While China does have tech companies that mimic the features of Google, Facebook and Twitter, note that those Western companies haven’t been able to operate in China. What China wants is not an environment where tech revolutionaries can flourish; it wants Chinese, state-run versions of these startups, which means it will never foster the entrepreneurial spirit that makes companies like these possible.
That desire — that seemingly irrepressible urge of the Chinese to copycat everything foreign, from cars to watches to iPhones to social networks, is ultimately why no matter how good the Chinese get at tweaking state capitalism, it will never match up to the promise of a truly free capitalist economy.
Here in the U.S., we don’t know what the next huge industry will be, and that’s great. Silicon Valley could invent another new gadget. Oil sands or fracking could benefit from more extraction breakthroughs. Electric cars or solar panels could jump an order of magnitude in a generation. One of our philanthropic billionaires — Bill Gates, say — could invest in some promising new technology tomorrow. Some other completely unknown idea could erupt from a university or government lab. But whatever the manifestation, our economy holds the promise of such discoveries. Those ideas are where real new pools of capital are created and how a country becomes wealthy. Cranking out iPhones might employ more people, but it’s not the foundation for a new kind of industry or economy we’ll need in the 21st century.
In short, it’s become fashionable to look at the rough stretch of the past few years and wonder if the industriousness and resilience of the American economy is at an end. But look around the world. While one could make a viable argument that some are doing capitalism better than us (look at our neighbors to the north), a state capitalist country like China doesn’t compare. Sure, we’re at a crossroads — but that’s a lot different from being at the end of the road. Read More