Fareed and Me

Fareed Zakaria recently jumped from Newsweek magazine to Time. His debut article is a gem, sharply delineating the economic challenge posed by China and how America is failing to meet that challenge. The article struck home for me in a very personal way. Why, after the jump.

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Here are some relevant excerpts from Fareed Zakaria's article titled "The Real Challenge from China: Its People, Not Its Currency."

"The real challenge we face from China is not that it will keep flooding us with cheap goods. It's actually the opposite: China is moving up the value chain, and this could constitute the most significant new competition to the U.S. economy in the future.

"For much of the past three decades, China focused its efforts on building up its physical infrastructure. It didn't need to invest in its people; the country was aiming to produce mainly low-wage, low-margin goods. As long as its workers were cheap and worked hard, that was good enough. But the factories needed to be modern, the roads world-class, the ports vast and the airports efficient. All these were built with a speed and on a scale never before seen in human history.

"Now China wants to get into higher-quality goods and services. That means the next phase of its economic development, clearly identified by government officials, requires it to invest in human capital with the same determination it used to build highways. Since 1998, Beijing has undertaken a massive expansion of education, nearly tripling the share of GDP devoted to it. In the decade since, the number of colleges in China has doubled and the number of students quintupled, going from 1 million in 1997 to 5.5 million in 2007."

So how is Fareed Zakaria speaking to me personally? My own son just graduated from a good university in the United States. Yet the job he has taken is in China. He's teaching conversational English to university students at Jiaxing University, near Shanghai. He's seeing first hand the major investment by China in that country's people and their education. He himself has an engineering degree (two, actually), but the backlash in the United States against investment in America's future, everything from highways to classrooms, is driving not only American jobs offshore, but now its young talent as well. My family is direct evidence of the truth of Fareed Zakaria's thesis.

Fareed Zakaria contends that America's competitive disadvantage comes as "a result of fundamental choices we have made as a country to favor consumption over investment and manufacturing." That's why it's misguided for politicians like first-time candidate Stefani Carter (Republican candidate for Texas House District 102) to pander to voters with promises to cut taxes and cut spending on transportation, public schools and social services. It may be good politics but it's short-sighted public policy. While China is investing billions in infrastructure and people, America is cutting taxes so Americans can buy more cheap crap from China. America's competitive disadvantage worsens. The vicious cycle accelerates.