Before Britain’s handover of Hong Kong to China in 1997, experienced
Asia hands joked that Beijing had had 5,000 years to make a mess of
the Chinese economy … and it hadn’t wasted a second.
That was then and this is now. No one these days believes China isn’t
becoming a huge economic power. Indeed, it is now axiomatic that one
day it could challenge the United States.
This utter transformation in the Western orthodoxy about China’s
economy should be matched by an understanding that strategic calculations
need to be changed, too.
Chinese history is not one of aggressive territorial expansion into
nontraditional areas of influence. (The example of Tibet, where Beijing
is ruthlessly expunging an indigenous culture, actually confirms rather
than undermines this view for, however illegitimate the occupation
looks from here, ordinary Chinese people who criticize Beijing’s
tyranny in other areas nevertheless concur in saying China has a legitimate
claim to the mountainous region.)
But however aggressive or docile China has been historically, we now
live in the global epoch, and there is every reason to suppose that
Beijing’s economic clout is matched by a determination to wield
strategic power.
In this light, Tuesday’s report from the congressionally mandated
United States-China Economic and Security Review Commission is thoroughly
welcome. And it should be taken with the utmost seriousness by lawmakers
on Capitol Hill.
There were those who complained that George W. Bush was unnecessarily
blunt when, campaigning for the presidency in 1999, he said China
should be treated as a “strategic competitor” rather than
as a “strategic partner.” But this week’s commission
report makes essentially the same point; it is foolhardy not to take
the long view and recognize that China will increasingly present this
country with a challenge. This challenge, if ignored, could become
insuperable.
We now have, as the commission concludes, a “historic opportunity”
to use American economic and strategic supremacy to guide the relationship
with China so that it develops in a way that helps ensure stability
rather than conflict in the future.
Members of the federal government, in the executive and legislative
branches, must not allow short-term advantages to weigh more heavily
than long-term necessity when shaping China policy. There will always
be temptations to accept tradeoffs; the commission cited the example
of soft-pedaling on China’s currency manipulation while seeking
Beijing’s help in reining in North Korea. And sometimes such
tradeoffs are unavoidable. But the United States must not squander
its historic opportunity — and lawmakers must play their part
in seizing it.
WHAT THE PAPERS SAY
Star Tribune
The last report of the Social Security trustees said the system will
exhaust the trust fund in 2042 and, relying solely on payroll taxes,
thereafter will have enough money to pay only 75 percent of promised
benefits. The new report, prepared by the respected Congressional
Budget Office, puts the insolvency date at 2052 and says Social Security
will still be able to pay 80 percent of promised benefits after that
date.
It’s impossible to say which forecast will prove more accurate.
What both reports show is that Social Security’s financial problems
are relatively small. Closing Social Security’s solvency gap
would require Congress to reallocate about one-half of 1 percent of
the nation’s gross domestic product during the next 75 years.
Advocates of privatization argue that workers could earn much higher
rates of return if they could just have their Social Security taxes
back and invest them in private accounts. Of course they could. But
that would require Congress to find $1 trillion somewhere else to
pay benefits already promised to retirees, and no supporter of privatization
has explained how to do that without creating a whole new solvency
mess.
Privatizers also say Americans deserve to have and control their own
private retirement accounts. But they do. They’re called IRAs
and 401(k)s; they enjoy very generous tax treatment and have grown
rapidly in the last decade. — June 16 (Minneapolis)
The Providence Journal
Politicians about 20 years ago began talking about “investing”
taxpayer dollars rather than “spending” them: investing
in education, investing in infrastructure, and so on.
There is a world of difference between a company’s investing
funds that stockholders have put at risk and a government’s
disposing of money taken through the coercive power of taxation. In
the private sector, failed investments lead to firings, bankruptcies
and liquidations. But since states and municipalities can’t
be easily liquidated, overspending by a government leads to bailouts,
usually entailing tax increases. — June 14
