The US and China’s inverse economic dilemmas

Ian Bremmer of Eurasia group makes a great point about how business has taken democracy captive in the US, whereas in China the state controls too much industry – the opposite problem.

This is the heart of it. Chinese leaders, to their credit, understand the problem. The question is whether they can, through reforms, uproot the system that has put them in power.

In the US, I’d argue that it’s part of a cyclical pattern of reform, followed by decades of drift. The US’s exit from that period of drift was accelerated by the subprime meltdown and the collapse of Lehman’s. That’s not to say that the reform will be easy or quick.

You could see a similar pattern switching from the 1960s-70s (a focus on economic and social reforms) to the 1980s-90, and back further from the 1920s to the 1930s and 40s.

If I had to say, I’d suggest the trajectory of reform in the US will last about two more decades.

But what is heartening is that in both countries, there is an increased emphasis on bolstering the workers and the middle-classes – theoretically at the expense of the elites. How successful China and the US are remains to be seen the general rhetorical trend towards prosperity shared more widely will inform more domestic rhetoric in both countries.

Bremmer: we’re left with a world in which the two strongest countries offer mirrored visions of what it takes to get to the top. In the U.S., the biggest danger of the capitalist system is that the private sector captures the state. In China, the biggest problem with state capitalism is that the state has already captured the private sector.