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In a recent piece for the Wall Street Journal, Andy Stern, an Obama insider and one of organized labor’s more aggressive personalities, praised what he called “China’s superior economic model.”

Does China have a superior economic model? That depends: Superior to what?


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Mr. Stern, who headed the Service Employees International Union, cited Andy Grove, founder and chairman of Intel, who concedes the 20th century’s “decisive victory of free-market principles over planned economies.” That is true. However, both Stern and Grove proceed to assert that some unspecified degree of government economic planning will generate more prosperity than free markets. Stern writes that the “free-market fundamentalist” model that made America prosperous “is being thrown onto the trash heap of history in the 21st century.” He argues that we should jettison our “empirically failing free-market extremism.”

Really? Pardon my candor, but what planet does Mr. Stern inhabit? For something to be “empirically failing,” it must first exist. Where in America is this supposed extreme “free market” system that Stern disdains?

In the United States today, government has largely nationalized the home mortgage market; cartelized the financial system; partially commandeered the auto industry; begun to take over the energy industry; plays the dominant role in the retirement, education, and health care of most Americans; has a leviathan bureaucracy that does everything from shutting down the development of domestic energy, to telling corporations which states they can operate in, to blowing taxpayers’ money on boondoggles. As for the boondoggles, they are both great (ethanol and solar energy) and small ($2.6 million to study whether alcohol increases a Chinese prostitute’s chances of contracting AIDS).

That said, I share Mr. Stern’s dissatisfaction with our sluggish economic growth, and agree that we should not be too proud to observe and learn from competitors like China. In fact, there are two important lessons we can learn from China right now:


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First, China’s impressive economic growth rates prove rather than disprove the need for free markets. While China’s leaders dictate certain economic priorities and parameters, and insist upon loyalty to the Communist Party’s political monopoly, they often practice a policy of benign neglect toward provincial and regional entrepreneurs, giving them considerable latitude in a free-wheeling, Wild West scramble to find ways to create as much wealth as they can.

A second important lesson from the Chinese, and one that helps to explain why their growth rate is higher than ours, is that we are drowning in debt while they are awash in savings.

Before we jump to the conclusion that China’s economic model is the way of the future, we should remember that we have heard similar projections before. In the late 1980s, commentators raved about the Japanese economic model. Predictions abounded that the Japanese economy was so powerful and unstoppable that it would soon surpass our own and be the wealthiest in the world. Like the Chinese state today, the Japanese government worked closely with businesses to forge an industrial policy that (allegedly) would prove far superior to a free-market model. Then the wheels fell off and the bubble burst. Since then, Japan has struggled with economic stagnation and malaise.

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The views expressed in this opinion article are solely those of their author and are not necessarily either shared or endorsed by WesternJournalism.com.


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