It is maybe a cliche at this point that China is ascending to a world power. In the latest article on that subject, Paul Krugman bemoans the country’s trade policies. Many end-of-decade articles pointed out that while the U.S. and other developed nations had basically zero growth on their nations’ stock indexes, and what I think is an even more dismal decline in salary, the markets in the “BRIC” nations–Brazil, Russia, India and China–grew explosively. There is no way this kind of growth will sustain itself–it never does, historically–but for the time being, I think it is important to take a certain perspective toward the growth of the Chinese economy in particular, as a lay consumer.
Although our economy is arguably abysmal right now and China’s is growing, I think Americans still enjoy standards of living the likes of which the Chinese or most other nations do not know. We have larger houses, more cars and did have more disposable income. Unlike millions of other people, we were, for many years, able to buy things on credit without proving that we could pay it back anytime soon. The current growth of China and decline of America is in some ways a leveling, where the Chinese move closer to what we have in this country just as we lose it.
This is not to say that I think what is happening is deserved. It is more that we should appreciate that for many years we had very favorable lending policies, could buy electronics and retail items for cheap (in large part, because of China) and could drive cars and live in homes that have great environmental and monetary costs (because of these lending policies), which most other people in this world could not do. We were not encouraged to live within our means, either. I think this way of life was egged on by an unfortunate mentality.
That is the Wal-Mart mentality–I’m as guilty of it as the next guy–of believing you should be able to get quality for cheap in areas like domestic services, infrastructure, schools. When they invariably do not see quality, many Americans immediately resort to blaming the local government or state governments or schools and insisting that they be deprived yet more money, and a vicious cycle of spending cuts continues.
Governments are not totally innocent–dishonest politicians have brought on massive tax cuts and freezes (see California, Colorado) and then people wonder why we have more congestion, worse public transportation, struggling schools and greater college and graduate school loans to shoulder. The answer is because we do not pay for quality. Quality–from health care to education to infrastructure–costs money and must be maintained. It is of course a question of priorities as to whether we want quality in these areas and whether we can pay for it all, but I hope in 2010 the American spoiled-ness that thinks we should get everything for less (see Wal-Mart) dissolves as our new economic reality becomes more clear.
My wishlist for 2010 is a total re-prioritization in this economy that would probably look un-American, or at least, un-American circa 1980-2009. This would mean…
Increase revenue from upper-income people, those who are still doing well by this economy, by…
- Raising taxes on the very wealthy. More tax brackets, so that millionaires and billionaires pay a greater percentage of their income to the IRS than people who make around 300K per year.
- As a corollary: greater enforcement of tax evaders (Fortunately, this has already begun).
- For the love of god, tax ibankers’ bonuses, as they are doing in Europe.
Spend to create jobs, improve infrastructure and maintain public services.
- Use this money to create jobs in areas that improve infrastructure and invest in American economies of the future.
- Also use money to help out states, which are having a terrible time balancing their budget and keeping basic social service programs.
Our leaders need to challenge us to overcome the selfish economic mantras of the ’80s-’00s. That will not be easy.