What did China get right in its economic and social development which the USA got wrong?
1 Background This can only be a brief response due to the scale of this question. Interested readers are invited to drill down into the referenced sources for a more complete answer. Isaac Hsu, one of my Quora readers, commented that “Everyone in the US should read this” and I’m republishing this on Medium to try to increase its readership.
2 What China Got Right
China got three major issues right. First, the Chinese leaders learned high-growth economics, second, they adopted economic realism, and third, they pursued an economic policy of improving the prosperity of all of their people.
2.1 First, China was prepared to learn high-growth economics from one of their nearest neighbours and their previous enemy, from Japan.
After the Nixon-inspired ping-pong diplomacy between China and the USA in Japan, the Sino-Japanese rapprochement agreement was signed on 25 September 1972, formally ending the poor post-war WWII diplomatic relations between China and Japan. The visiting Chinese were astonished by the obvious extent of Japan’s development, and begged their Japanese hosts to share with them “the secrets of high economic growth”. See
How Japan Zoomed From War Devastation into Prosperity 1945–52
Which they did. The Chinese “Paramount Leader” discovered the paramount macroeconomics of Dr Osamu Shimomura’s no-cost investment credit creation and that economic system has been practised in China since the mid-1970s. See
The Most Successful Economic Policy of all time
2.2 Second, China’s Paramount Leader, Deng Xiaoping, adopted economic realism as a guide to policy.
To put it very briefly, the Chinese economy copied what had worked in Ikeda’s/Shimomura’s Japan, and in President Park’s South Korea (where economic growth averaged 14% from 1960–1980).
And that worked in China, where average real economic growth was over three times the US rate from 1975–2016. See
Shimomuran Economics and The Rise of The Tokyo Consensus
2.3 Third, Chinese Economic Policy was aimed at improving the prosperity of the entire vast nation of China — all of its people, all of its cities and regions, all of its industries and services.
The major source of nearly all invention and innovation in all countries is the SME sector. The Chinese provide substantial (but not entirely adequate) funds to their SME sector.
The Shimomuran policy of no-cost investment credit creation provides for a continuously exploding economy based upon local invention and innovation, high factory-floor investment leading to rapidly increasing prosperity, and a continually improving support structure (of new fully-equipped and modernised cities, better transport systems, faster internet connections, greener energy production, better educational and health care systems, etc., etc.). See
China’s All-Inclusive Economic Miracle: The Third Economic Bomb
3 What the USA Got Wrong
The USA got three major issues wrong. First, Truman abandoned the high-growth economic policies of FDR, second, the USA failed to create a welfare state with a great public health service and excellent educational facilities available to all and a welfare state safety net, and third the Reagan and all subsequent US administrations increased the allocation of the annual gains from growth to the already rich and privileged.
3.1 After FDR died, Harry S Truman ceased the FDR investment creation which had won the war. FDR’s economic miracle (1938–44) ceased and economic growth reduced from a 1938–44 average of 12.2% pa down to a few percent a year.
During 1938–44, the USA nurtured its millions of SMES through its 26,000 local banks supporting local invention and the Shumpeterian transfer of invention to factory floor innovation. That’s how the USA won the war.
And the USA did not practice in peacetime the FDR-inspired investment credit creation policies which had won the war. That’s how they lost the peace. Wang Anshi (Dec 08,1021 — May 21. 1086) the great Chinese economist and the first practitioner of investment credit creation over nine hundred years ago, in the early Song Dynasty, understood the duty of care implied in the Mandate of Heaven. See
How did Wang Anshi contribute to the economic world? and
The United Kingdom and the United States of America Have Both Lost “The Mandate of Heaven” and read the Wang Anshi Section 2 of
https://www.quora.com/What-are-major-Chinese-innovations/answer/George-Tait-Edwards
3.2 The USA at all levels adopted the unrealistic mantra “Only Private Industry Delivers — Government can do no good.”
Now only a publicly funded education, health and social benefits system can provide the springboard conditions for very high economic growth. Economic development is maximised on the foundation of a well-educated, healthy and financially secure people.
Only the creation of no-cost investment credit at the Central Bank can provide the funds for a continuous economic miracle based upon SME productivity and continual major factory floor inventions. Only the Government can do that.
Nearly all prominent American “economists” neither know about nor understand about how high economic growth occurred in FDR’s USA. Their “knowledge” is therefore entirely useless. See
Why Western-Trained University Economists Are Almost Completely Useless
3.3 After the Reagan Presidency from 1980, American Economic Policy has prioritised improving the incomes of the richest of its people.
It has been and is a device for the allocation of more of the gains of economic growth to the richest 10% and in recent years to the richest 1% of its people. President Trump is out of the same box.
As a consequence of that policy, median incomes in the USA have not kept pace with the total growth of the US economy and the American dream has come to an increasingly impoverished end. See
Washington Consensus Macroeconomics Is Not The Best System For Increasing Prosperity and Economic…
4 Conclusions The two major alternative systems of comparative capitalism in today’s world can be referred to as Washington Consensus/Austerity/ Plutocratic Economics or the Capitalist-Serving Economics, where the major priority of governments is ensuring the rich continually receive a larger share of annual low economic growth, and the Shimomuran Prosperity-Increasing high growth economics of the Tokyo Consensus Zone. See
Comparison of the Washington, Berlin, and Tokyo Consensus Zones -Which one really works?
4.1 And for another comparison, see
How China Surpasses The EU and the USA, or The Seven Pre-Requisites for High-Growth Shimomuran…
4.2 And for how China could grow more rapidly- see
How could China grow more rapidly with regards to its economy?
4.3 And for a comparative review of the alternative capitalisms of China and the USA, see
