Competitiveness Panic

September 15, 2006

Robert Samuelson writes about the periodic panics Americans have about new countries competing in existing markets. Yesterday Japan was buying up cherished American properties, today China and India are expected to kick our butts. In a way this paranoia is what keeps us on our toes. There is a tendency for people to overestimate their competition because we can’t see their flaws, though our own flaws are obvious. Japan had numerous flaws that lead to a decade of stagnation and a future of demographic decline. China and India, our latest bogeymen, are also weak. China’s government has to manage a huge social transformation from communism to capitalism without yielding control through democracy. India has to manage 350 million starving people with a government that still leans towards socialism. Both governments are vastly more corrupt and inept than ours could ever be. The media reported that China and India produce more nerds than we do, but recent reports show that most of those nerds are not nearly as nerdly as ours (most come from lame trade schools). China is losing business to cheaper labor elsewhere in Asia. India’s IT firms are losing business to cheaper techies in eastern Europe. The US will dominate for a very long time as long as we avoid the European disease of mild socialism, visible today in overbearing union demands on American car companies. It is possible for China and India to dominate if they execute a perfect game, but they are far more likely to falter than the US. My fellow Americans should stay alert, but don’t panic.

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