China Has Us Beat

Thus, as Steve Bannon exclaimed a few years ago: “China has us beat.” Yet, this reality did not deter Bannon from seeking loads of money from China, and as a result, American authorities raided his boat and arrested him off the coast of Connecticut some time ago. But as I mentioned before, a number of other American politicians are applying and conforming to what is a reemerging norm or rule of the international order from before the 500-year period of Western hegemony, which is to seek the conferring of goods and wealth upon them from China in return for tribute to Chinese authority and good relations with China.

In a book titled “Has China Won?” the Singaporean diplomat and scholar Kishore Mahbubani has argued that although America is richer than China in terms of nominal per capita income – in fact, America’s nominal per capita income is about six times larger than that of China – the “well-being” of the Chinese people has improved over the course of the last couple of decades, whereas the well-being of ordinary Americans has deteriorated. Mahbubani concedes: “America is a much richer country than China.” But Mahbubani adds: “Yet, even though America is richer, the well-being of its people, especially the bottom 50 percent of the population, has deteriorated in recent decades.” Mahbubani attributes the downturn in America’s well-being to unnecessary wars. Mahbubani wrote: “In short, the American people would be far better off if America stopped fighting unnecessary foreign wars and used its resources to improve the well-being of its people.”

Thus, China is fast becoming an economic and social power in the world, whereas America is currently in the doldrums of economic decline and social deterioration due to unnecessary wars. As I mentioned before, one of the best workable definitions of the term “economics” is the wise and proper management of scarce resources. In turn, economics is not merely about utility-seeking, and an individual should not be seen as a mere homo economicus seeking only to consume and maximize utility.

Nevertheless, from a classical perspective, before the more complex concepts and ideas of economics are understood, one must first have an intuitive understanding of the most fundamental concept of economics, namely, the concept of ‘Supply and Demand.’ Arguably, there are four basic laws of ‘Supply and Demand’:

  1. If supply increases and demand stays the same, the price will go down.
  2. If supply decreases and demand stays the same, the price will go up.
  3. If the supply stays the same and demand increases, the price will go up.
  4. If the supply stays the same and demand decreases, the price will go down.

Monetary policy also ties into ‘Supply and Demand.’ Currently, there is an uproar in American society to a certain extent because of rising inflation. One of the ways by which the ‘Federal Reserve’ is seeking to reduce inflation is by increasing interest rates, thus reducing the supply of money in the market in order to reduce prices. However, there is no single identifiable cause for inflation. Keynes went as far as arguing that inflation is by design the “debauchery” of the currency in order to benefit and profit bankers and big businesses. As a result, one can argue that the rise in interest at a time of rising inflation is merely a self-serving action on the part of the ‘Federal Reserve.”

In fact, one of the theories to explain the rise of inflation is that government mismanagement of fiscal policy – combined with ‘Quantitative Easing’ (QE), which in essence is the printing of money to fuel disastrous government policies – is the primary cause of inflation. Thus, in addition to reducing the supply of money in times of high inflation or even increasing the supply of money in times of slowed consumption, government spending has to decrease over time in conjunction with changes and alterations in monetary policy, and thus fiscal policy has to be brought to order over time. However, there is no sign that the American government is bringing fiscal policy in order as monetary policy is being altered. Thus, these aforementioned points are just some of the reasons why Bannon and others have said “China has us beat.”

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