Two pictures show an important difference between China and America

Summary:  Americans tend to see the mote in China’s eye but not the beam in ours.  We project our dark traits onto China, no matter how absurd.  Today we see two pictures that provide a rebuttal to one common myth about China and America.

The French Marshall Louis Lyautey (1854-1934) told his gardener to plant a row of trees on his estate.  “My Lord, they will take a century to reach full growth” said the gardener.  “Then we start planting them today” replied Lyautey.

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The news media and its pet pedants tell us much about China.  Such as tales about China’s rampant malinvestment, unlike America — where home of entrepreneurs, where free markets rule.  Google shows 37 thousand hits to the words Chinese and malinvestment.  While there is probably much malinvestment in China, America has a far more serious malinvestment problem.

That’s important because over time even small differences in relative performance can produce large differences in national power.

Malinvestment in China

A new train station in Wuhan (Central China), completed December 2009 (source:  Financial Times).  One of the thousands of new ports, stations, and airports being built or expanded.   Two generations from now these will be considered far-sighted acts of genius, building infrastructure before its needed — contributing to its current growth, built cheaply while China is poor.

Malinvestment in the USA

Meanwhile the US has 18.8 million vacant homes (18.6% 14.6% of total units), up from 13.6 million (11.7%) a decade ago (Census data).  The office vacancy rate is 17.7% (per Grubb & Ellis).

But that’s a small aspect of the problem. Our critical public infrastructure is decaying (for details see “The 2009 Report Card for American Infrastructure”  of the the American Society of Civil Engineers (ASCE).  And our private sector engines of innovation have atrophied.  Overall levels of investment are low.  The great private sector R&D centers have died, such as Bell Labs and the Palo Alto Research Center.

So where is America investing?  Much of our research is done by the government.  NIH, NSF, DOE, and DARPA.  And what are we building to compare with China’s state of the art transportation and communication systems?

An interior view of one of the many new buildings, each roughly the size of the Pentagon, going up to house expansion of America’s intelligence agencies (official picture). Several house only computers, built near power plants because of their fantastic electricity usage. This is the new HQ of the National Geospatial-Intelligence Agency, costing $1.8 billion. It will be the third largest building in Washington.  An interesting contrast with the cuts in capex of America’s already decrepit public infrastructure.

Update:  another example of “excess” investment in China — “China is planning to create the world’s biggest mega city by merging nine cities to create a metropolis twice the size of Wales with a population of 42 million.”

Almost a trillion dollars per year, America’s blood, our surplus economic product generated from one hundred million families — goes into our military and intelligence services.  We spend more than the rest of the world combined, ten-fold times every possible combination of enemies.  This money could rebuild our infrastructure, be invested in education and research to build a powerful America for the 21st century.  Instead it gets consumed without thought or plan.  Spilled carelessly.

Defense analyst Chuck Spinner describes our past and present (until we go broke) in “The Domestic Roots of Perpetual War” in Challenge: The Magazine of Economic Affairs, January/February 2011.

Posts about China

1. Power shifts from West to East: the end of the post-WWII regime in the news, 20 December 2007
2. China becomes a super-power (geopolitical analysis need not be war-mongering), 9 July 2008
3. Words to fear in the 21st century: Lǎo hǔ, lǎo hǔ, Lǎo hǔ, 14 July 2008
4. A different perspective on the US and China, seen by an American living in Russia, 23 March 2009
5. China – the mysterious other pole of the world economy, 22 July 2009
6. Another big step for China on its road to becoming a great power, 27 July 2009
7. Will China collapse?, 5 August 2009
8. A revolution is not a dinner party. Thoughts about the future of China, 19 August 2009
9. Update about China: a new center of the world, 13 December 2009
10. Fertilizer overuse destroying Chinese soil, 18 February 2010
11. Rare earths – a hidden but strategic battleground between the US and China, 5 May 2010
12. Today’s example of the inscrutable mystery of China’s economic statistics, 13 May 2010
13. How China builds its commercial empire, 12 July 2010
14. The West has power, but often little self-insight, 19 September 2010
15. A look at the future (it’s already here, but it’s not in the USA), 29 September 2010
16. Why China will again rise to the top, and their most important advantage over America, 11 November 2010

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