In a column published on the Sun’s Opinion page June 30, “Now can we take infrastructure seriously?”, Jill Lawrence argues that after the collapse of the Florida condo America is in desperate need to fix all its infrastructure. This condo crash could be the symbol for the age as to how quickly things can come undone. She further states that “we should look at the people and companies that have prospered wildly in the last decade” and attempt to emulate them.
One of those “people” that we should be looking at are the Chinese. They are achieving spectacular economic growth with high infrastructure investment and low inflation, and they are doing it all with ideas they pilfered from American economists. Take a tour of China on Youtube and see first hand the kind of infrastructure projects they are pursuing.
Although they are thoroughly authoritarian and will find a significant cost to their repression, the Chinese understand capitalism and economics better than we do, and they are eating our lunch with this knowledge. They know that the macroeconomics of a sovereign nation state with the world’s second largest economy is very different than the microeconomics of a household or small business. Nation states do not go bankrupt. In fact, they have vast assets, the most important being law and order, peace and stability and educated citizens who can produce more wealth. America’s tremendous borrowing and spending for WWII proves this point. We spent an incomprehensible sum of money at the time, not on productive investments, but on weapons of war and destruction. America did not go bankrupt; we ushered in some of the greatest prosperity in history.
The Chinese create and spend trillions in Renminbi, not in a wartime effort to destroy, but in a peace-time effort directed toward vast infrastructure spending to develop a world class economy ready for climate change. And ready to compete with America.
They are “borrowing from the future,” in effect — one that they create. They do not worry about debt and deficits; they worry about inflation and the productive capacity of their economy which depends on infrastructure. This is straight from modern monetary theory, an American idea. It is how the Chinese think about economics. The money they borrow/create today is directed toward creating infrastructure wealth and assets for tomorrow, investments that will produce more wealth, growing the economy and servicing the debt.
It is not just energy, roads, bridges, railroads and ports, although there is plenty of that. It is also the infrastructure of schools, police, courts, healthcare, clean air, clean water and the creation of a more productive citizenry. It is the wealth-of-nations phenomenon, in which the people are the prime asset. And it is exactly what the Biden Administration has been trying to tell us.
The Chinese get it. They recognize they do have the money, and they are spending it now on all forms of infrastructure creating millions of jobs. And they understand that like the sudden building collapse, climate change will do much the same. Invest now to prevent the crash later.
Americans need to get it as well and start thinking and playing by the same “economic rules and ideas” that the Chinese do. American squabbling, bickering and endless cries of “we do not have the money” — like many of the condo owners — must have some context. Just like China, we do have the money, and actually much more than they have. And we need to invest it in creating a robust, diverse and carbon neutral economy. It should be obvious by now that climate change is an existential threat at the same level as WWII.
Unlike China, America also has “infrastructure investments” in the rule of law, free and fair elections, human rights and free speech. In the end, this is how we will win the competition with them.
Mike Nicosia lives in South Kitsap.