Hacker News Reader

Comment by mousa | Hacker News Reader

It's nice that we have freer enterprise and I'm happy to see SpaceX doing well, but China is pivoting hard. It's not a zero-sum game so it doesn't really matter who wins but they're not planning on being just the manufacturers forever. We have freer markets, but they have a big edge too in that they value education a lot more, especially now with the one child policy.

View on HN

I see a black cloud looming for China. The "One Child" policy is making their age distribution very top-heavy (much more so that the U.S. "Baby Boomer" phenomenon). Also, two-thirds of men in China smoke (and over half of male doctors). Furthermore, as a populace gets richer, its diet tends toward eating more animal-based products and obesity and cancer rates rise. I see a very large health-care problem in China's future that will certainly slow down their economy.

Furthermore, as a populace gets richer, its diet tends toward eating more animal-based products and obesity and cancer rates rise. I see a very large health-care problem in China's future that will certainly slow down their economy.

Is this going to be a competitive advantage for India, with its high population of vegetarians?

At least in the obesity case, the larger problem is sugar not animal fat.

An American-style diet will bring that as well. However, China's system is well positioned to avoid the subsidies which caused the American obesity disaster.

China also has farm subsidies -- and like the US not always for the most healthy of foods. (http://online.wsj.com/article/SB1000142405274870371690457613...) However, your point still stands because I'm not sure (and doubt) they subsidize corn to the extent the US does.

He may be referring to the claim that greater consumption of animal proteins, not fat, leads to higher incidence of cancer, heart disease, etc. It's a controversial claim, of course.

The competitive advantage in India in the long term is that their population will be significantly younger than China.

> India has more than 50% of its population below the age of 25 and more than 65% hovers below the age of 35. It is expected that, in 2020, the average age of an Indian will be 29 years, compared to 37 for China and 48 for Japan; and, by 2030, India's dependency ratio should be just over 0.4. http://en.wikipedia.org/wiki/Demographics_of_India

In the other hand India is confronting other problems.

These countries have had centuries to progress. Why now?

India got independence only in 1947. All growth till then made the British richer. Till the 1990s india had a strange cross breed b/w socialism and capitalism where large govt factories and govt organization employed most people and had low productivity.

One major gain was a strong focus on education many of them learning English. However most of it is rote learning centric. It is only in recent years that India has been able to make a place for itself in the BRIC economies.

Everywhere in the world has had millenia to progress. Progress appears to be the exception, not the rule, and to be somewhat splotchy in general.

Here's a nice, and recent article, by Amartya Sen, comparing development in India and China:

http://www.nybooks.com/articles/archives/2011/may/12/quality...

Sen wrote the book "Development as Freedom" after winning the 1998 Economics Nobel prize. He's known for the general observation that famines occur seldom in democratic societies because politicians are at a gross level accountable for outrageous mismanagement of resource allocation.

The Chinese government is banking on having a smarter working population being more valuable than a larger working population. With more and more blue-collar work being automated it will get harder to find jobs for everyone.

A link on the front page aptly illustrates China's coming population problem: http://www.economist.com/node/18651512

I'm not sure valuing education is enough. Japan didn't pass the US and it surely valued education more than the US. It is the combination of virtues and the chaos of individuals that allows the US to work. If the US gets its debt under control, I don't really see the "win" being China's. China is chaos adverse.

China has a significant population advantage and the US has a huge physical and social infrastructure advantage, but who is on top nominally is far less important than avoiding a Russia or Japan style collapse. The US and China are both having issues with letting their well connected elites fail. Taking risks is good for society but trying to get state support for risk taking causes huge market inefficiency and eventual failure.

PS: The specific US issues like healthcare, ridiculous military spending, and debt are still easily fixable as are China's corruption and Pollution issues the problem is forcing people who benefit and influence the current system to suffer. EX: Removing the mortgage interest subsidy would be a huge long term boon to the US but good luck getting that passed.

Physical infrastructure in the US has not been heavily invested in for decades. China, on the other hand, is aggressively building up its infrastructure.

If the US waits until China's advantage from this becomes apparent, it'll probably be too late to catch up.

Yes, but the US infrastructure is largely intact and well maintained. We can keep building roads and bridges, but we don't need any more. We could rebuild our airports/seaports, but the impact there would be more efficient air travel, not the economic boom you get from the original port. Commuter rail is a pretty good option, but only in certain regional areas and perhaps some municipal areas. Libraries, jails, courthouses, schools -- maybe there are some projects there, but again I don't see those as leading to an economic boom.

I really don't see as many good options for infrastructure spending as a country like China has (who, let's be honest, is playing catch-up). Perhaps we could do something real crazy, like build a space elevator, to create new markets rather than trying to build stuff for the sake of building stuff.

First a little bit of anecdotal evidence:

I'm from Australia and I just finished a 10,000 mile road trip around your nation with some mates. I can assure you your road network is falling apart. A lot of the time I felt like I was driving in a 3rd world country. While it is evident that the US has invested a lot in infrastructure in the past they are certainly not well maintained. From my limited experience Illinois had the worse road conditions and New Mexico and Texas has the best.

Here's what the economist has to say:

"Total public spending on transport and water infrastructure has fallen steadily since the 1960s and now stands at 2.4% of GDP. Europe, by contrast, invests 5% of GDP in its infrastructure, while China is racing into the future at 9%."

and

"In 2008 the commission (National Surface Transportation Policy and Revenue Study Commission) reckoned that America needed at least $255 billion per year in transport spending over the next half-century to keep the system in good repair and make the needed upgrades. Current spending falls 60% short of that amount."

Maybe you overvalue good road conditions because you've been driving so much.

china and india are investing in LFTR reactors. The US is going to look rather silly when the rest of the world starts producing massive amounts of cheap energy.

Physical infrastructure is more than just roads, and bridges. Fiber optics, and safe homes that people want to live in are both huge economic gains. The real secret to infrastructure is balancing utility with the cost to maintain vs simply building them. Unfortunately for China their demographics are in a rapid transition so they are going to be force to invest huge amounts of capital in new homes simply to keep up with changing customer demands. The US is facing similar issues based on long term energy trends, however that's a much more hypothetical issues so it's hard to predict what needs to be done.

Homes isn't really a strong point of the US. They are extremely cheaply built and leak temperature like a sieve.

The difference I see here is that the governing coalition in America seems to be shrinking, while in China it seems to be growing. In a broad coalition, there are too many people to just buy off, so you have to invest in public goods that benefit the people generally. In a narrow coalition, supporters can be bought off directly, through government-enabled rent seeking and the like.

You might see evidence of a broadening coalition in China, with high investments in public infrastructure. You might see evidence of a shrinking coalition in America, with the failure to pass effective health care, patent and telecommunications reform, in favor of greater rent-seeking.

Not to say China doesn't have rent-seeking, not at all. It's arguably worse than the States, I'm sure. But the trajectories appear to be different.

Side note: in the Chinese village my wife is from, the central government is now paying for the construction of new land fill. Currently all trash gets thrown in the river, and it creates an awful mess. The local government would never come together to provide trash remove services, so the central government has stepped in. They recognize the intractability of the issue locally, and the strategic importance to do something about it nationally. It's encouraging to watch.

so broad coalitions are forced to favor the public interest, while narrow coalitions can afford to serve only their sponsors and ignore the public interest -- very interesting thesis.

Do you have any links to more detailed discussions of this theory?

I got the kernel of the idea from Bruce Bueno de Mesquita, in this podcast:

http://www.econtalk.org/archives/2007/02/bruce_bueno_de.html

I'm sure you can find more material on the subject from there.

Since I heard this, I have found it very profitable to think of public policy in terms of coalitions.

Interestingly, one of Madison's arguments in favor of union at the Constitutional Convention was what that a United States would create broader coalitions, and thus a more stable government. This was to head off arguments at the time that republics had always been geographically limited, and any large state necessarily tended towards empire. (My source for that is Joseph Ellis, btw.)

What makes the US to work is too:

1)That USA is enormously resource rich, like natural gas,helium, oil, coal, enormous extensions with wood,cotton, cattle... while Japan has no resources at all.

2)That USA has an enormous population that is mobile(could move from west coast to east coast) speaking only one language while places like Europe or India has every country(or subcountry state) speaking its language and making not so easy the people to move(protectionism).

3) That USA got the world hegemony since WWII and everybody in the world needs dollars to buy oil, so USA can live from other countries work, just printing dollars.

While 1,and 2 will continue, 3 could end soon, because USA had abused so much it and is abusing it that things could change.

You may have #3 backwards (and also have the reason people want dollars backwards; it has very little to do with nominal oil pricing). I suggest reading http://mpettis.com/2011/05/is-it-time-for-the-us-to-disengag... for the former and any competent explanation of international trade mechanisms for the latter.

I'm going to keep that line in hand for the next 20 years: "China is pivoting hard". Anyone who's thinking of them as merely cheap labor for much longer is going to be very surprised.

Reply on news.ycombinator.com