Tales of Chinese growth have all been told before
Early in Michael Crichton’s 1992 novel “Rising Sun,” a police captain turned Japan expert named John Connor, a thinly veiled stand-in for the author, marvels at the sight of people “calmly discussing the fact that their cities and states were sold to foreigners.”
“Americans are eager to sell,” he continues. “It amazes the Japanese. They think we’re committing economic suicide.
And of course, they’re right.”
In a scriptwriting class, they’d call that moment “the theme is stated,” a theme that
Crichton hammered, remorselessly and without humor, for another 300 pages. I read his novel the summer after it came out, between my sophomore and junior years of college, and was for a time full of indignation at the thought of my passive, shortsighted elders allowing the Japanese to elbow America out of its preeminent place in the world economy. I recommended the book to others. I waxed voluble in coffee shop arguments.
Several economics classes later, I ruefully repented. Crichton had the spectacular ill-fortune to publish just as Japan’s economic bubble was deflating and the country was sliding into its “lost decade” (which actually lasted for closer to two or three, depending on who is counting). The Japanese remain valuable trading partners and important geostrategic allies for the United States, but the idea that we’re going to become their economic vassal now seems as quaint as a tricorn hat.
As it turned out, my experience with “Rising Sun” was excellent training for my later career as an economics columnist, which entailed weathering serial panics about some country or another that did everything better than us, especially industrial policy, and was about to displace us from the apex of the world economy. Most recently, and lengthily, we have been panicking about China, and not without reason; when the most populous country in the world grows at close to 10 percent a year, simple trend extrapolation tells you that, eventually, they’ll have the biggest and most important economy, too.
Yet now it looks as though that story might be ending the same way Japan’s did, with slowing growth and an attendant decline in asset prices that bodes ill for the banking system. Economists are pushing out the date at which they think China’s economy will surpass ours, and some think that date might never come.
There are any number of lessons to be taken from China’s slowdown, and Japan’s before it, many of them ably summed up by my colleagues in a recent colloquium: the sharp limits of hog-wild capital investment and export-driven economic models; the importance of demographic decline; and the way economic planning often ends up prioritizing the political problems of the planners over the economy. But there are also some lessons on the dangers of too-neat economic storytelling.
As economist Lawrence Summers points out in his contribution, all the stories about Chinese growth have been told before — about Russia in 1960 and, yes, Japan in 1990. These stories were part mindless-trend extrapolation, part economic nostalgia. And while it’s easy to point and laugh at the failed doomsayers of yesteryear, rereading Crichton, it’s striking how easily the story could be reprinted as a modern fable about China, with only light updating and some cultural details changed. It’s also easy to imagine that story becoming, once again, a New York Times bestseller, speaking anew to one of the core anxieties of our era.
Why do we find such stories so compelling — arguably, compelling enough to power Trump all the way to the White House on a wave of China anxiety? In part, because mindless-trend extrapolation is the way most of us think about the future most of the time. In 1992, sitting on my porch with a hardcover book in my lap, I certainly wasn’t expecting to someday turn it into a Washington Post column that I could “email” to my editor over the “internet” after rereading it on my “Kindle.”
And of course, like all mindless-trend extrapolations, these stories started with real facts on the ground: Japanese competition really did displace manufacturing jobs in the 1970s and 1980s, and Chinese competition displaced far more. Over time, those losses get absorbed in a larger, more prosperous economy, but at the moment of displacement, they hurt, and hurt people demand explanations.
However, I think the primary reason we keep telling these stories over and over is that while they purported to be stories about foreigners — wily, patriotic and patient, and thus capable of extraordinary feats of long-term planning for their collective good — they were really mostly about us, the hyper-individualistic Americans who had let themselves become hostage to the whims of the free market and the demands of the quarterly earnings cycle.
Obviously, that sort of self-criticism has a political component, which is why China doomcasting has often been popular with people who find individualism, or markets, wanting. But it also has a psychological component: If the story is really about you, it means that, ultimately, you’re the one who has all the power. Such stories tell us that, however dark it looks now, the future isn’t really uncertain — that we get to decide whether to commit economic suicide, or write a happier ending.