I’m a big fan of Matt Yglesias, but I found this off hand remark to be both inaccurate and in poor taste:
Analysts now think China’s GDP may not overtake America’s after all, good news for the world, albeit slightly bad news for “One Billion Americans” book sales.
The only meaningful way of comparing countries is on a PPP basis. And on that basis, China’s total GDP is larger than that of the US. The media only uses current exchange rate GDP measures when they wish to belittle China. Nowhere in the media will you find stories reporting the “Japanese Great Depression of 2012-22”, even though in US dollar terms Japan’s GDP has plummeted in recent years. The media instinctively knows that a dollar measure of Japan’s GDP is meaningless.
If you don’t believe me, I’d suggest visiting Beijing and staying in a 4-star modern hotel, for $48/night. Or ride the Beijing subway, which is light years better than the NYC subway, and costs about 50 cents for a ride. Even real estate is cheap in China, if priced in rental equivalent terms (as we do when constructing our GDP data in the US.)
[Update: The hotel was actually $74/night.]
But let’s say I’m wrong and market exchange rates are the correct way to make comparisons. In that case, China’s GDP/person would be roughly 1/6th the level in the US. In other words, China would be a very poor country. Then Yglesias would essentially be saying, “Good news, the 1.4 billion Chinese people are likely to stay very poor.”
The US government is now actively trying to sabotage the Chinese economy. We gloat every time they fail, and wring our hands when they achieve a limited success, such as producing their own smart phone chips. And then our media wonders why the Chinese consumers are moving away from Apple iPhones for “nationalistic” reasons. I guess nationalism is a disease that only affects the Chinese, not us Americans:
But the biggest potential threat to Apple may be something more nebulous: a resurgence in Chinese nationalism that spurs everyday consumers to shun the iPhone and other foreign-branded devices.
Governments that do great harm to other countries can always find an ethical fig leaf to justify their actions. I suppose one could argue that a richer China is a threat to world peace. But where are the academic studies that suggest that economic growth increases warfare? Doesn’t the correlation usually go in the opposite direction? Don’t rich people have more to lose from nuclear war? Social science research has recently received a great deal of criticism, and rightly so. The replication crisis suggests that very little published research is of any value. But let’s say I’m wrong. Is there any reliable research supporting nationalism?
Tyler Cowen recently asked AI doomsters to show him the mathematical model that demonstrates the existential risk resulting from of future gains in AI. I’m asking someone to show me the model that demonstrates how nationalistic policies aimed at hurting the welfare of a nation of 1.4 billion people and causing bitter resentment in that country is likely to make the world a better place. Heck, I’d even be happy if someone could show me a model where gloating over economic distress that we caused in China will make the world a safer place.
If you could push a button and make China much poorer, causing unimaginable harm to 1.4 billion people, would you have enough confidence in the social science model in your head to push that button? Should we be rooting for mass poverty?
