The Emergence of China

by Sal on April 19, 2006

in Politics

The UK paper The Independent has a warning message for America: be careful, China may overtake the US economically by 2045. There are many reasons for the rise of China’s economy, some dubious (such as the controlling of the value of its currency against the U.S. Dollar) and some legitimate (opening up Free market capitalist ideas within a totalitarian (one can hardly call it Communist anymore) system. The prospects of a China with economic supremacy is a scary one, as the Chinese government currently does not place the same value on human rights as the West, their army is a force to be reckoned with, and they have imperialistic tendencies. The U.S. needs to get its act together if it is going to compete with China in the 21st century and remain the economic superpower of the world (Note to America-bashers: Chinese economic surpremacy should worry you as well; the Chinese, based on intelligence data and news reports, may not be satisfied with economic domination). So is all lost for the U.S.? No. But we have a lot of work to do to stay competitive, and it needs to begin soon. I fear, however, that the Liberal Democrats will try to thwart any necessary initiative to maintain our supremacy, and the Republicans don’t have enough of a spine to propose these measures.

Education: This has been one of my hot-button issues lately. I spoke of some of the problems I see here, We need to produce the smartest, most well-educated students in the world. We have the ability, we did it throughout the 30s through the 60s. Some things that need to happen:

  • Intense Early Elementary Education: Students need to be able to read, do math, and even speak a foreign language earlier than we are achieving this now. We are behind the rest of the world in this regard, and it is handicapping our ability to do more later on in high school.
  • Utilize part-time Subject Matter Experts: Newt Gingrich has an idea to bring in experts in particular fields part time to educate children on areas of science, technology, computers, etc. as a supplement to the student’s primary teachers. A teacher, no matter how great, can’t be an expert in all subjects. Why not rely on additional sources to help supplement the day-to-day knowledge imparted by the primary teacher?
  • Allow students to attend the school of their choice: Other countries have tried this with great success. States where this has been tried (before being overturned by rogue courts) have met with great success. It is a law of human nature that competition breeds success. The public schools will become better naturally with the increased competition, which will bring up the nation’s educational caliber overall.
  • Semi-college level courses in High School: Many of the core courses that College Freshmen and Sophomores take are taught in High School in other countries. We need to have kids finishing up Calculus by the time they leave High School, and have advanced courses in English, Math, History and Culture, and the Sciences. Going to College should be a much more advanced transition than it is now.

Reform the Tax Code: The current tax code is a major burden on businesses to expand growth, hire employees, and expand our economy in general. The Bush tax cuts of 2001 and 2002 have proven their worth with a hugely expansive economy, but the size of the tax cuts are just a drop in the bucket if the U.S. is to remain competitive. Things that need to be done:

  • Simplify the Income Tax Code: Whether it’s a flat Income Tax, or the Income tax is done away with in the form of a consumption tax, a much lower and simpler tax rate is needed to reward the successful and remove the billions in GDP we spend every year on filing our taxes. Federal Income/Consumption tax should be no more than 20% of income, and more probably less (16-18% seems to be the typical proposals). No more complex tax forms and deductions, just a simple, one-page form with a check to be written out each quarter.
  • Eliminate Corporate Income Tax: The corporate income tax is probably the biggest drain on our economy today. A corporate tax is really a tax on consumers, as business build it into their forecast and charge prices accordingly. Eliminating this tax would drive the price of goods down and allow corporations to put more back into investment in future products/initiatives.
  • Eliminate Dividend/Capital Gains Taxes: The tax on dividends and Capital Gains taxes is a tax on those who fuel the economy with their investments. Removing this tax would spur investment.

Remove needless Regulation: The over-regulation of organizations like OCEA, the EPA, etc. cost our economy billions every year in GDP. It takes countless attorney’s alone to figure out the rules that companies need to abide by. We need more common-sense rules that are easy to follow and understand, but still protect workers, the environment (in a common-sense way), and the consumer.

Reform Draining Programs: Programs like Social Security and Medicare are HUGE drains on our economy. They should be reformed to make them more efficient (I.E. Social Security Private Accounts would both salvage the program, increase the benefits, and provide investment growth to the economy).

Reform Health Care: Health care is a big problem. It’s over-priced, insurance based structure is a drain on the economy, and it needs to be fixed. Universal Health Care is not the answer, as that will provide a bigger drain on the economy, and lower the quality of care as well as the quality of research for new cures and medicines. Some ideas in this area include:

  • Tort reform: Tort reform is necessary to lower the damages allowed in lawsuits. This is the single biggest health care reform that can be achieved, as malpractice insurance is the biggest contributor to our overpriced health care system.
  • Pay-as-you-go: Return to a pay-as-you-go system with safety nets for the poor
  • Medical Savings Accounts: Tax-free medical savings accounts to allow individuals to be able to pay for health care w/o insurance.
  • Insurance Reform: Insurance to be utilized for only the large-costing medical expenses (i.e. Cancer care, major surgery, etc.)

There is much more that can be done, and needs to be done in order to maintain our economic status. There is urgency here, as the prospects of the world with China as the economic superpower is not something to be desired.

{ 2 comments… read them below or add one }

Lockheed Hayheehoo Macedon April 19, 2006 at 1:26 pm

Definitely the capital gains tax should be gone. With it, that’s less money I can further invest each year…

http://www.tradinganddrugs.blogspot.com

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Ryan April 19, 2006 at 4:41 pm

The emergence of China will only succeed if they dump the totalitarian thing and engage the world in positive action. It was appauling how little China donated to help the tsunami victims last year, and how they could actually get a better deal on Iranian oil in the long run if they speed up the process of regime change in that part of the Axis of Evil.

I think China needs a real recession. Once the people understand and feel the business cycle and demand that their gov’t step in to help, the inadequacies of their current system will be too large to ignore. As it is right now, the Chinese gov’t has guns, but little way to control the hyper-growth in their cities, counterfeit currency, and a huge middle class with the power to dictate to THEM if the crisis develops.

Think about this: the Guangzhou economic region is larger in population than the ENTIRE European Union! Scary? Only if they keep the suppression and if, as Sal notes, WE, the US of A, do not adapt to not just an emerging China, but already democratic India!

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