As the U.S. defines, re-shapes and contemplates its global role, China seems to keep steadily increasing its influence on the world stage. Executive committee board member Patrick Jenevein expresses concern about the American Dream, and how China is taking more plays from our playbook. He offers wise counsel to those who might influence our future. He has worked in China for nearly two decades. Edited portions of a recent opinion article follow:
Ceding the American Dream
By impeding U.S. entrepreneurial promise, American political leaders imperil America’s global influence and cede power to China.
China still faces myriad economic challenges however. Her bureaucracies retain the burdens of their Communist legacy, but courageous Chinese leaders are working to remove these; shrewdly they grasp that China must protect both her own citizens’ and foreigners’ property better. Nevertheless, China is clearly advancing her economy’s ability to create wealth by increasing the consistency and sophistication with which the Middle Kingdom protects individuals’ rights to control property. At the same time, American leaders are imposing more government controls on how individuals and businesses use their properties.
In contrast, American bureaucracies pile compliance requirements on entrepreneurs and enterprises that encumber their energies, saddle their time and toll their finances. True, entrepreneurs who achieve extraordinary success levels (like Malcolm Gladwell’s “outliers”) may bear these burdens, but those burdens bury journeyman entrepreneurs. Such balls and chains include higher tax rates, and time-consuming reporting requirements. Systematic uncertainty, rather than the reasonable and predictable application of laws that protect property rights over time, dilutes productivity, stifles innovation and makes investing elsewhere in the world more attractive than investing in the U.S.
As we debate fiscal priorities, American federal and state governments should, as Chinese governments do, set their purpose to ensuring legal certainty in the investment environment. Doing otherwise rejects the very principles that launched the American middle class of journeymen entrepreneurs and demonstrably sustained the American Dream. Blithely neglecting these ideas restrains our enterprises and eviscerates our economic vitality. Painfully, on very personal levels, failing to ensure certainty through property protecting policies permanently impairs lifetime earnings potential of young job seekers and irrecoverably ravages the savings and retirement plans of all America’s citizens. Dangerously, on geopolitical levels, the failure undermines America’s diplomatic missions and military deployments around the world.
Too many Americans want to blame Chinese policies rather than work on economic failures at home. Cheering against China will not make America win. Tackling American weaknesses will. Just as Chinese leaders have taken a page from America’s property rights playbook, America needs to take a page from the Chinese fiscal discipline playbook. Rather than complain about Chinese competitiveness, Americans should bolster their own ability to compete.
Shedding debilitating debt will bring an immediate positive consequence of strengthening the dollar. Certainly, some American exporters prefer a weaker dollar in the short term, but, in the long term, even exporters, like their compatriots, depend on and greatly benefit from a strong domestic economy. A nation’s currency moves like a corporation’s stock: higher stock prices bring longer-term value to shareholders, and stronger currency values bring longer-term value to citizens. Furthermore, a strong currency helps advance foreign policy objectives. Whether in peace or war, a strong currency reduces a nation’s cost of diplomacy in terms of her citizens’ working hours. A strong currency also increases a country’s influence by making other countries want that currency more. Of daily concern to every American commuter, a stronger dollar makes imported oil and gasoline cheaper and reduces American dependence on foreign oil in both dollar and gross domestic product terms.
The American Dream now hangs in the balance. As China augments and America attenuates the commitment to the dream of protecting life, liberty and property, the very idea that established and sustained the American Dream, America will hand that dream over to China. Too many American political leaders take American success in wealth creation for granted. Leaders in China understand that the uniquely American vision of individual success supports and inspires the Chinese people who yearn for better opportunities. U.S. government attitudes that subdue inspiration and tax policies that limit the ability to fulfill dreams in America to $250,000 a year assure that other nations will command greater riches, more choices, and, indeed, more freedom than in America. As China builds her capacity to create wealth, she supports every entrepreneur’s and every parent’s dream. As Chinese businesses amass capital, Chinese politicians gather broader prerogatives to guide global events. Without changing the current trend of increasing time and cost burdens on private enterprise, both wealth and geopolitical power will continue to grow in and accrue to China instead of America. And America will find that she has surrendered the American Dream to the Chinese Dream.