|Robert Brooks, Editor |
On a long-weekend vacation in July I got caught in an entirely predictable traffic jam. It has happened before, and I was not surprised by it. What surprised me, though, were the new alternatives. It happened that we had a GPS device along — for novelty, I thought at the start, because I know that route instinctively. But, as we slowed and then stopped in traffic I noticed other cars pulling out of line, turning one way or another, and speeding off in new directions.
They’d all found new routes to get around the tieup via their GPS units, and we could, too, my passenger and I reasoned.
So, we did. I didn’t know the new route but it wasn’t too hard to follow. It didn’t seem to make sense to me at first, but neither did the idea of sitting still for three or four hours. I saw things I’d missed on similar trips over many years. We got back on course and managed to regain the schedule we’d planned all along.
Of course, this was in my mind when I learned later about the 60-mile-long traffic standstill on the Beijing-Tibet highway for nearly two weeks last month. The reports tried to assure those of us not caught up in China’s economic boom that traffic is always snarled around the country’s big cities, that road rules are nearly impossible to enforce with such a densely settled population, and trucks supplying products and materials invariably overstrain the carrying capacity of the roadways. Government efforts to build and expand the highway systems have been unequal to the growing availability and use of cars, trucks, and busses.
So, keep all this in mind when you evaluate what was thought to be the big global economic story of the past month, the news that China has surpassed Japan as the world’s second-richest economy based on the Q2 2010 gross domestic product figures: China’s GDP was $1.34 trillion, and Japan’s was $1.29 trillion. For those scoreboard-watchers who think these results prove something or other, I say “keep watching.” Results are constantly shifting, especially in economic reporting, which is just one window onto the vast betting parlor that is the global economy.
The better insight on wealth or poverty is found reading the trends for economic activity. Japan, for all of its accumulated capital, has been in a slow-growth mode since the early 1990s, while China has been leveraging its low labor costs and incipient consumer demand to generate economic growth. Thus, despite the 11-day traffic jam China is projected to have a long-term economic growth rate of more than 8% over the next decade, while Japan’s comparable rate is about 1%. The point is not just that China passed Japan in the second quarter of this year, but that it has found a better strategy for growth according to its own assets, resources, and opportunities.
This does not mean that all is well in China. Obviously, the truckers caught in traffic don’t think it is so, nor do the customers waiting for deliveries. There are many things about China that contradict the notion of an economic miracle there.
Furthermore, the entire debate about one nation’s versus another’s GDP is a matter of comparison, not determination. Just because China is doing well does not mean that Japan, or any other nation, is doing poorly. And, by saying a nation is “doing well” we are only saying that it is improving the general circumstances of its individual (and corporate) citizens. After all, this is a global economy — and as such the truly consequential measurements of wealth or success have to be located at the level of the individual. In other words: how well are you doing?
My own experience eluding a traffic jam last summer was not improved just because we had a Garmin device handy, but because the alternative routes were available to us, too. Equally, our good results depended on our willingness to take the alternative route available to us: human initiative mattered as much as the technology, the means, and the opportunity.
I won’t stray too far from this analogy to say what probably is obvious: the U.S. economy is in something of a traffic jam right now. We’re lined up and not moving primarily because we don’t have enough alternatives available to us: capital is scarce, regulations are inhibiting, and so forth. We know we can do better, but we don’t know how. We need to have more options available to us. And, we need to demonstrate more initiative to access those options and make them work for us.