Caddyshack 2 might be the second best Caddyshack movie. But that’s not saying much. Which is why it’s interesting that the world is making such a big deal of China overtaking Japan as the world’s number two economy.
Japan’s nominal GDP, which isn’t adjusted for price and seasonal variations, was worth $1.286 trillion in the April-to-June quarter compared with $1.335 trillion for China. The figures are converted into dollars based on an average exchange rate for the quarter.
It’s true, that China’s economy has been growing incredibly quickly over the past couple of decades as they have loosened up their economic rules and moved away from Communism. (Just a reminder for those in the media, this is to be portrayed as an innovative version of communism—certainly not a desperate action taken by yet another failing communist regime.)
But China’s economy, while growing more and more formidable, is still a joke compared to the United States, and honestly, Japan as well. Look at the world’s largest economies based on GDP from the World Bank, and you’ll see China at number 3 last year, with Japan at number 2, and lil’ old us at number 1. What might surprise you is the margin of victory.
We have ¼ of the people of China, and our economy is still about 3 times as large. China is accelerating incredibly quickly, mainly because they are grabbing the low hanging fruit. They are taking the basic innovations we created, applying them to their economy, and finding quick gains—pulling hundreds of millions from utter hopeless poverty into just hopeless poverty. Congratulations on that.
It’s like running a mile. Take a contestant from The Lardiest Load* off the couch and ask them to run a mile. They will stop 12 times, and finish in 20 minutes. Have them work out for a month, they’d quickly cut that to 10 minutes. Work out for a year, and they might cut it to 7 minutes. But, work out for their entire life with a professional trainer, and they will probably never run a sub 5 minute mile. It’s easy to get started, but it gets harder and harder to improve.
Of course, we can’t sit back and think there is no threat from China economically. But, we should recognize that they can’t beat us—we can only beat ourselves. They will never run faster than us…as long as we are in Olympic shape. But, we just are getting fatter, and fatter, and fatter—and if we don’t put down the Butterfingers—we will eventually lose.
Remember, while China has a bigger overall economy, their per capita income is pathetic.
Japan’s people still are among the world’s richest, with a per capita income of $37,800 last year, compared with China’s $3,600. So are Americans at $42,240, their economy still by far the biggest.
So, here are the economic lessons to learn from China’s rise.
1) It’s really easy to build an economy on slave labor.
2) It’s really hard to build an economy in a communist system, even when you have slave labor.
3) It’s really hard to blow the sort of lead we have. But…we can do it if we keep eating Butterfingers.
*My new version of the Biggest Loser that I’m pitching to networks.