I think there’s more to this excerpt from Robert Samuelson’s Wednesday column on China’s trade policies than he’s explicitly stating:
Even Chinese officials favor higher local demand. But either they can’t or won’t stimulate it. Personal consumption spending is a meager 38 percent of GDP; that’s half the U.S. rate of 70 percent. The Chinese save at astonishingly high levels, partly because they’re scared of emergencies. The social safety net is skimpy. Health insurance is modest: Out-of-pocket spending covers half of medical costs, reports economist Nicholas Lardy of the Peterson Institute. There’s no universal Social Security, and only 17 percent of workers have pensions. A mere 14 percent are covered by unemployment insurance.
It would take a much longer essay than I’m willing to write on this to unpack every implication here. Primarily, though, Mr. Samuelson is implying that China doesn’t have enough socialism. Could those oversights be a sign that the Chinese political class is more interested in enriching itself and its supporters than caring about the citizenry? Of course, that’s the experiential reality of socialism, but pay that no mind. So maybe saving for those emergencies has more to do with the way their “leaders” plunder the country’s wealth. Of course, if it’s true the Chinese save at astonishingly high levels, wouldn’t that bust the myth that a publicly-financed and provided safety net is necessary?
It is not “protectionist” (I am a long-standing free-trader) to complain about policies that are predatory; China’s are just that. The logic of free trade is that comparative advantage ultimately benefits everyone. Countries specialize in what they do best. Production and living standards rise. But the logic does not allow for one country’s trade systematically to depress its trading partners’ production and employment. Down that path lie resentment and political backlash.
Again, Mr. Samuelson is saying nothing more than China isn’t socialistic enough. It isn’t interested in the common good, only its own self-interest. And somehow this has the ability to depress its trading partners’ production and employment. Perhaps it’s that, or it could be the stupidity of implementing your own socialist protectionism rather than operating out of your own self-interest. I’m not interested in blaming the victim, but if a country lets itself get pushed around because it wants to insist on different rules, we can’t blame competition and free trade for the outcome.
For example, I negotiated with a recruiter earlier this week. She offered a contract rate significantly below what I’m willing to accept. However, I’m not willing to accept less because I know what my time is worth in this market. I gave her a bare minimum and she was nowhere close to that. I said no.
The next day, she called back and told me she’d managed to secure a higher rate. She was very proud of herself, although it was still significantly less than what I quoted her. I said no again.
Approximately five minutes after we hung up, she called back and said I’d won, she could match the rate I quoted as my bare minimum. This came as no surprise to me because I’ve done my homework on my situation. I still said no, but that’s because I didn’t want to trade negotiate with her anymore. She only met my minimum, and I’m working on better deals for my time and knowledge, which is my product. Under Mr. Samuelson’s analysis, it’s possible to conclude that I’m hurting her company’s production and employment because I didn’t seek the common good, which I presume means reaching a deal, regardless of the terms. Self-interest shouldn’t matter.
Nonsense. I seek what’s in my own interest. I trust my trading partners to do the same.