Joe Pitts, Dec 2, 2011

This week, Andy Stern, former president of the Service Employees International Union wrote an editorial in the Wall Street Journal entitled "China’s Superior Economic Model." The byline of the editorial is "The free-market fundamentalist economic model is being thrown onto the trash heap of history."

Stern claims that China’s model of central government planning is the future. He points to bold aims in the latest five-year plan: 7 percent annual economic growth, $640 billion investment in renewable energy, construction of six million homes, and supposedly "all while promoting social equality and rural development."

Is China catching up to the United States? Certainly. Every economic indicator shows that the Chinese people are becoming more prosperous. In the next few decades, the Chinese economy might even pass the United States in sheer size.

The Chinese certainly have a different system than the United States. But before we consider adopting the Chinese economic model, maybe we should look closer at the political model that makes it possible.

There is one political party in China. Debates over the direction of government take place behind closed doors. The state media supports the decisions of the party. Protests are rarely tolerated and strictly controlled when they are allowed.

One thing that unites both Tea Party and Occupy Wall Street protestors is their dislike of crony capitalism. But the Chinese system is essentially crony capitalism on steroids. Business leaders are beholden to government officials and government officials grow wealthy because of special deals with business leaders.

Is this the better road? Is the only sure way for economic growth central government planning?

Andy Stern is not the first to declare the American way of life inferior to a rising system. Only a few years after our own revolution, the French cast off their government. They established a more "free" society. Distinguished Americans such as Thomas Paine thought we should adopt a more French model. However, it wasn’t long before the Republic collapsed into the dictatorship and militarism of Napoleon.

In the 1930s, fascism was on the rise. Before World War II, there was speculation that the National Socialist economic model was stronger than capitalism. Indeed, the German economy grew by leaps and bounds in the 1930s before collapsing into barbarism and war.

The grim warnings of the inevitable failure of American capitalism were repeated in the 1950s and 1960s. The Soviet economy, following the war, was booming. At the famous Kitchen Debate in Moscow, Khrushchev said to then Vice President Nixon: "In 7 years we will reach the level of America. When we catch up and pass you by, we'll wave to you."

Again, in the 1980s, the Japanese economy grew fast. Japanese cars and electronics surged into the American market. Japanese businessmen bought up high-profile properties like the Empire State building. However, Japan’s monetary policy failed and the country went through a "lost decade" of weak growth.

Will China continue to grow more prosperous and more powerful? Maybe, however, significant cracks in the Chinese model are already showing.

First, we cannot forget the grim record of human rights abuses. Dissenters, ethnic minorities, and religious minorities are subject to terrible violence on a daily basis. How long will the Chinese people suffer before they revolt? Second, China is aging rapidly and has an imbalance of men and women because of the brutal one-child policy. These severe demographic challenges will only become more apparent in the coming years. Third, Chinese wages are rapidly catching up with developed nations making the country less attractive to manufacturing.

I hope that Andy Stern read the Wall Street Journal the day after his op-ed. The story, "China’s Bind: How to Avoid a Crash Landing," reports that the country is experiencing a construction slump. In Inner Mongolia, the city of Kangbashi is a ghost town. Dozens of 30-story tall apartment buildings sit mostly empty on a high desert plain.

The Chinese government may be able to build, but demand is harder to manage. From across the globe, we see tall Chinese towers rising out of deserts. The question for us is whether we should change our course to compete with ghost towns.

Congressman Joe Pitts, a Republican, represents Pennsylvania's 16th Congressional District, which includes Lancaster County and parts of Chester County and Berks County.