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China’s Purchase Power Parity GDP (in other words, adjusted for exchange rate and local costs) is already higher than the US’s and is probably around 10-20 year

China’s Purchase Power Parity GDP (in other words, adjusted for exchange rate and local costs) is already higher than the US’s and is probably around 10-20 years from being equal on nominal dollars as well. There’s no doubt China’s growth will slow due to an aging population, but they’re coming already from a MASSIVE population size advantage. The West can counter by increasing immigration significantly (and probably pursuing pro-natalist policies as well), plus picking some of the best of what China is doing with investments in infrastructure and R&D while maintaining the freedom and vitalism that has helped the West in the past.

whimsicalism 6y ago
One major problem is that the people directing massive capital investments in the West are simply not as smart as the people directing massive capital investments in China. If your nation gets rich earlier, then hereditary passing on of wealth will mean that in a few generations the people making the decisions about capital allocation are no longer your best and brightest. All you need to do is look at the difference between a scatter plot of "income vs. IQ in the US" and "wealth/assets vs. IQ in the US" to see at least part of the problem. e: I'm downvoted, but concentration of hereditary wealth is definitely something dragging Western models down.
- Robotbeat 6y ago
  Almost any argument attempting to invoke intrinsic intelligence (as an explanation for some geopolitical phenomenon) is horsehocky. But even if you buy that, the West (particularly the Us) can game that by accepting “High skilled” immigrants from the entire world rather than just relying on just a fraction of the human population. A distillation of ambitious people from every nation on Earth. I personally doubt very much how genetically hereditary this is. So you have to maintain a high number of first or second generation immigrants to keep the effect going.
  - whimsicalism 6y ago
    I think it'd be horsehockey if I were claiming that the Chinese or white people or Americans or whoever is intrinsically more intelligent or "culturally" hard-working or whatever. That's bullshit. I can understand the gut reaction to any mention of IQ since it is a common trope among racists on the internet. But my claim is not that: it is about the pretty clear concentration of inherited wealth in the US, compared to the intensive testing system used in China. Your immigration solution would fix the intelligence of our workforce (skeptical that's a huge problem to start with), but do nothing to resolve the distributional problems in our model.
    - Robotbeat 6y ago
      If your argument is that we are approaching an aristocratic, low-churn society with a bunch of favored failsons at the top, then that would make more sense than trying to frame it in terms of Intrinsic intelligence. But I don’t think your comparison is accurate. The Chinese Party leadership and bureaucratic apparatus is plenty nepotistic while America’s more private-market-oriented economy is now dominated by (1st or 2nd generation) immigrant-founded or run companies like Google, Microsoft, Apple, and Tesla. Read: https://www.scmp.com/news/china/article/1236343/son-also-rises-nepotism-doesnt-disappear-china-it-just-gets-promotion https://www.scmp.com/news/china/article/1236343/son-also-ris...
      - whimsicalism 6y ago
        > we are approaching an aristocratic, low-churn society with a bunch of favored failsons at the top, then that would make more sense than trying to frame it in terms of Intrinsic intelligence. Uh, I'm not sure exactly what you're disagreeing with. I think intelligence is a thing, I think tests can probably reflect it at least a bit, and I think the fact that wealth is not really correlated with it means that there are probably a lot of dummies making capital allocation decisions. > immigrant-founded or run companies like Google, Microsoft, Apple, and Tesla I'm talking about ownership and capital allocation, so the management of any particular firm is somewhat irrelevant. The immigrant founders of Google, for instance, only hold 14% stake in Alphabet. Much of the ownership is by these "favored failsons" as you put it, even if they aren't the managers. That's not even getting into the fact that the vast-majority of America's economy is not these popular-to-talk-about tech companies or that Google's have to run-the-gambit of getting green-lighted by "failsons" just to have a chance of being funded. We could have a whole separate conversation about the effectiveness of China's bureaucracy, but all I'll say is that - even if they have the same problems, ours have had more time to solidify, and China's wealth Gini coefficient is smaller than ours, so the problems would be less magnified.
- smallnamespace 6y ago
  This problem with this argument is that it can be flipped on its head to justify an aristocracy: the wealthy today are the ‘best’ and they will pass on their genes, successful values, and educational strategies to their children.
  - whimsicalism 6y ago
    > it can be flipped on its head to justify an aristocracy: the wealthy today are the ‘best’ and they will pass on their genes, successful values, and educational strategies to their children. I disagree, I don't think this argument can be flipped on its head: The point is that it's pretty clear that the wealthy today are not the best and that meritocratic approaches are much more effective than crossing your fingers and hoping that Einstein's kid will also be an Einstein. A large reason why affluence and intelligence are at all correlated is because wealthy people have access to better education and better early childhood environments. The fact that even with those advantages, wealth is so uncorrelated with intelligence shows that we have a pretty big problem.
    - zepto 6y ago
      Is wealth uncorrelated with intelligence though? You write as though that is obvious, but it seems like most new billionaires we hear about on HN etc, are pretty intelligent. It’s obvious that there are a lot of intelligent people who do not become wealthy, but that’s because becoming wealthy requires not just intelligence, but being in the right place at the right time at the right age. I.e. it requires the right kinds of opportunity.
      - whimsicalism 6y ago
        > new billionaires we hear about on HN etc, are pretty intelligent. New billionaires are the ones most likely to be intelligent (although again, measures of intelligence can't be detached from the opportunity you were provided), this is entirely consistent with the point I'm making.
        6y ago
- roenxi 6y ago
  A related point. the US economy tries to fix this every so often by sending the people directing capital flows bankrupt (notably, circa 2007). The US government keeps stepping in to fix capitalism when it looks like there might be change.
  - whimsicalism 6y ago
    I mean yeah, our government is totally captured which definitely hurts mobility and efficient capital allocation.
- Aunche 6y ago
  China's capital investments tend to be more successful because they copy the ones that already work. High speed rail is more likely to bring economic value than vertical landing rockets or self-driving cars. I think the problem in the US at least is that there is much much capital that all the brightest minds flock to profitable areas. In China, these opportunities are a lot rarer, so more people will pursue research or work for the government.
  - whimsicalism 6y ago
    There are huge opportunities happening in China all the time. They are doing new projects and creations that we do not have in the West, again - all the time. Rare opportunities to be involved in something big are just not how I would characterize China if you've been there in the past 5 years.
- eloff 6y ago
  That's an interesting angle I haven't heard before. Your thesis could be restated as hereditary wealth / rising aristocracy concentrates wealth based on lineage and not meritocracy, thus unlikely to be in the hands of those most able to put it to work effectively. This inefficiency in the market would lead to lower future growth potential. I'm going to ignore the mention of IQ because a) It's largely hereditary so I think it actually runs counter to your argument and b) It's not the best measure for ability to allocate capital effectively in the first place. That seems plausible though. It would superficially make sense to tax that with a wealth or estate tax and put the money into programs that increase social mobility. I say superficially because whenever you tax something you change people's behaviour, like moving their assets into a trust to avoid estate taxes. I think we're seeing this in the US where the states with the highest taxes, California and New York are seeing the highest net emigration of 200K people a year to other states. I wonder if it's related. The US in particular has the lowest social mobility compared to other major Western nations. The American dream is least alive in America in the West. That's a major drag on the future economic potential of the country.
  - whimsicalism 6y ago
    > I say superficially because whenever you tax something you change people's behaviour, like moving their assets into a trust to avoid estate taxes. To me, evasion is a solvable problem at the national level if we, again, hire & assess for merit w/ competitive pay in our enforcement agencies. Unfortunately, much of the government-especially the portions of government that would enforce this- is captured, so pretty unlikely chance of that.
- deleted 6y ago
  [deleted]
- TearsInTheRain 6y ago
  Thats of course ridiculous. "Low !Q" wealthy people in the US arent managing their own money. They hire the best and brightest to do it. China has a massive advantage because they can simply copy or steal what works in the US more efficiently than we can come up with the next best thing.
  - whimsicalism 6y ago
    > They hire the best and brightest to do it. Oh, and how do they determine the "best and brightest"?
    - TearsInTheRain 6y ago
      Just pick hedge funds who have performed in the past run by a bunch of people with top business degrees. Its a lot easier than picking a stock
      - whimsicalism 6y ago
        > Just pick hedge funds who have performed in the past run by a bunch of people with top business degrees. Its a lot easier than picking a stock Nope, it's actually very hard to outperform the market just by looking at hedge fund past performance. Top business degrees do not really equal top talent, having taken a few of these "top business" classes. It's all a salesmanship game to the rich, it's not about actual returns.
nostromo 6y ago
It doesn't make sense to use PPP when asking questions about a country's economic strength or power. It's designed for questions of manufacturing or cost of living. China has a high PPP GDP simply because it has hundreds of millions of people living in some form of poverty, which drives down costs locally. Clearly if the driver of your high PPP GDP is a massive underclass living in poverty, you can't turn around and use that as an argument in support of your economic might -- it's incoherent.
- Robotbeat 6y ago
  In terms of geopolitical significance, such as ability to wage war (modern industrial wars being heavily dependent on manufacturing capacity) then PPP is pretty relevant. If anything, that probably under-estimates China’s industrial capacity compared to the US. https://www.statista.com/chart/amp/20858/top-10-countries-by-share-of-global-manufacturing-output/ https://www.statista.com/chart/amp/20858/top-10-countries-by...

whimsicalism 6y ago

One major problem is that the people directing massive capital investments in the West are simply not as smart as the people directing massive capital investments in China. If your nation gets rich earlier, then hereditary passing on of wealth will mean that in a few generations the people making the decisions about capital allocation are no longer your best and brightest. All you need to do is look at the difference between a scatter plot of "income vs. IQ in the US" and "wealth/assets vs. IQ in the US" to see at least part of the problem. e: I'm downvoted, but concentration of hereditary wealth is definitely something dragging Western models down.

Robotbeat 6y ago
Almost any argument attempting to invoke intrinsic intelligence (as an explanation for some geopolitical phenomenon) is horsehocky. But even if you buy that, the West (particularly the Us) can game that by accepting “High skilled” immigrants from the entire world rather than just relying on just a fraction of the human population. A distillation of ambitious people from every nation on Earth. I personally doubt very much how genetically hereditary this is. So you have to maintain a high number of first or second generation immigrants to keep the effect going.
- whimsicalism 6y ago
  I think it'd be horsehockey if I were claiming that the Chinese or white people or Americans or whoever is intrinsically more intelligent or "culturally" hard-working or whatever. That's bullshit. I can understand the gut reaction to any mention of IQ since it is a common trope among racists on the internet. But my claim is not that: it is about the pretty clear concentration of inherited wealth in the US, compared to the intensive testing system used in China. Your immigration solution would fix the intelligence of our workforce (skeptical that's a huge problem to start with), but do nothing to resolve the distributional problems in our model.
  - Robotbeat 6y ago
    If your argument is that we are approaching an aristocratic, low-churn society with a bunch of favored failsons at the top, then that would make more sense than trying to frame it in terms of Intrinsic intelligence. But I don’t think your comparison is accurate. The Chinese Party leadership and bureaucratic apparatus is plenty nepotistic while America’s more private-market-oriented economy is now dominated by (1st or 2nd generation) immigrant-founded or run companies like Google, Microsoft, Apple, and Tesla. Read: https://www.scmp.com/news/china/article/1236343/son-also-rises-nepotism-doesnt-disappear-china-it-just-gets-promotion https://www.scmp.com/news/china/article/1236343/son-also-ris...
    - whimsicalism 6y ago
      > we are approaching an aristocratic, low-churn society with a bunch of favored failsons at the top, then that would make more sense than trying to frame it in terms of Intrinsic intelligence. Uh, I'm not sure exactly what you're disagreeing with. I think intelligence is a thing, I think tests can probably reflect it at least a bit, and I think the fact that wealth is not really correlated with it means that there are probably a lot of dummies making capital allocation decisions. > immigrant-founded or run companies like Google, Microsoft, Apple, and Tesla I'm talking about ownership and capital allocation, so the management of any particular firm is somewhat irrelevant. The immigrant founders of Google, for instance, only hold 14% stake in Alphabet. Much of the ownership is by these "favored failsons" as you put it, even if they aren't the managers. That's not even getting into the fact that the vast-majority of America's economy is not these popular-to-talk-about tech companies or that Google's have to run-the-gambit of getting green-lighted by "failsons" just to have a chance of being funded. We could have a whole separate conversation about the effectiveness of China's bureaucracy, but all I'll say is that - even if they have the same problems, ours have had more time to solidify, and China's wealth Gini coefficient is smaller than ours, so the problems would be less magnified.
smallnamespace 6y ago
This problem with this argument is that it can be flipped on its head to justify an aristocracy: the wealthy today are the ‘best’ and they will pass on their genes, successful values, and educational strategies to their children.
- whimsicalism 6y ago
  > it can be flipped on its head to justify an aristocracy: the wealthy today are the ‘best’ and they will pass on their genes, successful values, and educational strategies to their children. I disagree, I don't think this argument can be flipped on its head: The point is that it's pretty clear that the wealthy today are not the best and that meritocratic approaches are much more effective than crossing your fingers and hoping that Einstein's kid will also be an Einstein. A large reason why affluence and intelligence are at all correlated is because wealthy people have access to better education and better early childhood environments. The fact that even with those advantages, wealth is so uncorrelated with intelligence shows that we have a pretty big problem.
  - zepto 6y ago
    Is wealth uncorrelated with intelligence though? You write as though that is obvious, but it seems like most new billionaires we hear about on HN etc, are pretty intelligent. It’s obvious that there are a lot of intelligent people who do not become wealthy, but that’s because becoming wealthy requires not just intelligence, but being in the right place at the right time at the right age. I.e. it requires the right kinds of opportunity.
    - whimsicalism 6y ago
      > new billionaires we hear about on HN etc, are pretty intelligent. New billionaires are the ones most likely to be intelligent (although again, measures of intelligence can't be detached from the opportunity you were provided), this is entirely consistent with the point I'm making.
      - 6y ago
roenxi 6y ago
A related point. the US economy tries to fix this every so often by sending the people directing capital flows bankrupt (notably, circa 2007). The US government keeps stepping in to fix capitalism when it looks like there might be change.
- whimsicalism 6y ago
  I mean yeah, our government is totally captured which definitely hurts mobility and efficient capital allocation.
Aunche 6y ago
China's capital investments tend to be more successful because they copy the ones that already work. High speed rail is more likely to bring economic value than vertical landing rockets or self-driving cars. I think the problem in the US at least is that there is much much capital that all the brightest minds flock to profitable areas. In China, these opportunities are a lot rarer, so more people will pursue research or work for the government.
- whimsicalism 6y ago
  There are huge opportunities happening in China all the time. They are doing new projects and creations that we do not have in the West, again - all the time. Rare opportunities to be involved in something big are just not how I would characterize China if you've been there in the past 5 years.
eloff 6y ago
That's an interesting angle I haven't heard before. Your thesis could be restated as hereditary wealth / rising aristocracy concentrates wealth based on lineage and not meritocracy, thus unlikely to be in the hands of those most able to put it to work effectively. This inefficiency in the market would lead to lower future growth potential. I'm going to ignore the mention of IQ because a) It's largely hereditary so I think it actually runs counter to your argument and b) It's not the best measure for ability to allocate capital effectively in the first place. That seems plausible though. It would superficially make sense to tax that with a wealth or estate tax and put the money into programs that increase social mobility. I say superficially because whenever you tax something you change people's behaviour, like moving their assets into a trust to avoid estate taxes. I think we're seeing this in the US where the states with the highest taxes, California and New York are seeing the highest net emigration of 200K people a year to other states. I wonder if it's related. The US in particular has the lowest social mobility compared to other major Western nations. The American dream is least alive in America in the West. That's a major drag on the future economic potential of the country.
- whimsicalism 6y ago
  > I say superficially because whenever you tax something you change people's behaviour, like moving their assets into a trust to avoid estate taxes. To me, evasion is a solvable problem at the national level if we, again, hire & assess for merit w/ competitive pay in our enforcement agencies. Unfortunately, much of the government-especially the portions of government that would enforce this- is captured, so pretty unlikely chance of that.
deleted 6y ago
[deleted]
TearsInTheRain 6y ago
Thats of course ridiculous. "Low !Q" wealthy people in the US arent managing their own money. They hire the best and brightest to do it. China has a massive advantage because they can simply copy or steal what works in the US more efficiently than we can come up with the next best thing.
- whimsicalism 6y ago
  > They hire the best and brightest to do it. Oh, and how do they determine the "best and brightest"?
  - TearsInTheRain 6y ago
    Just pick hedge funds who have performed in the past run by a bunch of people with top business degrees. Its a lot easier than picking a stock
    - whimsicalism 6y ago
      > Just pick hedge funds who have performed in the past run by a bunch of people with top business degrees. Its a lot easier than picking a stock Nope, it's actually very hard to outperform the market just by looking at hedge fund past performance. Top business degrees do not really equal top talent, having taken a few of these "top business" classes. It's all a salesmanship game to the rich, it's not about actual returns.

nostromo 6y ago

It doesn't make sense to use PPP when asking questions about a country's economic strength or power. It's designed for questions of manufacturing or cost of living. China has a high PPP GDP simply because it has hundreds of millions of people living in some form of poverty, which drives down costs locally. Clearly if the driver of your high PPP GDP is a massive underclass living in poverty, you can't turn around and use that as an argument in support of your economic might -- it's incoherent.

Robotbeat 6y ago
In terms of geopolitical significance, such as ability to wage war (modern industrial wars being heavily dependent on manufacturing capacity) then PPP is pretty relevant. If anything, that probably under-estimates China’s industrial capacity compared to the US. https://www.statista.com/chart/amp/20858/top-10-countries-by-share-of-global-manufacturing-output/ https://www.statista.com/chart/amp/20858/top-10-countries-by...