We often showcase the Guardian’s Larry Elliott. not just because he’s good at economics (he is), but also because his articles have a way of illuminating a much broader range of human life including Geopolitics and History to name but a few. And we think today’s called China’s demise was gleefully predicted by the West-but meanwhile it’s built an AI Revolution Is a prime example. As usual, we provide a brief summary of Larry’s main points, accompanied by the earnest imploration for you to read it for yourself. Followed as ever by our own take: thoughts which the article has stimulated in the minds of the Editorial Board of LSS, its staff, and that contract bloke who does the cleaning.
LARRY SAYS
For decades, western experts have been confidently predicting the failure of the Chinese economic model. The Chinese, their wisdom ran, were overindebted, overinvested, over reliant on the property market and didn’t have enough democracy. Even when China began to do well at low level manufacturing it would never, they asseverated, catch the West’s lead in high tech manufacturing and industries of the future. But what has happened? Now the Chinese are leading the world on renewable energy technologies. They don’t even have to import machine tools from Germany, which we find especially significant. As for AI; their models and technologies are breathing down the necks of the leading American corporations. With dire risks to the current US stock market boom, perhaps even to the global balance of power itself. All in all, pretty significant stuff. Which leads us to think:
WHAT WE SAY
Let’s start by looking at how Larry thinks China achieved all this:
When China began to build up its manufacturing strength almost 50 years ago, it saw itself as a developing country. It had no illusions about the scale of the challenge but had a plan and stuck to it. There was no aversion to picking winners. Nor would the strategy be left exposed to the whims of speculators. Instead, there was a willingness to use all the policy tools available: subsidies, tariffs, exchange controls and state investment.
We remember how these were the very years western nations were taking the opposite route. Remember the Washington Consensus, Thatcherism, Monetarism, whatever you want to call it? Free markets were good, it held: and anything the State did was, by definition bad. So: cut taxes, cut regulations, abolish all industrial policy and above all keep labour costs low. If that meant outsourcing jobs to China, what the hey-it would keep those pesky unions in check, wouldn’t it? Nowhere was this policy more rigorously applied than in Great Britain, which has seen itself slide from manufacturing power base to a small offshore island living on tick, whose inhabitants wander bewilderedly through the remains of their past like the impoverished heirs to a squandered fortune.
Yet Britain’s story is the whole West’s really, only more so. We want the western nations to survive, really we do: they represent so much in the common patrimony of humankind. But if they are to do so they must stop thinking like spoiled brats, and start to think like developing nations once more. To learn a little humility, in fact.
#china #USA #UK #economics #technology #history #AI #manufacturing #trade #industrial policy
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