as increased public spending on R&D.
> “It’s so stupid that these people play the startup lottery. What idiots. They should just consult.” or “Startups need to stop glorifying young workers that can work all day and night”
No-one quite says that working hard is stupid (well, except the few misguided ones we should all ignore anyway). What people go tsk, tsk, tsk at is working really hard and giving up responsibilities at home, not being with you family, even forgoing the biological imperative to reproduce (or delaying it -- usually not a good idea, again biologically speaking), giving up your mental/physical health for a dream that is realistically very remote, etc.
The other big thing is, alas, it is a lottery. We guide our nephews toward a different direction that has a greater promise of economic security: be a neurosurgeon (and well, even if they don't become neurosurgeons, we hope they'll become at least primary care doctors :)). I mean, What is YC's acceptance rate at this point? Like 10%? And I bet the people applying are more able than other hopeful entrepreneurs who don't happen to apply to YC, so the success rate for the average entrepreneur is pretty bad.
Calling it a lottery is silly. I know some people who would have close to a 100% chance of getting into YC if they applied. I know other people who would have close to a 0% chance.
Maybe so but I thought the lottery wasn't getting into YC but working for a start up that becomes successful. In that sense it's very much like a lottery: you have a tiny probability of succeeding, but if you succeed you get an extremely large sum of money.
I'm not entirely sure it's like a lottery in terms of the expected value being negative though (if you consider the opportunity cost as a negative).
Its a lottery if you blind folded yourself and pointed at the startup you work at.
You can always mitigate the risk by researching and making an educated decision about where you work. Different startups have different degrees of risk.
Indeed, but the probabilities are still so low that it's like a lottery. Obviously it's not an actual lottery, just similar to one in the sense of low probability high reward.
Even a lottery is not a lottery by that account; statistics professor Joan R. Ginther won four multi-million dollar jackpots in Texas because he found a "pattern" in the lottery numbers, just like how very clever people find patterns in our world and hit the market as a "startup". So generalizing the advice to everyone: "hey! start/join a startup" is bad. Only the smart and well-connected Stanford kids have a realistic chance of getting a return. The rest of us should work hard, just not in starry-eyed startup happenings.
It isn't random, but it sure isn't a guarantee that being smart and working hard will pay off either. If it must be compared to some game, I guess poker would be more apt than a lottery.
If you're smart, and work hard you can make the right moves to put yourself in an improved position for possible success, but ultimately you are still playing odds with lots of variables that are completely out of your control and even if you play "perfectly" it is entirely possible you still fail.
In poker you can deal with this variance via bankroll management, for which the startup version would be not to invest too much of yourself (emotionally and/or physically) in any one startup. However, the culture around startups (unlike the culture around smart poker play) does not promote that at all, rather it tends to promote a leave-everything-on-the-floor approach... which, IMO, is the sort of position most people are really complaining about when they say things such as what sama paraphrased in the article.
Just because you have some outliers doesn't mean it isn't random. As long as you're good but not the best of the best of the best, it's random pretty much by definition. An old pg's essay covers it well: http://paulgraham.com/judgement.html.
There are a lot of great issues discussed here, and I'm going to say that most of it is valid and on point.
After living and working in SF, I moved to china 6 months ago and have come to understand that Chinese compared to US simply have hugely divergent values. And they work hard. From a very young age, they are conditioned to do so; and with 1.4 Billion people competing, there's no other option.
The US is still, and should continue to remain the focal point of innovation. I find China to be so far behind in this area, I don't think there is any hope of catching anytime soon.
I say this because, much of the money in China is grounded in old and dying business principles. The new generation, those in the country's "top" business schools, are being taught dated ideas which don't promote innovation at all.
I do agree though, China will continue to grow and the West will find a way to coexist. But I'm still not trading my USD for RMB just yet.
> Even if there weren’t a competitor in the picture, countries historically don’t do well with declining growth, and so it’s in our interest to try to continue to keep growth up. It’s our standard advice to startups, and it works for organizations at all levels. Things are either growing or dying.
Actually it's time to rethink this "wisdom" that was introduced by our grandparents. There is no such thing as infinite growth and only by seeing this, the West (actually I don't care about the USA so much, as I'm from Europe) is going to prosper. Because in no-growth there lies a different kind of growth and a lot of opportunities for those who can think out of the box.
Right now growth is measured in money, but maybe one day it's going to be trust or influence.
The most critical question, speaking as a hopeful US citizen, is whether or not it’s possible for one country to remain as powerful as another with four times as many people.
This seems to be an extraordinarily naive point. India (pop 1.2B) and Canada (pop 35M) have similar strength economies and similar geopolitical strength outside their immediate vicinities, for example.
These kinds of analyses always seem to forget the immense land wealth that the US has - agricultural, mineral, water, temperate zone, so on and so forth. China has it as well, but many other big-pop nations don't. And when all big economies become service economies, the land wealth is still a differentiator. It's not to say it's the only factor, but it's far too frequently overlooked.
> The other stark contrast is how much harder people in China seem to work than people here, and how working hard is considered a good thing, not a bad thing.
If continued growth is dependent on working harder (more hours), I'm completely fine with being over passed. If you have to give up more of your life to "grow" you have less time to enjoy the fruits of your labor. While America's growth is enviable, our work-life balance is not and many people outside the US think our labor and vacation policies are a joke.
I don't think the solution to growth is working harder or changing our attitude towards hard work, we're already at the top (excluding China) – it's about working smarter and with better legislation to support risk takers.
I think it's important to make a distinction between working hard for work's sake and working hard because you really believe in what you're doing. The concept of hard work that most people who frown upon it in the US have is likely the former and I would tend to agree with them. Mindlessly doing menial tasks but putting in "18 hour days" is not something to be admired.
That being said, a culture that encourages people to dedicate a lot of time to a company, a cause, or an idea if they like it or believe in it is certainly worth fostering. If this is the kind of hard work that Sam talks about as being looked down upon in the US, then that is indeed troubling and we should try to correct that perception.
The knee jerk for me, is the absence of regulatory control of industry standards that make US based companies grow for the benefit of the US economy. As far as being 2nd to China on overall economic power, that's just find in my book. We aren't racing for space here. It's the ethical challenges that present themselves by OTHER countries that provide hot beds for US business. I can just lean back on the banana republics of Latin America, as an example of economic explosion on the backs of others through brutality and instability of regional nations partners. From observation, if I'm not wrong, China has done exactly this to advance it's own economy via Africa endeavors. Am I wrong?
the US's government is finally becoming too burdensome to do business under. The taxation of American business is one of the larger handicaps they operate under.
however the biggest issue facing the US is this message that excelling isn't to aspired too, acceptance of who you are and who someone else is is all that matters. It is a self defeating mindset. Don't worry if you fail, you had no choice, you just can't do better. Here let us take care of you....
With regards to China, what percentage of their population is experiencing this boon? I was always under the impression (don't know the truth) that quite a bit of their population really doesn't matter to their economic output.
How do you square this self-defeating mindset against the described millennial sensitivity where everybody expects a trophy and considers themselves special? Seems like you might be referring to older works who are already jaded by the system and not the new class of workers who will be taking over their jobs.
It sounds like we need a new metric. Something like "military purchasing power parity" (MPPP). A conversion factor C would be determined for each country based on how expensive it is to locally produce tanks, aircraft, etc., train and maintain troops, etc. Then their nominal GDP would be multiplied by C to get MPPP GDP.
For example, just looking at troops, if it costs $100,000 per year in overhead-included costs to maintain one US soldier but only $10,000 to maintain a Chinese soldier, then that would help their MPPP. Large defense contractors with cost-plus contracts would influence the US's MPPP, but so would corruption in China.
An even better metric might be WMPPP (wartime military purchasing power parity), which is probably the real metric that counts and determines which country is a superpower. This is what the MPPP would be in wartime. For example, the US spends a lot on troops and equipment in peacetime, but in wartime it could operate much more efficiently. See World War II.
Another interesting metric would be how quickly a country could ramp up its military production within 1-2 years assuming a major war broke out, because a war against another superpower probably wouldn't last very long.
The question comes down to how you evaluate things. Are the growth rate and money the only measures here?
God doesn't favorite China. Looking at its past 100 years, huge political unrest and communism experiments kept the country so behind the rest of world.
The technology, free market reform and globalization help China quickly escape from its historical baggage and catch up with developed world. The question is what value would win out at the end now everyone has equal footing.
Culture, political system and work ethic are the deterministic factors going forward. Would you prefer a world looking more like America or China?
I know at least one metric where China won't beat the US in while: GDP per capita
>It’s almost unthinkable for most people born in the US in the last 70 or so years for the US not to be the world’s superpower. But on current trajectories, we’re about to find out what that looks like.
Things would have to go so horribly wrong as to make being a superpower irrelevant for the US to lose its superpower status. It's undeniable that in the future the US might have to share this status with China but I don't see this happening in the following years.
GDP per capita doesn't matter. PPP per capita is what truly matters when comparing countries.
> US to lose its superpower status
It already lost it. Not only to China, but also to the European Union. Both now equal or surpass the US in terms of PPP per capita.
> Quite frankly China's rise is overrated!
Perhaps you don't realize that an ~8% yearly economic growth means China's GDP/PPP per capita is DOUBLING(!) every 9 years. And it has been doubling every ~9 years for the last... 35 years.
"A remarkable number of the major technological developments—far in excess of our share of the world’s population—have come from the US in the last century."
For the most part those technological developments were due to the import (or plundering, if you're judging it as a non-American nationalist) of minds and entrepreneurial resource from elsewhere, and less because America actually forged its own bright people. That kind of affair was the easiest thing to do when America was the only place reasonably safe and developed (after WW2). Things change.
Right there in the first paragraph (emphasis added):
> The most important story of 2014 that most people ignored was the Chinese economy overtaking the US economy. (This is using the purchasing power parity metric, which incorporates differences in the price of goods, but the Chinese economy will overtake on other metrics soon enough.)
"Other metrics" does not include GDP per capita. That seems to me something you might not want to overlook when comparing the US and China.
It seems to be a fundamental assumption of most economy pieces out there that growth is good, stagnation is bad, and we should strive for ever more growth.
But how much growth can we actual sustain with the limited resources we have on earth? When is it time to stop?
Are there better things to optimize for? Happiness, maybe? Peace? Does growth make people happy and countries peaceful? Maybe we could achieve something good by re-distributing wealth, instead of trying to create and more and more.
"whether or not it’s possible for one country to remain as powerful as another with four times as many people"
I don't understand why one country whether it's the US, china or otherwise has to dominate the world.Assuming that shitty tradeoffs are made to get there, I wish there was a world country of some sort that dominated in the near future. Otherwise it seems to me like there are going to be many sony like episodes that just do more harm than good.
The following quote says a lot more about Sam Altman, the people he hangs out with, and his lack of exposure to mainstream media and political discourse than it says about objective reality:
As a related sidenote, “exceptionalism” in the US has become almost a bad word—it’s bad to talk about an individual being exceptionally good, and certainly bad to talk about the country as a whole being exceptional.
I'm surprised that he didn't talk about the last decade of US science funding. The US has radically cut back on research support. In theory, it shouldn't matter where the science happens. Publication means anyone can read it. In practice, the country that hots the training and tech transfer sees a lot more from scientific progress then anyone else.
GDP....
There's many big problems in China, like over dependence on Real Estate industry; environmental pollution; food safety; the aging of the population;
And statistical data from China's official statistics office, most Chinese know that China cooks its numbers on inflation and GDP growth.
What I hope for is not US coexisting with China, EU or any other state. I hope that more freedom-leaning countries open up to immigration and blur or erase the concept of being a citizen. In fact I hope everyone sees the current status quo as immoral rather than just not optimal. NWO ftw
PPP adjusting GDP to compare economies makes zero sense. The rest of the article, fine. But when you're comparing countries internationally, why on earth would you compare their internal broad average purchasing power (heavily weighted by China's outsized GINI)?
"US policy often encourages investment and job growth outside the US... and then hold/reinvest those profits offshore rather than pay high taxes repatriating their funds."
That's the most important part of the article. It's what made China rise in the first place.
The chinese build factories where they make pretty much everything for the global market. The americans build free time-oriented startups, such as image sharing, social news aggregation and messaging. And advertising, gotta keep those leisure sites funded.
I'm not entirely convinced on the US leading in innovation, particularly per head of population. The UK (as just one example) is surely way ahead by that measure and yet has come a long way from the global top spot.
The China mentioned in the article is not China, actually it is the China belong to Communist Party of China. It will be the enemy and virus of the world until Communist Party of China step down.
I think the arguments that it matters to be #1 are extremely weak. Besides having the USD as the world's reserve currency, is there any other good reason?
I wish I was a high-profile VC. Then I too would be writing essays exhorting people to take on high amounts of risk and to spend their 20s and 30s grinding through 60 hour workweeks, so I could grow my portfolio. Because, we're losing to China!
Honestly, it has never been clear to me why "growth" was the metric that we, as a society, have been optimizing for. Who stands to benefit? You? The middle class? Everyone? Or... wealthy investors and a few lucky founders?
Why not focus on, say, average income per citizen (adjusted for purchasing power)? Or even more radical, why not stop using money as a proxy for wealth, and start optimizing for average citizen well-being? Is China beating us on that point?
Or why not see further and optimize for the growth of our scientific knowledge and our technological capabilities?
Economic growth is generally praised because it is a weak proxy for things such as the wealth of a society (assumed to be well distributed) and its technological progress. So why not directly aim for these core goals?
> Honestly, it has never been clear to me why "growth" was the metric that we, as a society, have been optimizing for. Who stands to benefit? You? The middle class? Everyone? Or... wealthy investors and a few lucky founders?
I think the answer to this is pretty obvious when you look around.
"95% of the gains from the [recent economic] recovery have gone to the richest 1% of people, whose share of overall income is once again close to its highest level in a century." [1]
When you optimize for "economic growth" you are optimizing for the well-being of the already well-off.
Growth is the metric for success because we currently use the wealth of the richest as our benchmark for success. How much marginal gain in terms of quality of life do these richest people even get from the growth?
Much of what you say seems reminiscent of The Venus Project and The Zeitgeist Movement. Although both projects leave much to be desired in actual execution, their purported aims for moving away from our current societal framework (based on artificial scarcity, money-market economics, etc.) is rather commendable.
Who stands to benefit from growth? Everyone. The population is increasing, so we need economic growth to at least maintain employment.
This reminds me of something a friend mentioned when we were talking about American exceptionalism and the disproportionate number of inventions made relative to the population.
He saw a documentary where they interviewed a couple that owned an ice cream cart in Paris. The couple said that they take the month of August off for vacation. This perplexed the interviewer- but how? Isn't August the best sales month for ice cream?
The family said, essentially- we were born in this class, we'll die in this class, and the government more or less guarantees that. Why work any harder?
>>Honestly, it has never been clear to me why "growth" was the metric that we, as a society, have been optimizing for. Who stands to benefit? You? The middle class? Everyone? Or... wealthy investors and a few lucky founders?
Growth of who, or what? Focus on optimizing personal growth, either in your skillset or personal income, and everything else should take care of itself.
The world can't sustain a China middle class the same with similar proportion/consumption as the US (look at per capita oil consumption, fresh water consumpion, CO2 production, et al). That's maybe the bigger story in a bigger sense.
Can you provide any support for this statement? I don't believe population directly correlates with the size of your economy. I only ask because if America is going to remain relevant, its citizens need to stop making shit up as they go.
There is a ratio between them based on how productive your workforce is. German workers, for example, are thought to be very productive. But expressed as a GDP-per-person ratio, not as productive as US workers. China is far behind in productivity, yet their enormous population means they're ahead in total dollars. And as Chinese workers move from low-productivity work such as family farming to industrial farming & factory work, their population will act as a lever and grow their GDP even more so.
China: GDP 16,149 Pop 1,357,380
US: GDP 16,768 Pop 320,206
Germany: GDP 3,512 Pop 80,716
(millions and thousands, respectively)
So the GDP per-person ratio of each country is:
China: $0.01189
US: $0.05236
Germany: $0.04351
Expressed in terms of productivity, China still has a lot of growing room, and I would expect their GDP numbers to continue to grow in the future.
How about India? They will soon be the most populated country in the world? Indonesia has about 250m people? Brazil, Pakistan, and Nigeria? All these countries have large populations. They probably have a lot of "growing room" too.
In short, this claim is meaningless:
"China has 3 times the population of the US. As soon as they started growing a middle class, it was inevitable that this would happen."
That gets into the societal aspects - after working for their basic subsistence, how much time in the day is left for working on other things that they could sell. In the US, the creation of industrial-scale farming meant that food became plentiful and cheap enough so that there was capacity & time left over for work that could then be used to create a profit.
There are other factors at play of course. India has an enormous bureaucracy that soaks up much of their excess capacity and stifles innovation. The remains of the caste system also means that some of their most productive people aren't working effectively. Nigeria is doing much better these days, but still suffers with a large amount of corruption. Pakistan & Brazil - I don't know enough to comment - perhaps you can fill in why they aren't growing as fast as they might.
I disagree with literally everything said in this article.
Virtually every point the author makes is based on false assumptions, inaccurate information, a misunderstanding or other fallacies.
I really, really didn't want to break it down point by point, and I still don't, but I'm going to tackle the most obvious ones. Keep in mind I don't get them all, there are more than what I list here. I've included sources for some of my claims at the bottom:
- "US growth has stagnated while Chinese growth has continued to do pretty well"
Sure, if you account for the fact that it's not organic growth. Their growth is meticulously planned and executed. They have entire ghost cities which still remain vacant. Approximately 64 million apartments and houses in China are empty and have never been lived in before. There was just an article on Forbes on how they're now starting to fall into disrepair.
China's growth isn't like any other countries' growth and shouldn't be compared as such. Their growth is hollow and empty. They're literally reporting what they want to attract investors and say "See how well we're doing?" That's not fortitude, it's something else.
- "there countries have surpassed our education system"
Public education or higher education? There's a huge difference. You can't lump them together, it's misleading to the point of being inaccurate. In terms of higher education, nobody beats the US. They house 7 of the top 10 ranked universities in the world. The UK has the other 3.
- "The historical track record of the largest economy being overtaken by another is not good."
Irrelevant. Prior examples are absolutely no comparison to the global economy of today. Back then, the "global" economy was non-existent. There were also no nukes, no internet and there wasn't a singular sole superpower. We're now in uncharted territory.
- "The US gets huge advantages from being the world’s largest economy"
It also has its own drawbacks which you don't even touch on. And it also became the largest economy in the world for a reason, because people trust the U.S and its dollar. People invest in the U.S because they see that the country, economy and currency has value and fortitude. Even during the last recession, the damage was minimal despite ignorant people predicting the dollar would vanish after the U.S economy crashes. The only way that would happen is if the country itself vanished, due to war or a large asteroid destroying the continent. Plenty of rich and powerful (non-American) people/entities/corporations have a vested interest in a stable global market. If only because it makes them more money. In the end, that's all that matters. Stability is almost always good for business. That's why the U.S dollar will never "crash and burn". Because the only person who wants it to are your prototypical libertarian anarchists still living with their mothers.
- "The current business model of the US requires the dollar to be the world reserve currency, though the Chinese currency is rapidly becoming a viable alternative. "
Any country that either manipulates or artificially keeps its currency low to help itself (As China does to keep its export market competitive) to the extent China does, will never hold the title of world's reserve currency. The biggest and most obvious issue is one of corruption and trust. Can you really trust China to act fairly with your billions/trillions? To not artificially screw with their currency and/or banks to benefit themselves? Of course not, China only cares about China. No major player is going to unpeg their currency from the dollar to go to a currency with less stability and more corruption. It's simply a lesser of two evils situation and the U.S has proven to be the go-to currency for years, weathering even the worst storms.
- "At some point, China will relax its currency controls, allowing trade and offshore investment to grow rapidly."
And causing their own economy to tank as their export market completely dries up as India or other southeast Asian countries pick up the slack. Adding to that is their populace demanding higher wages. They see what's out there, they too, want the latest Ipad. You can't have borderline slave labor forever. At some point, you have to advance and evolve. And when the export market dries up, so will the jobs. When the jobs dry up, well, you know what happens...
- "whether or not it’s possible for one country to remain as powerful as another with four times as many people."
Using your logic, you shouldn't be talking about China, but instead India. They're set to overtake China. China is also going to experience what's known as the China Crunch sometime around 2030 (due to their 1 child policy).
- "The US should try very hard to find a way to grow faster."
Growing for the sake of growing is dumb. You're spending resources, time and energy on something that really, ultimately doesn't mean anything. We're not playing a game and there's no final score when the game ends. We should instead focus on bettering ourselves as a nation. If that means we grow as a side-effect, so be it. If it means we shrink, then that's ok too.
I think my father said it best, stop worrying about what everyone else is doing and worry about yourself.
Something overlooked at is that products bought in China are often fraudulent and cheaply made versuses made in Europe and citizens in China and abroad know it.
Citizens in China will travel to Paris to buy a handbag instead of a cheaply made knockoff in Singapore.
>The secret to this is not genetics or something in our drinking water. We’ve had an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work [2], and radical thinking, and minimizes impediments to doing new things. Unfortunately we’ve moved somewhat away from this. Our best hope, by far, is to find a way to return to it quickly. Although the changes required to become more competitive will likely be painful, and probably even produce a short-term economic headwind, they are critical to do.
On a high level I agree with this. The question is what's happened to cause growth to slow? The answer to this provides a prescription for what to do, but it's also a highly contentious and political question.
Here's a few suggestions, which will appeal to people of various political views. They're all true and all false to some degree.
1) Regulation has crept in to stifle innovation. It costs billions to test a new drug, so only a few firms can do it, and those firms will try to be really careful before spending any money. There's loads of rules no matter what sector of the economy you look at. Tax is a whole can of worms inside of this rubric. We want to have public services, but we also want people to have incentive to work.
2) Near-monopolies have taken over the economy. (You can tie this to regulation, of course.) You can work for one, or buy services from one, but they're so powerful few people would want to compete. As technology still inches ahead, a new one is up for grabs now and again (Operating System, Search, Social Network...) but this isn't all that great either. What happens to all those entrepreneurs and employees who aren't working for the next big ticket? What if the economy had real competition, with lots of little companies providing similar services?
3) Capital can move to where it makes the highest return. Labor can't. I wouldn't mind moving to the US, where I have lots of family, and there's work in both the fields I'm interested in (finance and startups). But I can't get a visa, apparently (been told not to bother). Plenty of people currently in the US can't really leave, even if their industries are leaving.
4) Perhaps China is just doing a Solow. They're behind, so their growth rate is higher. When they get closer (per capita) perhaps they will hit a wall like Japan. Not long ago everyone was lauding the Japanese model, now we think lifetime employment in large corporations is part of the problem. The danger of this explanation is it doesn't really spur on a lot of introspection.
Anyway, that's a bit disorganised, apologies for that. But those are just some things to think about in the debate.
Totally sanitizes the role of military power and research in explaining why the U.S. is economically dominant. This is like looking at the British Empire and saying it happened because Britain had some smart, hardworking entrepreneurs.
Countries like China are emerging in part because they have strong governments that just take money from the public and put it into industry. It's more more direct than having to come up with some military justification for it like we do in the U.S., like we have to invent lasers to shoot down Russian missiles, and then maybe later we can find some health care applications. It's quite inefficient. But figuring out a more efficient way runs directly counter to the self-congratulatory mythology of the Silicon Valley private sector.
Sam pins it all on "an environment that encourages investment, welcomes immigrants, rewards risk-taking, hard work, and radical thinking, and minimizes impediments to doing new things." This is a very rose-colored, sanitized view of American power.
There's also the little matter of winning WWII while our chief competitors had their economies wrecked, then using that hegemony to maintain effective control of the primary energy reserves of the world, keeping major military competitors in check and keeping Third World nations from breaking out of their subservient role through massive applications of violence and political intervention.
Turning to Silicon Valley, our meritocracy of innovation, Sam completely omits the massive sustained and critical military subsidy of Silicon Valley and the startup sector via government research and procurement to the tune of many billions per year, which has been the genesis of everything from the Internet to GPS to Siri.[1] This is to be expected coming from the private sector which loves to congratulate itself and claim it's all because of smart, hardworking entrepreneurs -- and therefore entitled to the full profits of the commercialization of government-funded research.
But if we are to rethink how to keep America economically dominant, it should start with a sober and clear understanding that it has always come from massive state intervention in the economy, starting with the very nurturing, protectionist policies we forbid the Third World from adopting, and continuing today with high-tech taxpayer-funded research via agencies such as DARPA and government procurement of early-stage products.
"It's-all-because-of-smart-innovators-in-the-private-sector" is a tenant that investors must hold to justify taking all the profits without returning the lion's share to taxpayers -- and more generally to justify funneling taxpayer money to industry without taxpayer control of industry. That is the function that the military-industrial system has served for the past century or so: public investment without public control. Because if the public did more directory control funds we'd probably steer a bit more towards education, health, public welfare, etc.
Let's have more real talk about how our system works.
Why should we want the US to be the largest (or one of the largest) economies in the world and/or maintain its position as a global superpower?
Maybe I’m missing something , but I didn’t see SA give a good and/or specific reason here (he makes some arguments about not wanting to decline, which I think makes sense but that would be true for really any economic organization...).
Of course I think there are a number of good reasons why it is good for the US to be the largest economy in the world, and for brevity I’d probably put them into two basic buckets:
A. some self-interested reasons: I’d rather be part of a nation-state that has more control over the global political economy than less control so that it is easier for me to have control over my own economic situation, I’d rather be part of a nation-state that is prosperous and can maintain that prosperity so that it is easier for me to maintain my own prosperity.
B. some (allegedly) selfless reasons: I’d like the global superpower to at least maintain some semblance of respect for / commitment to human rights, rule of law, democracy, freedom of speech/religion, a market economy and all that good old american pie stuff (I’m being snarky but I really do value those things) - don’t get me wrong, I understand there’s a lot of hypocrisy/inconsistency with how the USA actually operates, but this is the “USA-is-not-the-best-but-better-than-the-alternatives” argument, which I really do believe.
There’s a good argument that all the “human rights / rule of law / freedom of speech” stuff is just constructed-BS and that its worth trading off for high levels of growth (I’m Korean, and many Koreans see the military dictatorship after the Korean war as net positive since it allowed Korea to grow rapidly, in spite of major human rights abuses etc. which I don’t entirely disagree with), but I guess at the end of the day I’m old-fashioned enough to say that I value those things in and of themselves and that I wish them upon pretty much everyone that exists or has existed or will exist.
That all being said, my Chinese counterpart (or really anyone from any other country) can pretty much say the same thing as (A) and I can’t really give them a good reason to say that for some reason I (and the USA) deserve this position more than she and China (or anyone else and any other country in the world) does.
Therefore, when I say that I think it’s good for the USA to be the most powerful nation I have to (1) admit that it’s at least partially (if not more) motivated by A than B, in which case my position is not really any more valid than my Chinese counterparts and (2) hope it’s at least partially motivated by B, because then it’s actually a position that I believe(hope?) will actually benefit everyone involved.
This is of course all predicated on my moral beliefs that don’t allow me to say that my self-interest is always paramount, which I know many people just disagree with flat-out, which is fair - I pretty much am the same way, though I really do try (and most fail) to be another way, for reasons something like this: http://moreintelligentlife.com/story/david-foster-wallace-in...
One additional clarification: I'd say that I think continued growth is super important, I'm just not sure you need to be the biggest - see the UK, see Singapore, see South Korea, see Canada (all US allies, to be fair haha).
Clearly sama is preparing for a career in politics, because this is the standard canard of politicians everywhere. If we don't work harder, more efficiently, we'll be overtaken by country X, and be destitute.
It's a well known economic axiom, that long-term economic health of a country is directly proportional to productivity. It is not in any way true that its affected by the productivity of another country. Both countries can prosper, there's no zero-sum game here.
"If we don't work harder, more efficiently, we'll be overtaken by country X, and be destitute"
Before the days of the Internet, this might have been true (because it takes much longer for it to happen). But many companies can now hire overseas employees which will directly complete with potential employees in the US.
I'm sorry but I couldn't get past the first paragraph. It's common misconception that people claim China's economy has overtaken US, it's really a clickbait for media outlets last year.
Yes, using a calculation called "purchasing power parity," it looks as if China has passed America. But that calculation is a statistically manufactured one, which supposedly makes up for different costs of living in the two countries. In short, it doesn't measure anything that's real, but a concept that some economists — and certainly not all — believe is important. It's a phony comparison using a made-up number.
So what do the numbers show when you compare real apples to real apples? Real U.S. GDP this year will be about $16.27 trillion, adjusted for inflation, according to data from the U.S. government, World Bank and IMF. China? It will be less than half that, about $8.06 trillion. Not only has China not passed the U.S., but it's quite possible it never will. China's population growth is heading for a dramatic Japan-style collapse, which will slash economic growth dramatically in coming years. Growth has already slowed from 10% a year in the 1990s and 2000s to 7% — and it's likely to fall further from there. That's not all. The real measure of a nation's standard of living, productivity and, ultimately, the size of its economy is GDP per capita. What does that tell us about the difference between the U.S. and China? This year, America will have per person output of $50,979 in real terms, China $5,947. So the average American is nine times more productive than the average Chinese. So don't panic. The U.S. isn't No. 2, except in certain IMF statisticians' minds. Nor will it be soon. This is from a credible research article.
I wish Sam Altman wouldn't talk so authoritatively in his essays. He comes off as an obnoxious, arrogant ass.
He sold Loopt and won PG's praise, but it doesn't follow that he has definitive answers the topics he writes about.
The simpler explanation is that he won PG's praise because he is a master imitator. He writes very much like PG, and I think PG saw a lot of himself in Sam, so he promoted him to YC president or whatever he is.
The Chinese value the appearance of working hard, not actual hard work. Cheating among Chinese students is pandemic. Chinese companies regularly publish misleading or outright fraudulent earning statements and quarterly reports. While the Chinese government seems to be taking steps to reverse these trends, it will take a long time to undo their culture of corruption. Contrast this with the American culture of honesty; fraud and cheating are national scandals, not the norm.
Second, the US currency is the world reserve currency because the world trusts that the US will keep paying interest on the debts. A trillion dollar debt is not actually that large, and this is reflected in the near-zero interest rates on treasury bonds. If there was a belief in the market that America would no longer be able to pay off the debts, interest rates would be sky-high. But the opposite is true. The national debt is just a talking point for people who don't understand economics. (The largest owner of American debt is...America!)
Finally, I am unsure what evidence there is that the US culture has moved away from innovation, risk-taking, etc. If anything, there are many more entrepreneurs today than there ever has been before; the maker movement, youtube celebrities, and startup culture is evidence of a growing number of people who are not employees of large corporations, but independent businesses.