Mind Dump

China has 4x as many people so only needs to be 1/4 as productive per capita to overtake USA

China's population is enormous. It has over four times as many people as America, and so its output per capita only needs to be about a fourth of America's to match it in total size. At this moment, that would mean a level of per capita wealth roughly equal to that in Turkey, or Brazil, or Panama, which seems entirely achievable. If China can manage Portuguese or Slovakian wealth, it will have an economy twice the size of America's.

So even if China never becomes as productive as western Europe or South Korea, to say nothing of America, it will have the world's largest economy by a healthy margin (until, that is, India catches up). And that means that China will have enormous influence in the world—will be an agenda setter—and will, in some ways, be able to marshal more real resources than America. Within Asia, China's influence will dwarf that of America. Power inevitably follows economic might, and China will soon be the mightiest.

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Exactly once in the history of the industrialised world has a dominant great power lost its status to another dominant great power, and that already tiny sample size is of limited use in informing us about the future. Britain and America shared a language, a culture, and a general political philosophy of liberalism and democracy. They were explicit friends and allies. Perhaps most important, they were both rich, in per capita terms. Chinese culture is alien to Americans, and its primary political values appear to be quite different from those of the world's current hegemon. The two countries are not enemies, but their relationship is explicitly adversarial. And while America is rich, hundreds of millions of Chinese citizens will remain extremely poor at the time China assumes the top spot in the GDP league tables.

I think it's easy to underestimate just how unprecedented and historic a peaceful transition would be.

Filed under  //  economy   international   workforce  

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India and China: Entrepeneurship despite education

India and China now graduate three to six times more engineers than does the United States. The quality of these engineers is, however, so poor that most are not fit to join the workforce; their system of rote learning handicaps those who do get jobs, so that it takes two to three years for them to achieve the same productivity as American graduates. As a result, significant proportions of China's engineering graduates end up working on factory floors; Indian industry has to spend large sums of money on retraining its employees, as my research team at Duke and Harvard learned.

Despite this, India has built a $73 billion-per-year information technology service business and has been offering IT services of steadily increasing sophistication. Its engineering R&D industry is now a $10 billion business -- a three-fold increase in four years. It develops sophisticated products for Western firms in the aerospace and automotive industries, and in telecommunications, semiconductors, consumer electronics, and medical devices. And most significantly, there are thousands of new startups that are building web technologies, clean-tech products like low-power lighting, and mobile applications.

China has built world-class universities and state-of-the-art research facilities. The numbers of papers its faculty members publish and patents its researchers file are increasing dramatically. But these numbers are deceptive, as the patents and papers are largely plagiarized or irrelevant. There is also practically no innovation coming from the state enterprises that dominate industry. The big change that has occurred in China, however, is the emergence of technology startups: thousands of them, just as in India.

The first generations of Indian startups focused on selling IT services, and the Chinese developed copycat web technologies such as Baidu, China's Google rival, and Sina, its Twitter clone. But they are going beyond that now. They are gaining the knowledge -- and developing the confidence -- to create innovative products, not only for domestic markets, but also for global ones.

Filed under  //  economy   international  

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"American" companies often may not be so American

President Obama will consult with 20 CEOs of major U.S. companies today to get their advice on how to stimulate U.S. economic growth and create more American jobs. 

The premise of these kinds of meetings is that the heads of American headquartered companies like GE, Google, PepsiCo, and Motorola have a special concern for the fate of the U.S. economy and useful advice on how to fix it. But do they? Are these really American companies in any way other than that they happen to be incorporated in Delaware of some other U.S. state, and do these CEOs have or even can they have the best interests of the American economy at heart?

Remember that most of these companies sell and produce far more outside the United States than inside. They often have many more employees outside the United States than inside and a large proportion of their shareholders are also not American. They must deal in most cases with more than 100 presidents and prime ministers of countries in which they have major interests. In the case of the European Union they must deal with officials in Brussels who are responsible for an economy that is about a third larger than the United States. In Beijing and New Delhi they must deal with governments that are currently driving the development of economies that are almost surely going to become larger than the U.S. economy in the next twenty to forty years.

Also remember that these companies have greater financial power and greater production capacity than all but a handful of countries. They are quasi-sovereign entities and their CEOs are in many respects more akin to powerful heads of state than to your average everyday businessman. It is not a criticism of them to point out that their interests may or may not be congruent with America's interests.

These facts often are unrealized or ignored when discussing the American economy.

Filed under  //  economy   international  

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World's 10 largest companies? USA has 2, China has 3

Fortune's latest ranking of the world's largest companies has only two American firms in the top 10 -- Walmart at No. 1 and ExxonMobil at No. 3. There are already three Chinese firms in the top 10: Sinopec, State Grid, and China National Petroleum.

Filed under  //  economy   international  

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Not the USSR, Not Japan: China is the wolf

In the end, of course, the Soviet and Japanese threats to American supremacy proved chimerical. So Americans can be forgiven if they greet talk of a new challenge from China as just another case of the boy who cried wolf. But a frequently overlooked fact about that fable is that the boy was eventually proved right. The wolf did arrive -- and China is the wolf.

The Chinese challenge to the United States is more serious for both economic and demographic reasons. The Soviet Union collapsed because its economic system was highly inefficient, a fatal flaw that was disguised for a long time because the USSR never attempted to compete on world markets. China, by contrast, has proved its economic prowess on the global stage. Its economy has been growing at 9 to 10 percent a year, on average, for roughly three decades. It is now the world's leading exporter and its biggest manufacturer, and it is sitting on more than $2.5 trillion of foreign reserves. Chinese goods compete all over the world. This is no Soviet-style economic basket case.

Japan, of course, also experienced many years of rapid economic growth and is still an export powerhouse. But it was never a plausible candidate to be No. 1. The Japanese population is less than half that of the United States, which means that the average Japanese person would have to be more than twice as rich as the average American before Japan's economy surpassed America's. That was never going to happen. By contrast, China's population is more than four times that of the United States. The famous projection by Goldman Sachs that China's economy will be bigger than that of the United States by 2027 was made before the 2008 economic crash. At the current pace, China could be No. 1 well before then.

Filed under  //  economy   international  

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Chile: Head teachers, selected by boards, may get more power

Under Mr Piñera’s plan, head teachers, now to be chosen by independent boards, would be able to sack up to 5% of teachers.

Does the review by teachers who are selected by independent boards make this more palatable?

Filed under  //  education   international  

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China's industrial output growth rate will slow to 'only' 11 percent next year

China's 2010 industrial output growth rate is estimated to reach 15 percent, while next year's figure will drop to 11 percent, Li Yizhong told a meeting on Saturday, a day before standing down as minister for industry and information technology.

The slowdown in output shows that the government will adopt a more stable development blueprint in 2011, industrial analysts told China Daily on Monday.

The main targets for Chinese industry next year will be restructuring, energy efficiency and technological innovation, according to Li, who was succeeded at the ministry by Miao Wei.

Li said that the nation's industrial investment is expected to grow 19 percent next year, including information technology, and energy consumption per unit of industrial output is expected to decline 4 percent year-on-year.

For the next five years, the ministry expects an average annual industrial output growth rate of 10 percent and a reduction in energy consumption and carbon emissions per unit of output by 16 percent.

Filed under  //  China   economy   international  

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We're neglecting diplomacy

we need a balanced tool chest of diplomatic and military tools alike. Instead, we have a billionaire military and a pauper diplomacy. The U.S. military now has more people in its marching bands than the State Department has in its foreign service

Filed under  //  international   policy   politics  

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Who cares if some American universities don't teach French, German, or Italian?

A university of limited resources that has majors only in Chinese and Arabic should be a perfectly normal proposition. The only reason it does not seem so now is because of noble but fraying traditions.

Filed under  //  highered   international  

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The world passed Washington by and Olympia didn't notice

The world passed Washington by and Olympia didn't notice. The legislature is shocked that South Carolina will get some Boeing jobs and oblivious to the flat free-trade China-is-going-to-kick-our-ass education-is-everything global economy.

Filed under  //  economy   international   law   policy  

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We recruit our teachers from the bottom third?

Those countries that are doing best are recruiting their K-12 teachers from the top third of their college graduates. America is recruiting our teachers generally from the bottom third, and when you go into our high-needs communities, we're clearly underserving them.

Filed under  //  education   international   teaching  

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