TSJones wrote:I would remind everyone that Capitalism has its own mind that it sometimes deposits in a panic. There are business cycles. Things go up and things go down. It's rarely in a straight line. The US goes through through these things every 20 to 50 years.
While what you say is absolutely correct, and the business cycle does apply to future growth in China. But this is really a secondary effect; it's misleading to think of what's been happening in China over the past 20 years as being some how related to the growth side of a normal business cycle.
I think the better question that should be asked is: what are the conditions that allow wealth inequality to persist? Why should Western workers have much more wealth, and a higher standard of living, than those in China? Why, why, why? We all aspire to the same thing.
If the United States and China were plots of farmland... what is it that allows the US to harvest so much more? I'm not going to write a long thesis about this, but I will just briefly say, I think it's a question of providing the necessary conditions. You need the proper fertilizer, you need to have irrigation, you need workers at the right place at the right time. The story of the past 20 years has been China gradually putting together precisely that.
China's now possesses an educated population: literacy rates are through the roof, and secondary/college education rates are very high. Due to cultural influences, we study hard and we work hard; we are firm believers in the importance of both education and hard work. We have capital, and much of it is controlled by domestic sources (not just foreign). We have the physical resources needed to keep building our economy.
So, really, why shouldn't our plot be as fertile as that of the United States? Even if we give the United States the benefit of the doubt (for being "first mover"), and say GDP per capita should always be smaller than that of the US... then perhaps we're 10-20% less productive, certainly not 80% less productive (as we are today). I see what's happening in China as little more than the flattening out of an inequality that shouldn't be justified, and can't be maintained. Business cycle effects might dictate how long it takes for this to happen, but it's only a question of *when*.