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China beats U.S. fiscal stimulus plan
Todd Buchholz
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TEXT OF COMMENTARY
KAI RYSSDAL: The House Energy and Commerce Committee has passed its big climate change bill. That's going to let U.S. negotiators hold their heads a little bit higher at a global warming meeting in Paris next week. Chinese officials will be there as well. And they came in for some praise from the Obama administration's special envoy for climate change yesterday. Todd Stern called Beijing's efforts on cutting greenhouse gas emissions impressive.
Commentator and economist Todd Buchholz says the U.S. could stand to follow China's lead in more ways than just one.
Todd Buchholz: Name almost any category, and you get China. Tallest man? China. Smallest man? China. Best Chinese food? Well, maybe not that one. But here's a sad comparison: best fiscal stimulus plan? Yep, China.
Caterpillar and DuPont report that China's plans are already generating orders. Meanwhile, Goldman Sachs economists have already upgraded their old GDP forecasts. Now, how did China win the stimulus game?
Quite simply, our Congress decided to throw money where it wouldn't do much good. Most of the $800 billion is dribbling out to government, health care and education - sectors where the average unemployment rate is about 4 percent. Meanwhile, 21 percent of construction workers sit idle next to their lunch pails, waiting, as do 12 percent of factory workers.
Well, at least the jobless aren't forced to sit in traffic, which won't improve much, since only about 6 percent of the plan went for bridges, tunnels and freeing up bottlenecks. A majority of China's $587 billion is aimed directly at infrastructure.
Why did China get it right? Their leaders have bigger incentives. Our Congressmen care mostly about doling out favors. We get a $650,000 study of beaver management in Mississippi.
China's leaders face a more serious threat than a re-election campaign. China has 30 million more young men than women. When you have that many frustrated, randy and jittery young guys on the prowl who can't get a date, you better at least give them a job. And China will.
China must grow pedal to the metal for the next 15 years. After that, it smacks into the Great Brick Wall of China - its terrible demographics. China won't have enough young people to support its retirees. China will look like the old country -- Florida. For now, though, they beat us in the stimulus competition.
But, of course, some American firms are doing just fine, right here in America. P.F. Chang's, a thoroughly American company announced a 33 percent leap in first quarter profits. A "great leap forward."
RYSSDAL: Todd Buchholz is the author of New Ideas From Dead Economists.
Todd, if you'd looked a little closer to the PF Chang's results, their profits may be up due to cost cutting and price increases, but their sales are still in the tank like the rest of the Full Service Restaurant industry. Did you research this piece at all?
The wishful thinking of the author that in 15 years China will smash itself in the great wall because of not enough young people. We will have all 50 states like Florida by that time too.
So may be two economies at the same age level is a good comparison. What about the old Europe now?
A wishful thinking for the End of China is an anti-depressant mentality of a falling Empire whose power is declining day by day.
China has made it pretty clear that Capitalism does not require a democratic form of government. And the Republicans have also made it quite clear that they favor Capitalism over Democracy. Mr. Bucholz is apparently unaware that state, county and local DOTs prepared their lists of "shovel ready" projects while the stimulus package was still in the negotiation stage. He is apparently also unaware of the money flow (Federal to State DOTs, to County DOTs, to local DOTs and of the competitive bidding rules that give local contractors a shot at what otherwise behemoths like Halliburton would gobble up in a centralized pay to play government. Wake up Todd!
The solution for China has to be very different from the solution for the US. They need roads for cars, they need cars for the roads, and they need to decentralize the work from the clumped and polluted cities to the rest of their country. China grew in an incontrollable manner which placed a huge burden on their city environments.
The US needs a different type of roads (not concrete-asphalt), we need roads for energy, we need to upgrade the electric grid infrastructure so that we may power the cars of the future.
The US also needs to fix the broken health care system if it is to subsist in the global marketplace. The American people carry the huge weight of a mismanaged and broken health care system. Its manifestation is not only in poor or lacking care for the middle class with huge direct costs (hospital bills account for 50% of the reason Americans go bankrupt!), but also manifests itself in an incentive to outsource; paying for employee health insurance in the US makes employment just too expensive for companies to bear.
Please correct me if I am wrong, but Mr. Buchholz does not mention (or account for) either the electrical infrastructure investment, nor the health care overhaul in his story. More than roads for cars, we need a road to energy independence and reasonable health.
Source for bankruptcy by medical bills:
http://www.commondreams.org/headlines05/0202-08.htm
The solution for China has to be very different from the solution for the US. They need roads for cars, they need cars for the roads, and they need to decentralize the work from the clumped and polluted cities to the rest of their country. China grew in an incontrollable manner which placed a huge burden on their city environments.
The US needs a different type of roads (not concrete-asphalt), we need roads for energy, we need to upgrade the electric grid infrastructure so that we may power the cars of the future.
The US also needs to fix the broken health care system if it is to subsist in the global marketplace. The American people carry the huge weight of a mismanaged and broken health care system. Its manifestation is not only in poor or lacking care for the middle class with huge direct costs (hospital bills account for 50% of the reason Americans go bankrupt!), but also manifests itself in an incentive to outsource; paying for employee health insurance in the US makes employment just too expensive for companies to bear.
Please correct me if I am wrong, but Mr. Buchholz does not mention (or account for) either the electrical infrastructure investment, nor the health care overhaul in his story. More than roads for cars, we need a road to energy independence and reasonable health.
Source for bankruptcy by medical bills:
http://www.commondreams.org/headlines05/0202-08.htm
Comparing China's stimulus to the US's is like comparing apples to oranges. The two countries have very different economies and underlying politics.
Buchholz suggests that the most important goal of our stimulus should be keeping construction and factory workers employed while trying to negate the jobs that the environmental sector creates.
Just trying to maximize job numbers, without looking at the larger economic context the jobs reside in would not make us winners in the long term.
You forgot a category:
Best at ignoring the 20th anniversary of a bloody massacre against unarmed students protesting lack of civil rights? China.
I get it-- it's an economics show.
But GDP is not everything. They can keep their "good" stimulus plan-- I'll keep my representative democracy.
Nice to see a Republican economist come out in favor of mimicking the policies of the planet's largest communist country. Now his partisans' charges against Obama as a socialist make sense. They simply wanted to shame Obama into even further extending government control. Let's do away with those pesky Congressman, bullrush infrastructure programs with no regard to those annoying open government policies, and just give everything over to a powerful central government. Gee, should we mimic China's tax policies, too? They seem to have a booming economy over there.
