Michael Adkins
When it comes to the economy, we Americans tend to be paranoid to a fault. During a period of inflation, we fear the worst. It is understandable to fret when inflation raises prices on what we purchase, but it is often best to view the bigger picture. Presently, America is faring far better than the rest of the world in dealing with inflation. We don’t give credit to anyone when inflation drops, rather we assume things are worse than they actually are. But where we Americans really lose it is whenever we believe another nation will surpass our economy.
We are the strongest economic power on the globe and will remain so for as long as we can imagine. We are blessed with a trove of natural resources. Our history is full of immigrants coming to fill up our workforce. We have the most efficient form of capitalism on the face of the Earth, but every time another nation enjoys an economic boom, we panic and fear the worst.
When Japan’s economy grew substantially, all we could talk about is protecting our economy from the Japanese, out of fear that nation would overtake us. It didn’t happen, in large part because much of its economic growth was founded on grossly over valued real estate prices. That could not be sustained and that economy entered a period of deflation which still impacts Japan today. Further, Japan lacked the natural resources needed for sustainability and its aging population meant problems with its workforce.
China is now the economic boogeyman we fear. It recently concluded one of the greatest economic booms in history. The Chinese “economic miracle” would not have been possible without Deng Xiaping’s turning away from communist economic principles toward a hybrid form of capitalism. In 1980, China produced but 10% of what our economy produced. In recent years, it reached 75% of our production. Independent businesses and entrepreneurs sprung out of the ashes of failed Communist practices. Those business that remained state-owned operated much like private-sector companies and retained all profits rather than turn them over to the state. Though China referred to it as a “socialist market economy,” it was actually was more similar to “liberal capitalism.” China transferred state-owned assets to social-security funds to aid in the financing of pensions and it worked very hard at increasing foreign investment. But in spite of its massive economic growth, it was, at best, an unstable form of capitalism and that instability has recently revealed itself. China’s economic growth has all but ground to a halt. While economists predict the U.S. may reach 6% growth this year, China is expected to slow to roughly half that. China’s real estate market has crumbled much like Japan’s did some 30-plus years ago. Current leader Xi has demonstrated a vast ignorance of economics. His policies of the past two or three years has shaken the very foundation of his nation’s economy. His treatment of Hong Kong has scared off foreign investments. Xi’s overarching priority is to create a global military presence rather than an economic juggernaut. To reach his military goal, he returned to the very principles and practices of Chairman Mao that held back China from achieving real economic growth.
China’s situation is not unlike that of Japan. It faces the threat of crippling deflation which can take decades to overcome. And thanks to decades of its “One Child” policy, China is facing a workforce shortage. That will require the importation of foreigners, something that always makes communist nations uncomfortable.
There is a lesson to be learned. Our form of capitalism is exceptionally strong; assuredly it is flawed, but it is the best economic system in the world. We can improve upon it, certainly, but we need not fear the economies of the rest of the world. Instead, let’s put or minds to strengthening our democratic principles. The ebbing of those principles is what should concern us.
Michael Adkins is a former Chair of the Hancock County Democratic Party.
