You remember “China speed,” right? When infrastructure and residential developments were going up so fast it was hard to credit. Plenty of caveats went unnoticed – workers with few or no safety protections, no rules about work hours or conditions, poor quality in lots of projects, lack of supervision or inspection, round-the-clock work at base pay rates, residential projects deemed complete when unit windows and entry doors were installed. Usually work was done by immigrants (rural migrants) and it was often hot, dirty, and unsafe. But millions did the work to build a life for their families back in the village and for themselves. It was “move fast and build things.”
There was a time when the US worked at “China speed” as well. That was the height of the industrial revolution circa 1870-1920, when cities like Chicago were the fastest growing places in the world. Immigrants (immigrants!) were flocking here to build a future for the US, cities, their families and themselves. The work was hot, dirty, and unsafe. Millions did the work. You remember Carl Sandberg on that unfathomable upstart Chicago –
… I turn once more to those who sneer at this my city, and I give them back the sneer and say to them:
Come and show me another city with lifted head singing so proud to be alive and coarse and strong and cunning.
Flinging magnetic curses amid the toil of piling job on job, here is a tall bold slugger set vivid against the little soft cities;
Fierce as a dog with tongue lapping for action, cunning as a savage pitted against the wilderness,
Bareheaded,
Shoveling,
Wrecking,
Planning,
Building, breaking, rebuilding …
…
Laughing the stormy, husky, brawling laughter of Youth, half-naked, sweating, proud to be Hog Butcher, Tool Maker, Stacker of Wheat, Player with Railroads and Freight Handler to the Nation.
Your thinking goes immediately to China, in all its modern excesses good and bad but supremely confident and arrogant.
We can see environmental fitness as the rationale for the national success in both instances. The Industrial Revolution made the US, which was in the right place at the right time with respect to Europe. The US was supremely fit for that new economic, political and social environment of steam power, oil power, steel and railroads, huge factories, replaceable parts and political leadership that wanted local growth. It had vast open lands, ample water resources, an eager labor force, few legacy institutions to impair new methods or businesses, and government that did not stand in the way (and occasionally looked the other way). Manifest destiny was on the cultural mind. England and Holland and France and Germany could change with the times, but the change was more difficult. They were in a real sense the Old World.
China was in the right place at the right time with respect to the shipping container. It had vast open lands being appropriated from farmers, generally ample water resources, an eager labor force, legacy institutions that could be persuaded to not impair new methods or businesses. Government did not stand in the way (and occasionally looked the other way). Growth and survival of CCP was on the cultural mind. The international economic environment changed substantially for China starting in the 1980s. The US expanded opportunities with the most favored nation grant in 1980, the WTO admission in 2001, and China’s ability to flout regulations and human rights unimpeded. Manifest destiny was international trade for international corporations, and China was its prophet.
For both countries they were geographically, demographically, economically, cultural fit for a development role. Both were, in a way, naturally selected by international business and politics. Evolution of that sort worked. A bit of biology 101 and econ 101 for development.
Both countries made big mistakes over the decades and survived. Murders of landlords, Great Leap, Cultural Revolution, covid response. Racism and suburbanization and financial crisis response and financialization and political decay. In both countries the economic and political and social institutions evolved to fit the changing times. China speeded up the change response since 1978. The US seems to have slowed its change response since about that same time.
Now 2025 is in a different era than 1890 or 1979 or anytime in the last century. If we are to use an evolutionary model, the question is whether the US and China can still adapt well enough to a changed world. The US could grow fast because it had the ability, it wanted to, and there were few hindrances. And reasonably so, building the world’s best infrastructure at the time had to slow down at some point, and it did. China could grow fast because it had the ability, it wanted to, and there were few hindrances. Reasonably so, building the world’s best infrastructure had to slow down at some point, and it has.
Now in the 21st century growth is no longer mostly about steel and concrete. Both countries need to address internal social needs more than steel and concrete. Care for people, education and health care, science and research, are what will grow economies and help people flourish.
The business byword in the US for the last couple of decades has been to “move fast and break things” – the idea being to disrupt existing arrangements and be there “firstest with the mostest.”
That is the way to dominate. Unfortunately that byword has become fashionable among some in the political class. Destroy institutions, don’t worry about replacing them. Some would argue that byword operates in US foreign policy as well.
China innovates as well, with lots of breaking going along with the building. There have been plenty of bankrupt and displaced businesses and people, from construction of the Three Gorges Dam to government sponsored development zones. No one claims that the losers get full compensation. But the general thrust is to more development, more modernization, more flourishing.
When the US was building national railroads and highways there was sufficient consensus to do national financing and standards (recall the problem of different track gauges in the south during the Civil War). Forming a national consensus is far more difficult now. Rarely are there politicians who lead. Mostly they spend time raising money and trying not to stand out too much lest they get targeted by … well, anybody who doesn’t like them.
The question
My contention is that the US has adapted more slowly to changing social and economic conditions (e.g., more human capital needed), adapted poorly, and not in good directions in any case. In the last decade or so we have let “move fast and break things” dominate thinking about how to grow. “China speed” has certainly been about moving quickly, but it is much more about creative construction, even in science and engineering, than creative destruction. It is “move fast and build things” in medicine, in solar and wind power, in quantum computing, in engineering. See the critical technology tracker of the Australian Strategic Policy Institute. Conclusions are that China leads the world in 37 out of 44 critical technologies, with Western democracies falling behind in the race for scientific and research breakthroughs. From the ASPI in 2023 – China’s global lead extends to 37 out of 44 technologies that ASPI is now tracking, covering a range of crucial technology fields spanning defence, space, robotics, energy, the environment, biotechnology, artificial intelligence (AI), advanced materials and key quantum technology areas.
China has a unitary system of government. Provinces and cities are somewhat independent, as in the US, but the single political Party enforces conformance when it wants to. There is discussion and dissension on policy, but when the leadership demonstrates that it wants something it is able to get what it wants.
CCP has shown itself to be remarkably flexible when needed. One could say, when Chinese institutions are broken and no longer fit for the environment, CCP is able to adjust, and adjust quickly. We see how quickly China adjusted to the Trump tariffs. We see how easily policy turns on foreign investment and trade. U-turns on policy are common, as with the covid change. CCP can also afford to plan ahead, far ahead of anything that can be taken seriously within the US by the US government, where election cycles uber alles. Quick example, among dozens – The US in 2025 is desperately seeking alternatives to China as a source of rare earth minerals. Malaysia is a source, and the US is seeking to buy from Malaysia. But China- which has been developing the rare earth business in Malaysia for a decade – is refusing to sell spare parts for Chinese-made rare earth processing machines unless the metal refining is done in China. The US can sign all the deals it wants with Malaysia, but Chinese companies already there control the supply.
I see American institutions as politically and financially hidebound. We are bringing 1960s -if not 1780s – economic and government and cultural institutions to 2025 problems. US institutions as they now exist are less fit for the new environment, for political reasons that encompass policy, representation in Congress, funding of races in elections, and independence of levels of government.
And yes, the US has – or had – some sophisticated institutions of government it did not have sixty years ago – consumer protection and civil rights and environment and water resources. Support for science and research and the less-well-off. Today’s problems – extreme financialization, oligopoly in many industries, failures to regulate, arteriosclerosis in political districts and numerical senate representation – require a national level commitment to political and social change that seems … well, old. Like from eighty or a hundred years ago. Maybe our particular form of democracy has reached its environmental limit. This complaint is not only about the current despicable pig of a leader, though this administration pushes us farther faster into being less relevant. But it doesn’t seem to matter who the leader is, we don’t seem able to do much better using the institutions we have. China can do industrial policy because it can have a unified national mission. US industrial policy, such as it is, is fragmented by agency and its special interests. US government institutions cannot respond effectively. and for some things it is becoming apparent that it is needed.
Now we are engaged in a great cultural war, testing whether the American system, or any system so conceived and so dedicated, can long endure. For evidence, we note that when America did big things, it was the government that did them or funded them – intercontinental railroads, great dams, reversing the flow of the river, space and the internet and … well, even rule of law, when that used to work. Somewhere in the last fifty years of sovereign individualism and George Carlin-noted stupidity we lost cognizance of government as a prime mover of great things (and yes, ok to the concept of business innovation.)
China can do and does do those great things. Government is authoritarian, hierarchical, and does serious vetting of government administrators and leaders. I’m not suggesting we should try to “be more like China.” I am suggesting that the US must necessarily move away from its current way of doing things – quite broadly construed – to something that fits the changing environment – think of it as evolution and natural selection as the world and scientific and cultural environment changes. More than ever in American history, national problems require national solutions. Not just for war, but for health of the population. We did national solutions with Medicare and interstate highways. We need those again for policy and funding in several disciplines.
Former National Security Advisor Jake Sullivan echoes this idea. Jordan Schneider interviewed Sulllivan on the ChinaTalk podcast (November 18, 2025) –
Sullivan: We really need a deep and rigorous study of what the objectives of industrial policy are, what the limits of industrial policy should be, what tools work and don’t work, and then once it’s being applied, what are the obstacles to actually executing in a way that delivers results on a reasonable timeframe. To the extent those obstacles need to be adjusted, how do we adjust them? … But there is not a body of work on this, in part because industrial policy was basically considered unacceptable to work on. We’ve got to bring it front and center, and not just with the core economics profession — that’s got to be a dialogue between national security professionals and economists coming up with a range of answers to those questions that are rooted in empirics and evidence and rigorous study.
Essentially the argument is not one between competing views of government policy. In normal times the US government also wants electric vehicles, solar power, better batteries, more and better science. China has (or had) 47 companies competing to make electric vehicles. The central and provincial governments provided some interim financing. After a few years, most of the 47 dropped out and the governments sought to consolidate plants and equipment and talent. There were losses, public and private. As of November 2025 the number of manufacturers is down to about 11. Still too many. Government spending has been far too lavish – one could call it a waste. The China EV sector is struggling from the closings and the price wars but the objective of dominating the world market is a rousing success. Long-term success for China at the expense of short-term pain. Perhaps akin to spending on some American military programs – tanks and planes … and wars. The model is spend money now for long term safety.
Of course dam projects and the interstates and lots of medical research programs do not return benefits within a timetable that accommodates private business. That is the reason for publicly necessary projects to be financed or built by government in the first place. No different in China than in the US, except that China has a short-term perspective on when government financing is useful, to accommodate longer-term national goals.
Michael Shuman in China EV article above –
The Center for Strategic and International Studies estimates that the government provided more than $230 billion of financial assistance to the EV sector from 2009 to 2023. The strategy worked: China’s EV makers would likely never have grown as quickly as they have without this substantial state support. By comparison, the recent Republican-sponsored tax bill eliminated nearly all federal subsidies for EVs in the U.S.
At the same time, US private-federal partnerships are common. SEMATECH was launched in 1987 to coordinate semiconductor research among US manufacturers that might have been prevented from cooperating under existing law. The National institutes of Health and the Department of Defense use such public-private partnerships with regularity to improve quality and speed of research. Obviously big projects like airports and seaports are built as partnerships with private carriers. The transcontinental railroad was built using federal government issued bonds to pay for construction and large land grants to support longer-term profitability for the railroads.
Quite ominously for America in 2025 politics, a new paper provides provide empirical evidence on the macroeconomic impact of the post-war American innovation model Public Money, Private Innovation: How Government Funding Built -and Sustains – America’s Technological Leadership. The researchers show that government-funded but privately owned patents — just 2% of all patents — account for roughly 20% of medium-term fluctuations in US productivity and GDP growth. These public–private innovations also crowd in private R&D and investment, underscoring the outsized returns to government support for basic research.
As the US government eliminates funding for research in just about every discipline, one is inclined to wonder. What next?
America certainly still does innovate. But looking at the physical condition of our cities, not to mention advances in engineering, medicine, computing and “smart cities” – well, those innovations now seem to come more from China than the US. One wonders if the US has lost dynamism at the same time China has rushed dynamism into top gear. I’ve made an American legacy argument before, justifying American lack of improvements in airports and trains and public transportation – too hard, too expensive to work around old existing systems, particularly when the government cannot control the land. But eventually that justification regarding the physical environment starts to get old as well. One minor example – the CTA Red Line that serves Chicago neighborhoods still takes an hour to get downtown from Evanston, IL after spending $570 million on a flyover designed to reduce travel times. The suburban METRA train takes 30 minutes from the same initial stop.
Ok, this is one minor example. And perhaps this just demonstrates the ongoing federal negative bias against cities, spurred on by suburban financialization of government fiscal relations. If so, that only further makes my point. China understands that cities are the engines of the economy, if not now for factories but for new ideas coming from density and close community and immigrants (!). If we want America to become more unified, more concerned for the Other, those ideas will have to come out of cities, not suburbs. Those are the things that permit an economy and its people to flourish. Those days of innovation coming out of tinkering in suburban garages – well, that was never a thing.
I remember a 1994 article by James Fallows in the Atlantic What is an Economy For? At the time Japan’s economy was on everyone’s mind. Fallows identified four distinctions between Asian and western economic thought. Perhaps he boils it down to one sentence – We know the answer: to grow so that we can all buy more and keep the world economy spinning. Asians have a different answer: to grow so that a country can produce more–whoever buys the goods–and keep the country’s, not the world’s, economy spinning. Concomitant with the Asian view is the presumption that the government has an important role in providing direction, and businesses and individuals are honor-bound to go along.
Walter Issacson probes a bit deeper in The Ideal That Underlies the Declaration of Independence (Atlantic, November 2025). The ideal is that of a common dream for all. This, he says, has been ignored in the last fifty years.
The entrenchment of a meritocratic elite came at the expense of community and the American dream. The globalized economic system increased wealth, especially for the elite, but it reduced opportunities for those who used to have secure, working-class jobs.
Given the resentments and polarization that afflict the country today, (this) should lead Americans to ask a basic question: What is the purpose of an economy? To increase wealth? Yes, that’s good. Growth? Yes, good too. But the purpose of an economy is also something deeper. Its purpose is also to create a good society. A good, stable society where individuals can be free and flourish and live together in harmony. That requires nurturing the sense that Americans share common rights, common grounds, common truths, and common aspirations. Democracy depends on this.
Restoring stability to American politics will require reviving an age-old concept: common ground.
Our innovation needs are not just in economics and technology. They are in civility, social capital, and civil society. Those softer requirements are critical to growth potential over time.
The academic questions
What does research say about development trajectories over time?
As to government financing of development, the argument is not so different from that in econ 101, deciding whether a retail business should remain open at night or not. Businesses have to cover expenses for rent, insurance, and property taxes 24/7. Those fixed costs don’t go away if the business closes up at 5:00 PM. The economic argument is if the business can garner enough sales in otherwise off hours – say 5:00 PM to 9:00 AM – to cover its variable costs – the direct costs of serving those off hours customers, labor and utilities and supplies – then it is worthwhile to be open then. You can cover your immediate costs and maybe do a bit better, to help on the fixed costs. In China most expressways are operated as toll roads. For many roads, tolls don’t come near to covering financing costs. But in twenty years the expressway will be there, in the meantime business conditions are improved for some businesses, and there are jobs for construction and expressway workers. In the short term – akin to overnight – there may be losses, but in the long term the project will be profitable by government standards. So, too, for most of the high-speed rail lines. Chinese institutions – government, banks, and contractors – operate differently than those in the US with regard to investment. As Fallows pointed out, benefits accrue most importantly to the nation, rather than the individual company. One should remember the distinction between the American Dream and Xi’s Chinese Dream. The American Dream is one of individual achievement, for oneself and one’s family. The Chinese Dream, as Xi defines it, is of a strong China.
At a larger scale is the macroeconomic performance of the country. Development trajectories can be enhanced, stymied or cut off, depending upon government and cultural institutions. The institutions we have – laws, regulations, practices, favored treatments, public and private – are they hampered by their own rules and regulations so that they cannot innovate anymore? Are current institutions extracting so much from the economy that new ideas, new businesses get starved? This is the middle income trap argument for developing economies.
The institutional limit argument says that the laws and regulations and practices that allowed growth to get to a certain point may be insufficient – may even be antithetical – to further growth. In the US, a good deal of our innovation in the last twenty years has been to let finance take over operating businesses – fast food chains, drug stores (Walgreen’s), even professions like health care clinics and there is no shortage of articles and research documenting the damage done by financialization to American business and fostering of inclusive institutions. One of many – Private Equity is Out of Control.
A test of the “institutional limit” view plays out in the next decade or two in the US and China. The argument is similar to that of the middle income trap postulated for developing economies and popularized (in my mind, anyway) by Barry Eichengreen and others in a 2013 NBER paper Growth Slowdowns Redux: New Evidence on the Middle Income Trap.
Eichengreen was describing a ceiling that seemed to constrain low-GDP countries working to move up the GDP development ladder. Most countries seemed to hit a limit on their ability to grow GDP.
Whatever their natural advantages when developing from a rural, subsistence based economy – low labor costs, natural resources, a good port or an enlightened leader – growing economies eventually need new financial arrangements, new forms of education, new business models, perhaps new types of business leaders, more inclusive institutions, to take next steps to becoming a higher income country. (Inclusive institutions generally mean those that provide for more sharing of responsibilities and benefits). After some years the economic and political environment that encouraged early development is no longer such a good fit, because of changed international competition, resistance to change from businesses and individuals that benefitted early on, need for better educated workers.
Daron Acemoglu and James Robinson extended the point in Why Nations Fail: Origins of Power, Prosperity and Poverty. Whatever the original sources of development, and whatever the government structure – socialist, communist, capitalist, mercantilist – institutions need to evolve to meet new conditions presented by growth. All too often, entrenched bureaucracies and influential business leaders stymie further growth to protect existing jobs and economic rents. Those extractive institutions strangle growth by confining most wealth creation or income to an elite. Alternatively, inclusive institutions spread wealth more widely in the society and foster growth. Countries that want to grow past middle income GDP need to choose wisely about next steps – become more institutionally inclusive to spread the wealth around. Even if that means improving education and health care, expenses that mostly yield benefits a generation down the road.
Notably for Eichengreen and Acemoglu and Robinson, the Asian Tigers seemed not to fit the model of a middle income trap development ceiling. All of the Tigers have gone from low income, rural status to high income modern economies while countries like Mexico, Russia, Greece, Columbia, and Nigeria (among others) have stagnated at a lower-middle income status. China is still a bit of an open question, even now. How come?
The booming China of the first fifteen years of this century was accompanied by powerful entrenched bureaucracies and effective but corrupt local leaders. Zhou Yongkang and Miao Hua come to mind. Extractive institutions in the form of state business monopolies and contracts going to high-guanxi individuals did limit some growth, but as Michael Pettis points out, when otherwise corrupt incentives align with those of the overall economy, extractive institutions can work just fine, at least for a while (Michael Pettis, How Much Investment is Optimal? China Financial Markets, Carnegie Endowment for International Peace, May 20, 2013).
Political and economic institutions in China were – are – certainly extractive. Xi Jinping’s anti-corruption campaign has prosecuted hundreds of political and business leaders. After thirteen years of a fierce campaign, in 2025 Xi maintains that corruption is still the greatest threat to the Chinese Communist Party. Xi took down powerful business leaders and powerful businesses with the crackdowns on real estate development, tutoring programs, and internet technology. While necessary in a larger sense for continued growth, these actions cost tens of thousands of jobs and the effects are ongoing. But CCP demonstrated its flexibility and willingness to take on oligarchs and bureaucracies that threatened future growth. On-going extractive institutions in China are less a threat because the political leadership and most oligarchs are not fundamentally threatened by growth, creative destruction and some institutional opening. The Party is able to take care of its own if needed. (A note on investment – circa 2009 I remember hearing from numerous sources “the more risk, the more profit.” Say what? No one in a market thinks that way. But if you can privatize the gains and socialize the losses, well then. Proceed. Ka-qing).
China is slowly recovering from those recent industry crackdowns. Young Chinese are taking gig jobs or jobs for which they are overqualified or seeking to “go out” or becoming a “full-time kid” while living with parents. An ace in the hole for Xi and China is that CCP has proven to be a remarkably flexible institution when necessary. Rules and laws and regulations are one thing; the fundamental goal is always survival of CCP. State-owned businesses can absorb some new or laid off workers. Business profit is not the only metric for state-owned businesses. Economic growth is the means by which CCP will retain power and at the same time, help more Chinese flourish individually. In any case, Mr. Xi has told young Chinese to be prepared to “eat bitterness” (chi kuwei) for a while until Chinese dominance moves ahead. Try a president saying that in the US.
The US economy has done marvelously well, thank you, since the Reagan era. That creation of wealth and GDP has been highly disproportionate, though. A few have benefited enormously and lots of Americans, not so much. Institutions – large businesses and tax laws, privatization of what used to be common – look increasingly extractive.
An institutional turn against growth began, ironically enough, in the Reagan era. His 1981 firing of air-traffic controller signaled a national movement against unions and in favor of greater business autonomy in relations with employees. A comment at
Reagan was a disaster for the labor movement. A second Trump term could be worse.
Companies were emboldened to attack unions at companies like Greyhound, Phelps Dodge, Massey, Caterpillar, Bridgestone/Firestone, and International Paper. Elimination of the Glass-Steagall Act under Clinton in 1991 removed separation of investment from commercial banking, creating more opportunities for penetration of investment firms in retail operations. This really ushered in the era of financialization of the American economy, in which investment banks, private equity companies, and stock brokers became the oligarchs controlling the American government and regulation of business. The 2008 financial crisis was a result. Notably, the government bailed out banks and investment firms, not residential borrowers. Now, the GOP seeks to eliminate consumer protections of all kinds, including Dodd Frank and related consumer protections with additional further threats to unions, immigrants, health care, education and the low-income. None of the current measures are borne of economic necessity for the economy. They are borne of rent seeking by huge businesses with influence in Washington, D.C. and, to be fair, a sense pointed out by Adam Serwer in 2016, The Cruelty is the Point. Accountability and regulators are being dismissed wholesale. And as pointed out in a recent NYT article, when sentinels sleep, fraudsters flourish. (This has been the China problem).
The US government has for decades been demonstrating its increasing inability to control financialization and oligopoly in industries. A fundamental flaw for the US is that government, whether under Democratic or Republican leadership, has proven to be a remarkably flexible institution when oligarchs press, much less so when voters press for change. Rules and laws and regulations are one thing; but the fundamental goal is always – not survival – but promotion of oligarchs and financial enterprises. There is no shortage of research showing congressional voting decisions often do not reflect wishes of constituents but do reflect wishes of donors. One example – Gilens and Page: Testing Theories of American Politics: Elites, Interest Groups, and Average Citizens
In their recent book Abundance Ezra Klein and Derek Thompson have a slightly different but related take – that America is stuck between a progressive movement that is too afraid of growth and a conservative movement that is allergic to government intervention. Our political result is too often stagnation. Their prescription is a reduction in regulation that stymies growth. Good idea, but not nearly broad enough to restart the engines of confidence and optimism. They forgot “make no little plans.”
The Authoritarian Stack has an excellent post on oligarchic control – How Tech Billionaires are Building a Post-Democratic America – This project maps the “Authoritarian Stack”—a network of firms, funds, and political actors turning core state functions into private platforms. Economic growth for oligarchs is the means by which they permit government to remain in power. Under the banner of “patriotic tech”, this new bloc is building the infrastructure of control—clouds, AI, finance, drones, satellites—an integrated system we call the Authoritarian Stack. A privatized military is part of the program. Helping more Americans flourish individually is really not part of the calculus.
In other words, economic and local political institutions in China bend to the will of CCP, which has a long term survival goal. Economic and political institutions – banks, investment firms, tech, MAGA – in the US bend the government, which by virtue of heavily contested democratic elections has no long term survival goal.
The general distinction is memorialized in the phrase – in China, the government controls the oligarchs. In the US the oligarchs control the government.
We see policy differences play out in South America, Chinese long term planning and … well, none. The Chinese have opened a new port in Peru at Chancay, which will substantially enhance trade with South American countries including Brazil and eliminate need for the Panama Canal. This will promote growth in China and CCP influence across South America. At the same time, the US government is murdering passengers in small watercraft on the high seas and looking to threaten and possibly invade Venezuela, using an airstrip in El Salvador. In Peru, to go tit-for-tat with the opening of the Chinese port, the US government promised some helicopters to assist in seeking drug smugglers.
1776, 1861, 1917, 1929, 1941, 1963, 1968, 2001, 2025
In 25 or 50 or 100 years historians and writers of all stripes will want to know about 2025, another year that everyone will remember for its singular event in history – when the US gave up the “shining city on a hill,” the last best hope of mankind, the leading scientific and technological country for the prior 150 years, the leading economy of the last hundred years, the proudest achievement of the Enlightenment, the one country that – even now – people clamor to come to, the place that said “Give me your tired, your poor, your huddled masses yearning to breathe free.”
And to be fair to the US, we didn’t get beaten. We just … retired. Our political institutions, representing American voters, just couldn’t cope. Too much change needed in a changed world environment. What we ended up with, what we voted for, was not just paralysis. It was autophagy, eating oneself, at a social, economic, and political levels. We destroy what we are for the sake of enjoyment at the suffering and confoundment. See the despicable Mar-a-Lago fest.
Regarding Chinese extractive institutions and the bad optics of CCP as an imperial oligarchy, we should note that part of Xi Jinping’s anti-corruption campaign has been to severely curtail extravagance in CCP meetings, even of the business lunch variety. Rather than multiple courses and drinks, meeting are limited to “four dishes and a soup.” A very far cry from the old days, before 2012 when “too much is not enough” was the rage. Shamelessness was becoming a death knell for CCP. In the US shamelessness appears to be just another Chinese import for MAGA and the GOP.
The American disease of sovereign individualism and shamelessness has been incubating for two generations. It is by no means only a MAGA trait, and is much more pernicious than the “engineering state v lawyer state” dichotomy described by Dan Wang in his Breakneck: China’s Quest to Engineer the Future (“America is run by lawyers, and China is run by engineers”). We can all see an element of truth in that, but the American system now has no commonality, no sense of the common good. It is as if all Americans existed as shoppers in a big mall called America. While in the mall, we are in the same physical place but without any commonality. We may acknowledge each other but mostly we compete over parking spaces and lining up in the queue. We are sovereign individuals all the way, owing nothing to anyone else in the mall.
The middle income trap, like the argument in Why Nations Fail, suggests that legacy institutions at some point block ability to change and progress (see American financialization and sovereign individualism). At some point extractive institutions in society impede needed change. Natural selection works in biology and it works in development economics – and right now the US is failing to respond as the environment demands.
There are fixes for what ails America. All are tough, if not seemingly impossible to implement. At a minimum we can start with updating governance from its 1789 origins. As I like to say, in China the government controls the oligarchs. In the US, the oligarchs control the government.
What we can do tomorrow
Ok, not so serious. Fixes are necessary, nevertheless.
What are necessary fixes in the US? For the US, change is needed in political party organization and slating. Change is needed in political districting and representation. Change is needed in public-private relations regarding major investments. Change is needed in restraint of monopoly, oligopoly, and regulations that favor big business over small and employer over employee. Change is needed in the ability of aggrieved parties to stall major investments for years via lawsuits. Change is needed to make health care available and affordable for all. Change is needed to value education.
Some parts of these problems can be addressed locally and in different ways. Some parts of these problems require national solutions.
Delay in responding to environmental changes is deadly for plants and animals. So, too, for development economics. Change may take a generation, but delay – hoping the environment will change back to what it was 50 years ago – is not ok. It is betting that the future can be like the past.
A question for the nay-sayers to fundamental but needed change in American governance, perhaps American cultural outlook –
Does anyone think the Chinese pattern of promoting education and science and engineering is going to impede human flourishing? Does anyone think the MAGA pattern of destroying government is going to promote human flourishing?
Wait a decade or so, and we will see.
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