The Republicans in the US Congress are now saying the reason they are paralysing government is to stop Chinese having power over the USA by buying its bonds (and funding the deficit). This was to be expected. The right rarely say “we want to reduce taxes on the rich because we have always wanted to hang on to all the money we can” or “we should cut welfare because helping the poor is a stupid idea” or “we want to reduce employment rights because we think bosses should have a free hand”. What they say is “we are so worried about the national debt that we regrettably (holds onion under eyes) have to cut welfare” or “to make the economy competitive, we need to cut taxation on the wealth creators”. Now the false alarm about the US deficit – it is falling, and it was not a problem – has been called, an alternative enemy has to be found, and the Chinese are an ideal target. “There’s this nation, billions of ‘em, they look really foreign, and despite productivity less than 20% of US levels, they plan to come and eat your breakfast. And they will unless we cut the debt, slash welfare and reduce the rights of working people”.
For anyone seduced by this stuff, see Ben Chu’s recent articles as a welcome rebuttal.
Oh, and if you want a bit of “O” level economics, we don’t get poorer if other nations get richer. If we did, we would be poorer than we were in 1900, and we aren’t. The only thing that can make us poorer is bad economic policies, like we have at the moment. I’m half way through a longer piece on the UK productivity problem, what it is and why it matters more than the national debt or immigrants or much else, but this post will cover things until I have the time to finish that.
Grumpy Wisdom 