Getting By on 7 Million Yuan February 8, 2010March 17, 2017 FLOR DOTS Click here to design your own floor. It’s fun. You can get samples before you commit. And when the tiles do arrive, laying them down is so easy that even I succeeded at doing it. Charles was amazed. GETTING BY ON $1 MILLION A YEAR ‘Trust me,’ RNC Chair Michael Steele says. ‘After taxes, a million dollars is not a lot of money.’ ☞ This from a party whose most recent presidential candidate couldn’t remember how many houses he owned. Listen: I’m all for wealth and the wealthy. ‘More power to them,’ as the saying goes. Just not more political power. CHINA – EVEN MORE THAN WE THINK In 30 years, according to Robert Fogel in Foreign Policy, China will represent 40% of world GDP (to our 14%). To the extent his assessment holds (‘How did this guy get a Nobel prize?’ reads one of the many skeptical comments you’ll find appended) – and to the extent the Chinese can achieve this growth in an environmentally benign way (a huge challenge) – it’s all good. The more prosperous the Chinese, the more they’ll be able to purchase our stuff. Wheat, DVDs, jumbo jets . . . and the shares of stock in our 401k’s we’ll be selling to finance our retirements. Even assuming that his $123 trillion China 2040 GDP estimate is way off, his argument is interesting. In part: What, precisely, does China have going so right for it? The first essential factor that is often overlooked: the enormous investment China is making in education. More educated workers are much more productive workers. (As I have reported elsewhere, U.S. data indicate that college-educated workers are three times as productive, and a high school graduate is 1.8 times as productive, as a worker with less than a ninth-grade education.) . . . In 1998 . . . just 3.4 million students were enrolled in China’s colleges and universities. . . . Over the next four years, enrollment in higher education increased 165%, and the number of Chinese studying abroad rose 152%. . . . I forecast that China will be able to increase its high school enrollment rate to the neighborhood of 100 percent and the college rate to about 50 percent over the next generation, which would by itself add more than 6 percentage points to the country’s annual economic growth rate. These targets for higher education are not out of reach. It should be remembered that several Western European countries saw college enrollment rates climb from about 25 to 50 percent in just the last two decades of the 20th century. The second thing many underestimate when making projections for China’s economy is the continued role of the rural sector. . . . Third, though it’s a common refrain that Chinese data are flawed or deliberately inflated in key ways, Chinese statisticians may well be underestimating economic progress. . . . Fourth, and most surprising to some, the Chinese political system is likely not what you think. Although outside observers often assume that Beijing is always at the helm, most economic reforms, including the most successful ones, have been locally driven and overseen. And though China most certainly is not an open democracy, there’s more criticism and debate in upper echelons of policymaking than many realize. . . . For instance, there is an annual meeting of Chinese economists called the Chinese Economists Society. I have participated in many of them. There are people in attendance who are very critical of the Chinese government — and very openly so. Of course, they are not going to say “down with Hu Jintao,” but they may point out that the latest decision by the finance ministry is flawed or raise concerns about a proposed adjustment to the prices of electricity and coal, or call attention to issues of equity. They might even publish a critical letter in a Beijing newspaper. Then the Chinese finance minister might actually call them up and say: “Will you get some of your people together? We would like to have some of our people meet with you and find out more about what you are thinking.” Many people don’t realize such back-and-forth occurs in Beijing. In this sense, Chinese economic planning has become much more responsive and open to new ideas than it was in the past. Finally, people don’t give enough credit to China’s long-repressed consumerist tendencies. In many ways, China is the most capitalist country in the world right now. In the big Chinese cities, living standards and per capita income are at the level of countries the World Bank would deem “high middle income,” already higher, for example, than that of the Czech Republic. In those cities there is already a high standard of living, and even alongside the vaunted Chinese propensity for saving, a clear and growing affinity for acquiring clothes, electronics, fast food, automobiles — all a glimpse into China’s future. Indeed, the government has made the judgment that increasing domestic consumption will be critical to China’s economy, and a host of domestic policies now aim to increase Chinese consumers’ appetite for acquisitions. . . . ☞ Stay in school, kids.